Both can work for rental property investors. But 85% of Lineage investors choose DSCR. Here is a side-by-side comparison so you can decide which financing path fits your situation.
Two Paths to the Same Destination
Both loan types can finance rental properties. Why the choice matters more than most investors realize comes down to how each lender evaluates you -- and how that evaluation changes as your portfolio grows.
What Is a DSCR Loan?
DSCR loans qualify based on property income, not personal income. The DSCR ratio (Net Operating Income divided by Annual Debt Service) tells the lender whether the property can cover its own mortgage. Most lenders want a DSCR of 1.0 or higher.
What Is a Conventional Mortgage for Investment Properties?
Conventional mortgages qualify based on personal income and debt-to-income ratio, following Fannie Mae / Freddie Mac guidelines. They typically cap at 10 financed properties.
Side-by-Side Comparison
- Income verification: DSCR (property only) vs. Conventional (personal)
- Down payment: DSCR (20-25%) vs. Conventional (15-25%)
- Interest rates: DSCR (7-9%) vs. Conventional (6-7.5%)
- Closing speed: DSCR (15-25 days) vs. Conventional (30-45 days)
- Portfolio scalability: DSCR (unlimited) vs. Conventional (capped at 10)
- Documentation: DSCR (minimal) vs. Conventional (extensive)
When DSCR Wins
- Self-employed or complex income structures
- Scaling beyond 4-5 properties
- Out-of-state investing where speed matters
- Competitive markets requiring fast closing
When Conventional Wins
- First or second property with strong W-2 income
- Rate sensitivity where every basis point matters
- Primary residence conversion to rental
The Hybrid Approach
Most sophisticated investors use both. Start with conventional financing for your first one or two properties to capture the lower rates. Switch to DSCR as you scale beyond what conventional lenders will approve.
Choosing the Right Path
The best loan is the one that matches your portfolio stage. Compare quotes side by side for every deal, and pick the option that lets you keep buying.