Investment Property Loan vs. DSCR Loan

Quick Answer

The primary difference: conventional investment property loans review your personal income (W-2s, tax returns, DTI), while DSCR loans review the property's rental income against its payment (the DSCR ratio). Conventional loans typically offer lower rates but stricter personal income requirements. DSCR loans offer flexibility for self-employed investors, LLC vesting, and unlimited property counts — at a rate premium of 1-2%.

Factor	Conventional Investment Loan	DSCR Loan
Income Review	W-2, tax returns, DTI ≤ 45%	Property rent ÷ PITIA only
Min. Down Payment	15-25%	20-25%
Entity Vesting	Individual name only	LLC, corp, trust allowed
Loan Limit	Conforming limits (~$766K)	Often $3M+ per loan
Max Properties	10 financed properties	Unlimited (portfolio review)
Rate	Lower baseline	1-2% above conventional
Prepayment Penalty	Typically none	Often 3-5 years

When to Choose Each

Choose Conventional If:

You show strong W-2 or tax return income
You want the lowest possible rate
You're buying in your personal name
You have fewer than 10 properties
You don't need entity vesting

Choose DSCR If:

You're self-employed with low taxable income
You want to close in an LLC
You've maxed out conventional limits
You need speed and fewer docs
You're buying 2-4 unit properties

FAQs

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Disclaimer: Educational only.

Last Updated: June 21, 2026