DSCR loan rates commonly run above conventional mortgage rates, often by about half a point to two points, because the loans are priced for private investors rather than Fannie Mae or Freddie Mac. Your rate is a base price that moves with the bond market, plus adjustments for your credit score, leverage, DSCR, loan size, property type, prepayment penalty and points. A strong file prices closest to conventional; a thin one pays the most.
How DSCR rates are set
A DSCR loan is a non-QM loan: it falls outside the qualified mortgage rules and is not bought by Fannie Mae or Freddie Mac. Lenders sell these loans to private investors, often pooled into mortgage-backed securities, and those investors price each risk separately. Every DSCR lender publishes a daily rate sheet: for each rate, a price in points, then a grid of adjustments by score, leverage, ratio, loan size, property, prepayment term and more.
Your quote is that grid applied to your file. Two investors buying identical houses on the same day can get rates half a point or more apart because of their scores, down payments or prepayment choices.
Where rates are anchored
DSCR rates follow long-term bond yields, not the Federal Reserve's overnight rate directly. The investors who buy the loans compare them with the 10-year Treasury and with agency mortgage bonds, so when those yields rise, rate sheets reprice, sometimes within a day.
Two public benchmarks, as examples of where things stood when this page was updated:
- The 10-year Treasury yield closed at 4.91% on November 2, 2026.
- Freddie Mac's weekly average for a 30-year fixed loan on a primary home was 7.24% on October 29, 2026.
Both are published free on FRED, the St. Louis Fed's data site. A DSCR quote sits above the primary-home average: by a fraction of a point for the strongest files, and by two points or more for weak ones.
What moves your DSCR rate
| Factor | Prices better | Prices worse | Notes |
|---|---|---|---|
| Credit score | 740 and up | Below 700 | Steps roughly every 20 points |
| Loan-to-value ratio | 70% or less | 80% to 85% | Each 5 points of leverage can cost |
| DSCR | 1.25 and up | Below 1.00, or no ratio | Sub-1.00 and no-ratio cost the most |
| Prepayment penalty | 5 years | None | A shorter penalty commonly costs 0.25% to 0.75% in rate |
| Loan size | Mid-size loans | Small loans, very large loans | Small loans carry fixed costs |
| Property | Single-family | Condo, 2 to 4 units, rural, condo-hotel | Varies by program |
| Rental type | Long-term | Short-term | Commonly 0.125% to 0.25% higher |
| Purpose | Purchase, rate-and-term | Cash-out | Cash-out adds risk and price |
| Payment | Fixed, fully amortizing | Interest-only | ARMs may start lower than fixed |
| Points | Discount points paid | Lender credit taken | The rate and points trade |
| Lock length | 30 days | 60 days or more | Longer locks cost more |
Ownership in an LLC rarely moves the price by much. Some states cost more because of local rules on prepayment penalties or foreclosure timelines. The score and leverage lines are the same ones that decide whether you qualify at all, set out in DSCR loan requirements, and short-term rental pricing has its own page, DSCR loans for short-term rentals.
Points, par and buy-downs
A point is 1% of the loan amount paid at closing. On a DSCR loan you will see two kinds:
- Origination points pay the lender or broker for making the loan, commonly 1 to 2 points.
- Discount points buy the rate down, each commonly by about 0.25% to 0.5%, depending on the rate sheet that day.
Par is the rate that costs no discount points and earns no credit. Below par you pay points; above par the lender pays you a lender credit toward closing costs. The same rate sheet prices both directions, so a "no-cost" loan is a loan above par.
Whether a point pays off depends on how long you keep the loan, and a DSCR loan's prepayment penalty and your refinance plans set that horizon.
Is one point worth it on the example rental?
The loan: $300,000 for 30 years. Par is 7.50% and one point ($3,000) buys 7.25%. Both rates are examples.
| Par: 7.50% | Bought down: 7.25% | |
|---|---|---|
| Monthly principal and interest | $2,097.64 | $2,046.53 |
| Paid at closing for the rate | $0 | $3,000 |
Monthly saving: $2,097.64 minus $2,046.53 is $51.11. Simple break-even: $3,000 ÷ $51.11 = about 59 months.
A fuller test adds up interest paid plus the point, which captures the extra principal the lower rate pays down each month:
| Years you keep the loan | Par: interest | 7.25%: interest plus the point | Who wins |
|---|---|---|---|
| 2 | $44,598 | $46,092 | Par, by $1,494 |
| 3 | $66,558 | $67,295 | Par, by $737 |
| 4 | $88,269 | $88,247 | About even |
| 5 | $109,711 | $108,928 | The point, by $783 |
| 10 | $212,102 | $207,515 | The point, by $4,587 |
If you might sell or refinance within four years, skip the point.
