Compare a DSCR loan vs conventional mortgage on rates, closing speed, down payments, and limits to choose the right rental property financing.
TL;DR: Conventional investment mortgages offer lower interest rates and lower upfront costs for investors with low DTI and under 10 properties, while DSCR loans provide faster closing, LLC titling, and flexible underwriting based on property cash flow.
A head-to-head comparison of DSCR loans and conventional investment mortgages — rate, leverage, close time, prepayment penalties, and the decision framework we use with clients.
Conventional loans offer lower interest rates but cap at 10 financed properties and require personal income documentation.
DSCR loans qualify based on property cash flow without personal tax returns or DTI caps.
DSCR loans close faster (21-28 days) and allow LLC titling, but carry prepayment penalties and higher rates.
Use conventional financing for early acquisitions with clean DTI, and switch to DSCR when scaling or facing tight deadlines.
What is the primary difference between a conventional loan and a DSCR loan? Conventional loans are underwritten on the borrower's personal income and tax returns with a 10-property cap, whereas DSCR loans are based solely on property rental income, closed in an LLC, and have no property count limit.
Which loan type closes faster? DSCR loans typically close in 21 to 28 days, compared to 35 to 45 days for conventional loans, because they do not require personal income documentation.
Does a DSCR loan report to personal credit? Because DSCR loans are issued to an LLC, they generally do not report to personal credit or consume personal debt-to-income (DTI) capacity.