DSCR Refinance vs. Conventional: Which Is Right for Your Rental?

You've got a rental property to refinance. Two paths: conventional or DSCR.

Conventional is cheaper. DSCR is easier. Here's how to pick the right one.

I'm Bill McCoy, California mortgage broker (CA DRE #01212512) and rental property owner. I've closed both types dozens of times.

The Quick Comparison

Feature	Conventional Refi	DSCR Refi
Income verification	Yes (W-2s, tax returns)	No
DTI calculation	Yes	No
Credit score	680+	660+
Max LTV	75%	75-80%
Interest rate	6.75-7.0%	7.25-7.75%
Reserves	6-12 months	6-12 months
Best for	W-2 employees	Self-employed investors

Bottom line: Conventional saves you money if you qualify. DSCR gets it done when your income looks messy on paper.

Conventional Refi: The Cheaper Option

Conventional lenders verify everything — W-2s, tax returns, bank statements, employment. They calculate your debt-to-income ratio including all your properties.

You'll need:

• 700+ credit (680 minimum, 720+ for best rates)
• DTI under 43% with all debts counted
• 6-12 months reserves per investment property
• 2 years of tax returns with Schedule E
• Signed lease and 12 months of rent deposits

The rental income offset: If you can document 12+ months of rental income, lenders credit 75% of rent against the mortgage payment on your DTI.

Example: $3,000/month rent, lender credits $2,250. New payment is $2,500. Net DTI impact: just $250/month.

The catch? If you own multiple properties, those reserves add up fast. Three rentals at $2,500/month with 6 months required = $45,000 sitting in the bank.

DSCR Refi: The Easier Path

DSCR lenders don't care about your W-2s. They care about one number:

DSCR = Monthly Rent / Monthly PITIA

That's it. If the property covers its own debt, you qualify.

Example:

• Monthly rent: $4,000
• PITIA (mortgage + taxes + insurance): $3,200
• DSCR: $4,000 / $3,200 = 1.25 — you're approved

No need for: W-2s, paystubs, tax returns, or employment verification.

Minimum requirements:

• 660+ credit (700+ for best rates)
• DSCR of 1.0 to 1.25 depending on lender
• Current lease or market rent appraisal
• 6-12 months reserves

Broker's Tip: If you're self-employed with heavy write-offs, DSCR is often your better play. Your tax returns might show $60K in income while you're actually earning $200K. DSCR ignores all of that and judges the property on its own merits.

When to Choose Conventional

• You're a W-2 employee with clean, straightforward income
• You want the lowest possible rate (0.25-0.75% cheaper)
• You have few properties and reserves aren't a stretch
• Your DTI is comfortable even with multiple mortgages

When to Choose DSCR

• You're self-employed or have complex income
• You own 5+ properties and DTI is maxed out
• Your tax returns don't reflect your real earnings
• You want to close faster with less paperwork
• The property cash flows well (strong DSCR)

Can You Switch Between Them?

Absolutely. I've had clients start on conventional, hit a DTI wall at property #4, then switch every future refi to DSCR.

You can even refinance the same property from one type to the other. Bought with conventional, refi later into DSCR when you've added more properties and DTI is tight.

Full guide to DSCR loans | All investment property loan options

Get a Free Quote on Both Options

I'll run your numbers through conventional and DSCR lenders to find the best rate and terms for your specific situation.

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Read next: How to refinance an investment property in California | DSCR vs. conventional deep dive

Better Offers Inc | CA DRE #01212512