Conventional vs DSCR Loan
Compare conventional and DSCR loans for rental property investing. Rates, down payments, qualification requirements, and which is better for your situation.
Conventional Loan
PROS
✓Lower interest rates (typically 0.5-1% less)
✓Lower down payment possible (15-20%)
✓No prepayment penalties
✓Longer rate lock options
✓Widely available from any lender
CONS
✗Full income documentation required (W2, tax returns)
✗DTI limits (typically 45-50%)
✗Limited to 10 financed properties
✗Employment verification required
✗Slower closing (30-45 days)
DSCR Loan
PROS
✓No income documentation needed
✓No DTI limits — qualification based on property cash flow
✓No limit on number of properties
✓Faster closing (21-30 days)
✓LLC-friendly — borrow in entity name
CONS
✗Higher interest rates (1-2% premium)
✗Higher down payment (20-25% minimum)
✗Higher fees and points
✗Prepayment penalties common
✗DSCR must be 1.0+ (ideally 1.25+)
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