Side by side
DSCR Loan vs Conventional Investor Loan
Both work for rental property. They differ on what they qualify off, what docs they collect, and how many properties you can stack. This is the practical comparison investors actually need to make.
| Factor | DSCR | Alternative |
|---|---|---|
| Qualifies off | Property cash flow | Borrower's personal income + DTI |
| Tax returns required | No | Yes (typically 2 years) |
| Pay stubs / W-2 / 1099 | No | Yes |
| DTI calculation | None — DSCR ratio instead | Yes (typically 45% max) |
| Max financed properties | No cap | 10 (then constraints stack) |
| Min FICO | 620 (substitute reserves below that) | 620-640 depending on LTV |
| Max LTV | Up to 80% purchase / 70% cash-out | Up to 85% purchase / 75% cash-out |
| Vesting | Personal OR LLC | Personal only |
| Rate (as of recent market) | ~0.50% to 0.875% over conventional | Standard agency rates |
| Prepayment penalty | Optional 1- to 5-year (lower rate w/) | None |
| Close timeline | 14-30 days | 30-45 days |
| Property type | 1-4 unit residential investment | 1-4 unit (different price hits per unit count) |
Bottom line
- Conventional is the lowest rate path if you qualify on income.
- DSCR is the only path once you cap out on conventional (10 financed properties is a real ceiling).
- DSCR is the right pick when you want to vest in an LLC, want to skip income docs, or are self-employed.
- For long-term portfolio investors, the rate spread is often worth paying to keep the LLC structure and avoid DTI gymnastics.
Pick DSCR when
You are scaling past 4-5 properties, want LLC vesting, are self-employed, or just do not want to hand over tax returns.
Pick the alternative when
You are buying your first or second rental, personal income is strong, and you do not mind the doc collection.
Frequently asked
Can I switch from conventional to DSCR mid-portfolio?+
Yes. Many investors finance their first 1-4 properties on conventional and then transition to DSCR once they cap out or want to vest in an LLC.
Is the DSCR rate spread fixed?+
No. The spread between DSCR and conventional fluctuates daily. Some weeks it is 0.50%, other weeks closer to 1.0%. The DSCR Direct pricer shows the live spread.
Can I cash-out refinance from a conventional into a DSCR?+
Yes. DSCR cash-out refinance is one of the most common uses of the program. Typical max LTV is 70% with stabilized rental income.
Do DSCR loans count toward the conventional 10-property cap?+
No. DSCR loans are non-QM and do not count toward Fannie/Freddie property limits.
Run your scenario both ways
DSCR Direct shows real-time DSCR pricing. For conventional rates on the same scenario, see ratedirect.net.