← Back to BlogMay 20269 minDan White
Conventional Investment Loan vs DSCR Loan: Which Is Better?
Both conventional and DSCR loans are legitimate tools for rental property financing. The best choice depends on your income documentation, how many properties you own, and whether you're buying in an LLC. Here's how they compare.
Market Context
Live Market Data
Washington, DC Housing Market
Cool Market
Data through Mar 2026
Median Sale Price
$590,000
+0.8% YoY
Median Days on Market
44 days
lower = faster market
Sale-to-List Ratio
99.7%
buyers' market
Homes Sold
4,457
last reported month
Source: Redfin Data Center. Updated monthly. Data reflects Washington, DC residential sales.
redfin.comConventional Investment Loan
- Qualification: Your personal income, DTI (max 45%), credit score, and employment history
- Rate: Typically 0.5–1.0% lower than DSCR
- Down payment: 15–25% for investment properties
- LTV: Up to 85% for SFR investment, 75–80% for multifamily
- Fannie/Freddie limit: Maximum 10 financed properties under conventional guidelines
- Entity: Must be in personal name — not LLC
- Process: Full documentation — W-2s, tax returns, employment verification
DSCR Loan
- Qualification: Property income covers debt service (1.20–1.25 DSCR minimum)
- Rate: 0.5–1.0% higher than conventional
- Down payment: 20–25%
- No property limit: Scale indefinitely without hitting DTI caps
- Entity friendly: Can close in LLC
- Process: Lease and rent schedule only — no personal income docs
Run Your DSCR Ratio Before Applying
Freddie calculates your DSCR and tells you whether you qualify for financing — free before you talk to any lender.
Check My DSCR Free →Which to Use When
Properties 1–4: Use conventional for the lower rate. Properties 5+: DSCR becomes the primary tool as conventional DTI limits tighten. LLC purchases: DSCR is your only option. Self-employed investors with complex tax returns: DSCR avoids the income documentation challenge entirely.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been investing in real estate for 20+ years.