DSCR loan vs. Conventional loan
For investment property, the question is whose income carries the loan — yours or the property's. A DSCR loan qualifies on the rental's debt-service coverage ratio (rent ÷ PITI) and needs no personal income documentation. A conventional loan uses your personal income and DTI, at a lower rate but with more scrutiny.
DSCR shines for investors with complex personal income or many properties; conventional shines for a buyer with clean W-2 or documentable income and room in their DTI.
Side by side
| Factor | DSCR loan | Conventional loan |
|---|---|---|
| Qualifies on | Property rent (DSCR = rent ÷ PITI) | Your personal income and DTI |
| Personal income docs | None required | Full (W-2s or tax returns) |
| Down payment | 20–25% typical | 15–25% for investment property |
| Minimum credit | 620–660+ | 620+ (higher for investment) |
| Rate vs. conventional | ~1–2% higher | Baseline (lowest) |
| Property count limit | Often unlimited | Capped (typically 10 financed) |
Figures are representative ranges, not quotes, and vary by lender. Read the full guides: DSCR loan · Conventional loan.
Who should pick dscr loan
Investors who are self-employed, write off heavily, already hold several financed properties, or simply don't want to document personal income — the property's cash flow does the qualifying.
Who should pick conventional loan
Buyers with clean, documentable personal income and DTI headroom who want the lowest rate and are within the financed-property cap.
Bottom line
Still deciding? Take the 5-question loan quiz, compare every option on the loan types page, or size a purchase with the affordability calculator.
FAQ
Most lenders want 1.0–1.25 or higher, meaning the rent covers at least 100–125% of the full PITI payment. Some lenders allow sub-1.0 ratios with a larger down payment or reserves, treating the shortfall as a compensating-factor question.
No — DSCR loans are for investment/rental property only, since they qualify on rental income. For a primary residence with non-traditional income, look at bank statement or conventional options instead.
Educational information only — not financial advice, and not a quote, pre-approval, or offer of credit. Mortgage Merlin is a publisher, not a lender or broker.