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DSCR vs conventional loans
When a DSCR loan beats a conventional investment property loan, and when it does not.
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Qualify on the rent, not your income. Send the deal and a loan officer follows up with your rate and terms.
Estimate only. Loan amount is up to 85% of the purchase price on purchases, or up to 80% of the appraised value on cash-out refinances. Minimum loan $150,000. Rate and final terms depend on the property, the rent and your credit. Business-purpose loans on investment property in Texas.
Side by side
| DSCR loan | Conventional | |
|---|---|---|
| Qualifies on | Property rent | Your income and debts |
| Tax returns | Not needed | Required |
| Borrow in an LLC | Yes | Usually not |
| Number of financed properties | Not capped by your income | Capped |
| Cash-out seasoning | None with us | Usually required |
| Rate | Usually somewhat higher | Usually lower |
Which one to use
If your tax returns show strong income and you own few properties, a conventional loan may be cheaper. If you are self-employed, own several properties, buy in an LLC or want to pull cash out right away, a DSCR loan is usually the better fit.
Questions investors ask
Are DSCR loans more expensive?
Usually somewhat, in exchange for no income documents, LLC ownership and no seasoning.