Loan Comparison
DSCR vs Conventional Loan
The honest side-by-side: where each loan wins, where each loses, and how to pick the right product for your next deal.
Side-by-side: DSCR vs Conventional
| Factor | DSCR Loan | Conventional Loan |
|---|---|---|
| Income documentation | None — property's rental income qualifies | 2 years tax returns + W-2s + pay stubs |
| Maximum LTV (investment) | Up to 80% | Up to 75–80% (lower for 2nd+ investment) |
| Minimum credit score | 640 | 620 (higher for investment property) |
| Debt-to-income (DTI) limit | Not measured | Typically capped at 43–50% |
| Property count limit | Unlimited | 10 financed properties total |
| LLC vesting | Allowed | Not allowed (must be personal name) |
| Short-term rental (Airbnb) income | Counts up to 80% LTV | Often excluded or heavily discounted |
| Closing timeline | 15–21 days | 30–45 days |
| Foreign national borrowers | Eligible (FN DSCR program) | Not available |
| Rate (typical, 2026) | 0.75–1.5% above conventional | Lowest available |
Choose DSCR if…
- You own 4+ financed properties already
- You're self-employed or 1099
- Your tax returns show low net income due to deductions
- You want to vest in an LLC
- You're buying a short-term rental
- You're a foreign national or visa holder
- You need to close in under 30 days
- You don't want to share personal financials
Choose Conventional if…
- You're buying your first or second rental
- You have W-2 income that supports the DTI
- You can vest in your personal name
- You don't mind a 30–45 day timeline
- You want the absolute lowest rate available
- You have <4 financed properties total
DSCR vs conventional — FAQs
What is the main difference between a DSCR loan and a conventional loan?
A DSCR loan qualifies on the property's rental income; a conventional loan qualifies on the borrower's personal income, employment, and DTI. DSCR is for investors who want speed, flexibility, and no income docs. Conventional is for borrowers with traditional W-2 income who want the lowest available rate.
Is a DSCR loan a good idea?
For real estate investors, yes — DSCR loans are the standard product. They allow unlimited properties, LLC vesting, no DTI cap, and faster closes. They're not suited to primary residences (DSCR is investment-only) or borrowers who could easily qualify conventionally for a single rental.
Are DSCR loan rates higher than conventional?
Yes, typically 0.75–1.5% higher than conventional investment rates. The premium pays for no income docs, faster closes, LLC vesting, and higher leverage. Most experienced investors find the trade-off worthwhile — the deal speed and scaling ability outweigh the rate difference.
Can I switch from conventional to DSCR after I close?
Yes — you can refinance a conventionally-financed rental into a DSCR loan. Common use case: investors hit the 10-property conventional limit and refi older properties into DSCR to free up conventional slots for new buys.
Which is better for first-time investors?
If your tax returns and DTI support a conventional investment loan, that's usually the cheapest. If not — or if you want to vest in an LLC, skip the income docs, or close fast — DSCR wins. Total Quality Lending offers both paths and helps borrowers pick the right one.
Not sure which loan fits your deal?
We offer both. Talk to a real human who’ll tell you the truth about which product saves you more money over the life of the loan.