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 |
| Down payment | 20% | 15-20% |
| Close speed | 21-30 days | 30-45 days |
| Documentation | Minimal | Extensive |
| Reserves | 6-12 months PITIA | 2-6 months PITIA |
| Prepay penalty | 3-5 yr step-down typical | None typically |
For whether a DSCR loan counts as a conventional loan at all, see Is a DSCR loan a conventional loan?.
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 10-Property Conventional Limit
Fannie Mae and Freddie Mac cap investment property financing at 10 financed properties per borrower. In practice, many conventional lenders impose stricter limits — some cap at 4, others at 6. Once you hit that ceiling, conventional financing is no longer available regardless of your income, credit, or net worth. This is the single most common reason portfolio investors switch to DSCR. With DSCR, each property is evaluated independently on its rental income, with no aggregate limit.
LLC Ownership and the Due-on-Sale Problem
Conventional (Fannie/Freddie) loans require the property to be in your personal name, so lawsuits, tenant claims, and property-related judgments attach to you as an individual. Many experienced investors want entity protection through an LLC, LP, or trust. DSCR loans allow this from day one: the loan is made to the entity, the property is titled in the entity, and your personal liability exposure is limited.
Some investors try to work around the conventional restriction by buying in their personal name and transferring the property to an LLC after closing. That transfer can technically trigger the due-on-sale clause in the mortgage, creating risk. DSCR loans avoid the workaround because they are designed for entity borrowers from the start.
Florida-Specific Context
Florida investors often weigh liability exposure heavily, which makes LLC ownership — and therefore DSCR financing — a common choice as portfolios grow. Florida's insurance environment also matters: lenders experienced with investor properties tend to understand Florida-specific insurance requirements better than lenders that rarely see them. Conventional financing still serves early-stage investors, and if you already hold a conventional first mortgage you want to keep, a DSCR second mortgage can access equity from an existing property without disturbing that first lien. For how the ratio itself is underwritten — which rent counts and how LTV and reserves move the terms — see DSCR loans: qualifying on the property, not your income.
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Frequently Asked Questions
Chad Evers, NMLS #2822744. Not a commitment to lend. Equal Housing Lender.
DSCR or Conventional — We'll Tell You Which
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