⚡ Quick Answer
DSCR: qualifies on rental income only — no W-2, no DTI, no property limit, LLC allowed. Rate: 7.25–9.00%. Conventional: qualifies on personal income — W-2 required, full docs, max 10 properties, personal title only. Rate: 6.50–7.50%. Choose DSCR if self-employed, 4+ properties, or want LLC. Choose conventional for clean W-2 and lowest rate.
Full Side-by-Side Comparison
| Feature | DSCR Loan | Conventional |
|---|---|---|
| Income verification | None — rental income only | Full docs: W-2, tax returns, pay stubs |
| Qualification metric | DSCR (rent ÷ PITIA ≥ 1.0x) | DTI (income vs all debts ≤ 43-50%) |
| Self-employed | No issue | 2 years returns required |
| Properties limit | No hard limit | 10 maximum |
| LLC vesting | Allowed | Not allowed |
| Rate (30-yr fixed) | 7.25–9.00% | 6.50–7.50% |
| Down payment | 20% | 15-20% |
| Close speed | 21-30 days | 30-45 days |
| Documentation | Minimal | Extensive |
| Prepay penalty | 3-5 yr step-down typical | None typically |
When to Use DSCR vs Conventional
✓ Choose DSCR When:
- Self-employed with complex income
- Tax returns show low income due to deductions
- 4+ financed properties already
- Want LLC vesting
- Want faster closing, less paperwork
- Plan to keep scaling portfolio
- Rental income clearly covers mortgage
✓ Choose Conventional When:
- Clean W-2 income — easy to document
- Fewer than 4 financed properties
- Want absolute lowest rate
- Comfortable with personal title
- Plan to hold long-term
- Property doesn't hit 1.0x DSCR
The hybrid strategy: Use conventional for first 3-4 properties (lowest rates). Switch to DSCR as you approach Fannie limits or income docs become complex. Best rates early, best flexibility later.
The Real Cost of the Rate Difference
| Loan Amount | Conventional 7.00% | DSCR 7.75% | Monthly Diff |
|---|---|---|---|
| $150,000 | $998/mo | $1,074/mo | $76/mo |
| $250,000 | $1,663/mo | $1,790/mo | $127/mo |
| $350,000 | $2,329/mo | $2,506/mo | $177/mo |
Context matters: LLC vesting alone can save $50,000–200,000+ in liability exposure. No property limit means you scale without hitting Fannie's wall. For self-employed, DSCR often means the difference between getting the loan and not.
Not sure which is right?
We offer both. We'll tell you honestly which makes sense for your deal.
Frequently Asked Questions
What is the difference between DSCR and conventional?
DSCR: rental income only, no docs, no DTI, no property limit, LLC allowed. Conventional: full income docs, DTI calculation, 10 property cap, personal title. DSCR rates 0.75-1.50% higher.
When should I use DSCR?
Self-employed, 4+ properties, wanting LLC, or complex income. Use conventional for clean W-2 and lowest rate.
Can I switch from conventional to DSCR?
Yes — refinance anytime. Many investors use conventional first 3-4, then DSCR for the rest.
Is DSCR harder to qualify for?
For most investors, easier — no DTI, no property limit, no income docs. Only harder if rental income doesn't support 1.0x DSCR.
Max properties with DSCR?
No hard limit. Each loan evaluated independently. This makes DSCR the primary tool for 5+ property portfolios.
Viador Partners NMLS #2822744. Not a commitment to lend. Equal Housing Lender.
DSCR or Conventional — We'll Tell You Which
We offer both products. Honest recommendation based on your deal.