DSCR vs conventional loans is usually a trade: conventional can be cheaper; DSCR can be simpler to qualify and easier to scale for investors.
Quick comparison
- Qualification: conventional leans on personal income/DTI; DSCR leans on property cash flow.
- Rates/fees: conventional is often lower; DSCR often higher but more flexible.
- Scaling: DSCR can be easier for portfolios if rents support debt service.
When DSCR is usually better
- You’re self-employed and DTI documentation is painful.
- You’re scaling beyond what personal DTI will comfortably allow.
- You want the property to “stand on its own” for underwriting.
When conventional is usually better
- You qualify easily and want the lowest rate and fees.
- You’re buying a property that doesn’t DSCR well at today’s rates.
- You plan to hold long-term and minimize financing costs.