There's no single "DSCR rate." Every quote is built from your scenario: credit score, down payment, the property's cash flow, loan size, and the prepayment penalty you choose. Knowing how each piece moves the price is the fastest way to get a better one.
Why You Won't Find a Rate Table Here
DSCR pricing changes daily, sometimes more than once a day, and it varies from lender to lender. A table posted last month is already wrong, and an average rate tells you very little about your deal. Two investors buying the same house can get quotes that are well apart because one has a 760 credit score and 25% down and the other has a 680 and 20% down.
So instead of a number that goes stale, this guide explains what drives the number. When you're ready, send me your scenario and I'll quote it live.
1. Credit Score
Credit is usually the biggest single factor. DSCR lenders price in tiers, often in 20-point bands such as 660–679, 680–699, 700–719, 720–739, and 740+. Moving up one band can noticeably improve your rate, so if you're a few points below a cutoff, it can be worth paying down a card balance before your credit is pulled.
Tip: Lenders typically use the middle of your three bureau scores. If you have co-borrowers, many lenders use the highest middle score among the guarantors on an LLC loan, but rules vary, so ask before you decide who signs.
2. Loan-to-Value (Your Down Payment)
LTV is the loan amount divided by the property's value. Less leverage means less risk for the lender, and better pricing for you. Pricing tends to step up at each 5% of LTV, for example from 65% to 70% to 75% to 80%. Cash-out refinances generally price higher than purchases at the same LTV.
3. Your DSCR
The ratio itself affects pricing. A property at 1.25x or higher usually gets better terms than one at 1.00x, and ratios below 1.00x, where allowed, cost more. You can improve the ratio by putting more down, choosing an interest-only option, or documenting higher market rent. Run your numbers in the DSCR calculator to see where you land.
4. Prepayment Penalty
Most DSCR loans on investment properties carry a prepayment penalty, and it's one of the biggest levers you control. A longer penalty, such as five years, usually gets you a lower rate. A shorter penalty or none at all costs more. Common structures include:
- 5-4-3-2-1: 5% of the balance if paid off in year one, stepping down to 1% in year five.
- 3-2-1: a three-year step-down.
- 1 year or no penalty: the most flexibility and the highest price.
The right choice depends on your plan. If you expect to sell or refinance within two years, paying for a shorter penalty is often cheaper overall than paying the penalty itself. Some states limit or prohibit prepayment penalties, so the options depend on where the property is.
5. Loan Size
Very small loans, often under about $150,000, can carry higher pricing because the lender's fixed costs are spread over less balance. Very large loans can move into jumbo pricing tiers. Mid-range loan amounts usually price best.
6. Property Type
A single-family rental is the baseline. Two-to-four unit properties, condos (especially non-warrantable ones), and short-term rentals can each add to the price. Rural properties and unique homes may also cost more or have lower maximum LTVs.
7. Loan Features
- Interest-only: lowers the payment and can raise your DSCR, but usually adds to the rate.
- Fixed vs. adjustable: 30-year fixed is the most common. Adjustable options such as a 5/6 or 7/6 ARM may price lower to start.
- Points: you can pay discount points up front to lower the rate. It makes sense if you'll hold the loan long enough to recoup the cost.
- Entity and citizenship: LLC borrowing usually doesn't change pricing much, while foreign national loans generally price higher.
How to Get a Better DSCR Rate
- Check your credit first and see if you're close to the next tier.
- Price more than one down payment. Sometimes 25% down costs only slightly more cash than 20% but moves you into a meaningfully better tier.
- Match the prepayment penalty to your plan instead of defaulting to the shortest one.
- Document the strongest rent you can support. A signed lease above market rent, or a well-supported rent schedule, can improve your DSCR.
- Get insurance quotes early. Insurance goes straight into the payment, and a high premium can push your DSCR into a worse tier.
- Compare full costs, not just rate. Look at points, lender fees, and the penalty together.
DSCR Rate FAQ
Are DSCR rates higher than conventional rates?
Usually, yes. DSCR loans don't use income documentation, so lenders price in more risk. For investors who can't qualify conventionally, or who are past conventional loan limits, the DSCR loan is often the only practical option.
Can I get a quote without a hard credit pull?
Yes. I can price a scenario from an estimated credit score with no credit pull. A credit report is only pulled once you decide to move forward and authorize it.
Can I refinance later if rates drop?
Yes, but check the prepayment penalty first. Refinancing during the penalty period means paying it, which can wipe out the savings.
Do DSCR lenders charge more for an LLC?
Most lenders price LLC loans the same or nearly the same as loans in your personal name. You'll still sign a personal guarantee.
In the financial industry since 2015. Licensed loan officer in Los Angeles, California. NMLS #1493724, with UTM Financial, LLC (NMLS #2591548). More about Ivan
This article is general education, not financial, tax, or legal advice. Loan guidelines vary by lender and change often. Not a commitment to lend.