DSCR Loan Rates
DSCR rates sit above conventional by design. Here is what sets yours, and which levers actually move it.
By Mike Basti, Licensed Mortgage Broker (NMLS #377740) · Updated September 2026
Why DSCR Rates Sit Above Conventional
A DSCR loan typically prices 1% to 2% above a comparable conventional investment property loan. The premium is not arbitrary — the lender is underwriting a property rather than a borrower, forgoing tax returns, employment verification and personal debt-to-income analysis.
That trade is deliberate. Investors with heavy depreciation write-offs frequently show minimal income on paper, and conventional underwriting reads that as inability to repay. The rate premium buys an approval that would otherwise not exist.
The Five Factors That Move Your Rate
| Factor | Effect on rate | Practical range |
|---|---|---|
| DSCR ratio | Largest single driver | 1.25+ earns best pricing; below 1.00 adds 0.5–1.5% |
| Loan-to-value | Lower LTV, lower rate | 65% LTV can price 0.5% below 80% |
| Credit score | Tiered, like conventional | 700+ meaningfully better than 660 |
| Property type | Single-family cheapest | 2–4 unit and condo add a premium |
| Prepayment penalty | Accepting one lowers the rate | A 5-year penalty can cut 0.25–0.5% |
Points Versus Rate
Nearly every DSCR quote comes with a points option, and the trade is steeper than on conventional. Paying one point often buys 0.25% to 0.375% on a DSCR loan.
The maths is simple: divide the point cost by the monthly saving to get your break-even in months. If you intend to sell or refinance before that point, paying points loses money. Investors who plan a 3-year hold should usually decline points; a 10-year hold usually justifies them.
The prepayment penalty trade
Accepting a longer prepayment penalty is the cheapest way to lower a DSCR rate — often 0.25% to 0.5% for a 5-year step-down. It is also the easiest way to trap yourself. If there is any chance you sell inside five years, take the higher rate. Buying out of a penalty later costs far more than the rate saving.
What Does Not Move Your Rate
Your personal income, employment history and tax returns are irrelevant to DSCR pricing — the lender never looks at them. Nor does the number of properties you already own, which is precisely why investors move to DSCR after hitting the ten-property conventional cap.
Getting an Accurate Quote
DSCR rates move daily with the wider market, so a rate quoted last week is not a rate today. Ask for pricing on the same day across lenders, and insist the quote states the DSCR ratio it assumes — a quote built on 1.25 is meaningless if your property runs 1.05.
Run your ratio first with the DSCR calculator so you can tell whether a quote is realistic for the property you actually have.
Related Pages
Frequently Asked Questions
What are DSCR loan rates right now?
DSCR loans typically price 1% to 2% above a comparable conventional investment property loan. Rates move daily with the wider bond market, so quotes are only comparable if gathered on the same day. Your specific rate depends most on the DSCR ratio, loan-to-value and credit score.
Why are DSCR rates higher than conventional?
Because the lender underwrites the property rather than the borrower, forgoing tax returns, employment verification and personal debt-to-income analysis. The premium buys an approval that conventional underwriting would decline for investors whose write-offs suppress reported income.
How can I lower my DSCR loan rate?
Raise the DSCR ratio toward 1.25, reduce the loan-to-value, improve your credit score past 700, or accept a longer prepayment penalty. The penalty trade is the cheapest lever at roughly 0.25% to 0.5% for a five-year step-down, but only if you are certain you will not sell early.
Do DSCR loans have points?
Nearly always as an option. One point typically buys 0.25% to 0.375% on a DSCR loan, a steeper trade than conventional. Divide the point cost by the monthly saving to find your break-even — a three-year hold usually argues against points, a ten-year hold usually for them.
Does my credit score affect a DSCR rate?
Yes, in tiers much like conventional lending. Most programmes start at 620 with materially better pricing at 700 and above. Because no income is evaluated, credit and the DSCR ratio carry proportionally more weight than they would on a full-documentation loan.
Is an interest-only DSCR loan cheaper?
The monthly payment is lower, which raises your DSCR ratio and can improve pricing indirectly, but the rate itself is usually slightly higher on an interest-only structure. It suits investors optimising for cash flow during a defined hold period rather than long-term cost.
Educational information only, not a commitment to lend. Program terms vary by lender and are subject to credit approval. Figures reflect 2026 program limits. Sources: FHFA, HUD, VA, CFPB, California DRE. Sponsored by Save Financial, Inc. (NMLS #377740). California DRE #01875766. Equal Housing Lender.
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