🔓 How to Qualify for a DSCR Loan (Even If You’re Self-Employed or Retired)
⚠️ 5 Common Mistakes Investors Make With DSCR Loans (And How to Avoid Them)
Why they’re higher than traditional — and why serious investors still choose them.
One of the first questions real estate investors ask about DSCR loans is:
👉 “What are the rates like?”
Here’s the truth: DSCR loans do have higher interest rates than conventional mortgages — but that’s because they’re built for flexibility, not cookie-cutter borrowers.
The real question isn’t just “What’s the rate?” — it’s “What’s the return?”
Let’s break down how DSCR loan rates compare, what affects them, and how to think like an investor when evaluating the cost.
✅ Are DSCR Rates Higher Than Traditional Mortgages?
Yes — and here’s why:
DSCR loans are:
- Non-QM (non-qualified mortgages)
- Risk-based, since no personal income is documented
- Designed for investors, not owner-occupants
- Often used in LLCs or for short-term rentals
💡 In exchange, you get:
- No income docs
- No DTI calculation
- Unlimited property potential
- And the ability to close even if a traditional lender says no
📉 What Impacts Your DSCR Rate?
Several factors influence your exact rate, including:
| Factor | Effect on Rate |
|---|---|
| DSCR Ratio | Higher = lower rate |
| Credit Score | Higher = lower rate |
| Down Payment | More = lower rate |
| Property Type | STRs or condos may be higher |
| Occupancy Type | Investment = higher than primary |
| Loan Term | ARM vs. fixed options |
📘 Rates also vary based on lender overlays, loan amount, prepay penalties, and your portfolio profile.
🔢 Example (For Context Only)
While we can’t quote exact rates without a personalized quote, here’s how it typically compares:
| Loan Type | Rate Range (Approximate) |
|---|---|
| Conventional (owner-occupied) | Lower (prime market rates) |
| Conventional (investment property) | Higher than owner-occ |
| DSCR Loan | Usually 0.75%–1.50% higher than investment conventional |
✅ The higher rate is offset by the reduced paperwork and unlimited scaling potential.
🧠 How Investors Think About DSCR Rates
Smart investors look at:
- Cash-on-cash return
- Net operating income (NOI)
- DSCR ratio and leverage potential
- Time saved vs. conventional process
- Opportunity cost of waiting or not buying
📘 You’re not buying a low rate — you’re buying an asset that performs.
🔄 Can You Refinance Into a Lower Rate Later?
Absolutely. Many investors:
- Use DSCR loans to acquire quickly
- Refi into traditional loans later when they qualify
- Or cash-out refi with better DSCR terms after value or rent increases
Think of it as transactional leverage — buy now, optimize later.
🏢 Why PRMI?
We help investors:
- Understand rate tiers and pricing strategy
- Choose between ARMs, fixed options, or interest-only
- Get rate quotes tailored to your deal structure
- Make sense of the ROI — not just APR
We price like investors — not just lenders.
👇 Want to See Your Estimated DSCR Rate Based on Credit and Property?
Let’s run a soft credit pull, review your deal, and give you real insight on rate options — no obligations.