Direct private lending in most states
Call us anytime at 512-617-9400
Apply now
Compare

DSCR Loan vs Conventional Loan

Qualify on the property, or on your personal income.

For an investment property, the core difference is what you qualify on. A DSCR loan looks at whether the property's rent covers its payment, with no personal income documentation, and it can be held in an LLC with no cap on how many you own. A conventional loan qualifies you on your personal income and debt-to-income ratio, usually offers a lower rate, but limits how many financed properties you can hold.

DSCR Loan
Qualifies on the property
Conventional Loan
Qualifies on your income
Qualifies on
Property cash flow (DSCR)
Personal income and DTI
Income docs
None required
Tax returns, W-2s, pay stubs
Ownership
LLC friendly
Usually personal name
Property limit
No set cap
Often capped (e.g. ~10 financed)
Typical rate
Higher than conventional
Lowest available
Best for
Self-employed, scaling investors
W-2 buyers, first few rentals
Bottom line

If you are self-employed, scaling past the conventional property limit, or want to hold in an LLC, a DSCR loan removes the income-doc and property-count hurdles. If you have strong W-2 income and only a few rentals, a conventional loan's lower rate may win.

Rates and terms shown are typical figures, subject to underwriting and market conditions. Not a commitment to lend.

Free calculatorDSCR CalculatorSee if your rental cash-flows before you apply.Open
Related program
Rental / DSCR
Long-term financing that qualifies on the property.
Read the guide
DSCR vs Conventional Loan: Which Is Better for Investment Property?
DSCR vs conventional loan for investors: they qualify you very differently. Compare documentation, speed, cost, and property limits to pick the right one.

Common questions

Is a DSCR loan a conventional loan?
No. They are different products with different underwriting. A conventional loan is underwritten to your personal income and debt-to-income ratio, and on investment property it follows agency guidelines. A DSCR loan is underwritten to the property's rent against its own payment, which is why it needs no tax returns and no W-2s. People call DSCR a conventional loan because both are long-term rental financing, but only one of them looks at your paycheck.
What credit score and down payment does each need?
Conventional starts lower on credit, and both cap around the same leverage. Our conventional investment program starts at a 580 credit score; our DSCR program starts at 640. Both go to 80% LTV, so plan on 20% down either way. The real difference is the paperwork: conventional wants documented income, DSCR wants a property that covers its payment, with a DSCR from 0.75.
Can a first-time investor get a DSCR loan?
Yes, and it is often the easier of the two to qualify for. Because the loan is underwritten on the property's rent rather than your track record, having no prior deals is not the obstacle it is on a bridge or construction file. What matters is the property's numbers, your credit, and your down payment. If the rent covers the payment and you have the equity, a first deal can qualify.
Is a DSCR loan rate higher than conventional?
Usually a bit higher, because it is an investor product qualified on the property rather than your income. Investors accept the slightly higher rate for no income docs, LLC ownership, and no cap on the number of properties.
Can I hold a DSCR loan in an LLC?
Yes. DSCR loans are typically LLC-friendly, which is one of the main reasons investors choose them over conventional financing for scaling a portfolio.

Related comparisons

DSCR Loan vs Hard Money LoanLong-term rental financing versus short-term project capital.DSCR Cash-Out vs Conventional Cash-OutTwo ways to pull equity out of a rental you own.Bridge Loan vs DSCR LoanShort-term capital to reposition, then long-term money to hold.

Still not sure which fits?

Tell us about your deal and we'll point you to the right structure. No obligation.

Apply nowTalk to us