How does a DSCR loan compare to a conventional investment property loan?
A conventional investment loan qualifies you on your own income and tax returns, while a DSCR loan qualifies the property on whether its rent covers the payment. The Lindley Team's David Chandler runs both for the same deal; if you qualify conventionally and it's your first or second rental, conventional usually prices better, and DSCR wins when your returns are complicated, your portfolio is growing, or you want to close in an LLC.
By The Lindley Team. Last updated October 19, 2026.
What a DSCR loan is
DSCR stands for debt service coverage ratio. Put plainly, it's the property's monthly rent divided by its monthly payment, where the payment includes principal, interest, taxes, insurance and any HOA dues.
At 1.0, the rent covers the payment exactly. Most programs want somewhere between 1.0 and 1.25, and the best terms start at 1.25 and up. Your personal income never enters the math, so there are no tax returns, no W-2s and no debt-to-income ratio.
This is a mortgage where your tax return can stay in the drawer.
If the property isn't rented yet, the appraiser's market rent schedule (Form 1007) sets the rent figure. Some programs count short-term rental income and others use long-term market rent only, so tell us up front if that's your plan.
How a conventional investment loan works
A conventional loan looks at you. It counts only part of the rent toward your income, and it still looks at your personal debts. On a purchase, Fannie Mae's rules count 75 percent of the monthly rent, then subtract the property's payment. Conventional investment loans also generally need more down than a primary home.
Conventional deserves its credit. If you qualify on your returns and this is your first or second rental, it usually prices better. That's the one we'd pick. Where it gets harder is as the portfolio grows, because conventional guidelines start fighting you once you own several financed properties.
Side by side
| Conventional investment | DSCR | |
|---|---|---|
| Who is qualified | You | The property |
| Income proof | Your income, with part of the rent counted | The property's rent against its payment |
| Tax returns | Yes | No tax returns, no W-2s, no debt-to-income ratio |
| Down payment | More than a primary home | Typically 20 to 25% |
| Credit | Ask us | 660 and up; 700 and up improves pricing |
| Property type | Primary, second and investment homes | 1 to 4 unit residential investment |
| Closing in an LLC | Ask us | Works on most programs |
| Property count | Guidelines get harder as your portfolio grows | The ratio is figured property by property |
| Cost | Usually prices better for a first or second rental | Higher rates than owner-occupied conventional |
The limits on both sides
A conventional loan's limits come from your side of the file. Only part of the rent counts, your personal debts still count, the down payment is more than on a home you live in, and the guidelines get harder with each financed property.
A DSCR loan's limits come from the property's side. Rates run higher than on owner-occupied conventional loans, the down payment is typically 20 to 25 percent, a property that doesn't cash flow doesn't qualify, and prepayment penalties are common on the best-priced programs.
Which one fits you
Conventional is likely the better pick if:
- this is your first or second rental,
- your tax returns show the income you need,
- you want the better price and don't need to close in an LLC.
A DSCR loan is likely the better pick if:
- your returns are complicated, or you'd rather your personal income stay out of it,
- your portfolio is growing and conventional guidelines are starting to push back,
- you want to close in an LLC, and the property's rent covers its payment at 1.0 or better.
We'll run both for the same property, say which we'd pick, and leave the call to you.
How it works with us
- Run the ratio. The address and the expected rent are all we need to start.
- Structure. Purchase or cash-out refinance, your name or an LLC, and the trade-offs on a prepayment penalty.
- Appraisal and rent schedule. The appraiser confirms the value and the market rent.
- Closing. If you're building a portfolio, a cash-out DSCR refinance can fund the next purchase.
We manage the file from the first ratio to closing, which covers the appraisal, the rent schedule and the paperwork for your name or your LLC.
Frequently asked questions
What is a DSCR loan? A DSCR loan qualifies an investment property on whether its rent covers its payment, not on your personal income. DSCR stands for debt service coverage ratio: monthly rent divided by the monthly payment of principal, interest, taxes, insurance and HOA dues.
Can I buy a rental property without showing my personal income? You may, with a DSCR loan. It uses the property's rent instead of your income, so there are no tax returns, no W-2s and no debt-to-income ratio.
What credit score do I need for a DSCR loan? Most DSCR programs start at 660, and a score of 700 or higher improves pricing.
How much down payment do I need for an investment property in Oregon? A DSCR loan typically needs 20 to 25 percent down. A conventional investment loan generally needs more down than a primary home, and the exact minimum depends on the property, so we'll confirm it for yours.
Can I use rental income to qualify for a mortgage on a second property? Yes, in both loans, in different ways. A conventional loan counts part of the rent toward your income and still looks at your personal debts, while a DSCR loan qualifies the property on its own rent.
Can I close a DSCR loan in an LLC? Yes, on most DSCR programs. Wanting to close in an LLC is one of the cases where we'd point you to DSCR over conventional.
Run the ratio on your next rental
Tell us the address and the expected rent, and we'll run the ratio.
Related: DSCR loans · Investment property loans · Conventional loans
Sources
All retrieved October 19, 2026.
- The Lindley Team program pages: /services/dscr, /services/investment and /services/conventional
- Fannie Mae Selling Guide B3-3.8-02, Rental Income from the Subject Property (dated 09/02/2026 on the page): https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property
The Lindley Team at Movement Mortgage, LLC. Movement Mortgage, LLC is an Equal Housing Lender. NMLS ID #39179 (www.nmlsconsumeraccess.org). David Chandler NMLS #265974 - Brianna Lindley NMLS #1367416. Interest rates and products are subject to change without notice and may not be available at the time of loan commitment or rate lock. This is not a commitment to lend; terms and conditions apply; not all applicants will qualify. Licensed in OR & WA. Movement Mortgage, LLC, 10135 SE Sunnyside Rd, Suite 125, Clackamas, OR 97015.