DSCR vs Conventional: Which One for Your Rental?

Two ways to finance a rental property. Here's how they actually compare.

The Comparison

| | Conventional | DSCR |
|---|---|---|
| What they look at | Your W-2s, DTI, tax returns | Property's rental income |
| Rates (2026) | 6.5-7.25% | 6.75-8.5% |
| Down payment | 15-25% | 20-25% |
| Max properties | 10 (Fannie/Freddie limit) | No limit |
| Closing speed | 30-45 days | 21-30 days |
| Self-employed friendly | Not really | Very |
| DTI matter? | Yes, max 45-50% | No |

Use Conventional When:

• It's your 1st-4th investment property
  - You have strong W-2 income and low DTI
  - You want the lowest possible rate
  - You can document income easily

Use DSCR When:

• You own 5+ properties (DTI is maxed)
  - You're self-employed and write off everything
  - The property cash flows well (1.2x+ DSCR)
  - You want to close fast without income docs
  - You're scaling a portfolio

The Real Secret

Many investors use both. Conventional for the first few properties while DTI allows it, then switch to DSCR once their debt-to-income maxes out. That's the smart play.

The rate premium on DSCR (0.25-1.5% higher) is worth it when the alternative is "denied."

Need help figuring out which fits your deal? Run the numbers →

Bill McCoy | Better Offers Inc | CA DRE #01902006