DSCR rates vs conventional rates
| DSCR loan | Conventional investment loan | |
|---|---|---|
| Who buys the loan | Private investors | Fannie Mae or Freddie Mac |
| How risk is priced | A lender's grid of adjustments | The agencies' loan-level price adjustments |
| Rate | Higher | Lower for a documented borrower |
| Prepayment penalty | Common, and it lowers the rate | None |
| Points | Commonly 1 to 2 origination points | Varies |
| Qualifying | The rent | Your income and debt-to-income ratio |
The gap is narrower than it looks. A conventional investment property loan is not priced at the primary-home rate you see advertised: the agencies charge extra for investment occupancy, for higher leverage and for cash-out, so an investor's real conventional rate starts above the headline. For a borrower with strong W-2 income and few properties, conventional still usually wins on price. For a self-employed investor, an LLC buyer or anyone past the agencies' 10 financed properties, the DSCR loan is often the only one on offer.
Fixed, adjustable or interest-only
- 30-year fixed is the default. Some lenders offer 40-year terms, often with an interest-only period.
- ARMs such as a 5/6 or 7/6 hold the rate for five or seven years, then adjust every six months within caps. They often start below the fixed rate and suit a planned sale or refinance inside the fixed period.
- Interest-only periods, often 10 years, lower the payment during that time. On the example $300,000 loan at 7.50%, the interest-only payment is $1,875.00 against $2,097.64 fully amortizing. Many lenders compute the DSCR on the interest-only payment, which raises the ratio, and the price is commonly a little higher.
How the rate changes your DSCR
The example rental at five rates
The house rents for $3,250 a month, with $350 of taxes and $150 of insurance on a $300,000, 30-year loan. Rates are examples.
| Rate | Principal and interest | PITIA | DSCR |
|---|---|---|---|
| 7.00% | $1,995.91 | $2,495.91 | 1.30 |
| 7.25% | $2,046.53 | $2,546.53 | 1.28 |
| 7.50% | $2,097.64 | $2,597.64 | 1.25 |
| 7.75% | $2,149.24 | $2,649.24 | 1.23 |
| 8.00% | $2,201.29 | $2,701.29 | 1.20 |
Each quarter point moves the ratio about 0.02 or 0.03. At 7.50% the file sits exactly on the common 1.25 pricing tier; a quarter point higher drops it under the line, which can cost a little more again.
How to calculate DSCR shows the same math in a spreadsheet, and how to back into the largest loan a rent supports.
Rate locks
A quoted rate floats with the market until it is locked. When a lender locks varies: at application, once the appraisal is ordered, or later. Locks commonly run 30 to 45 days, and an extension costs a fee, so match the lock to the appraisal and closing dates.
A lock covers the market, not your file. If the appraisal comes in low, the rent figure is lower than expected, your credit changes, or a flood insurance requirement or HOA fee appears, the price can still change after the lock.
How to compare DSCR loan quotes
Business-purpose loans fall outside the federal disclosure rules, so a lender does not have to give you a Loan Estimate or an APR. Compare offers on paper you build yourself:
- Get a written, itemized term sheet from each: rate, points, every lender fee, the prepayment penalty, the lock period and its extension cost, reserves, and the DSCR and loan-to-value ratio they priced.
- Ask for the same structure from each lender: the same loan amount, prepayment term and points.
- Separate the lender's fees from title, escrow and prepaid items, which are the same whoever lends.
- Price the total cost over your expected hold: interest plus points and fees, plus any penalty if you will exit inside the window.
- Check the lock trigger and what happens if the appraisal or rent comes in low.
How DSCR prepayment penalties work shows how to price the penalty side of that comparison, year by year.
How to get a lower DSCR rate
- Raise your score before the pull, especially if a tier is close.
- Bring more down to reach a lower leverage tier, commonly 75% or 70%.
- Push the ratio to 1.25 or more: shop the insurance, check the tax bill, document the rent.
- Take a longer prepayment penalty if you will hold past it.
- Buy points only if you will keep the loan past the break-even.
- Avoid very small loans, which price worse.
- Shop several lenders at once for the same structure. A broker prices the file against many rate sheets in one pass; GoDoor's quote calculator gives an estimate on your own numbers first.
Frequently asked questions
Why are DSCR loan rates higher than conventional rates?
DSCR loans are sold to private investors instead of Fannie Mae or Freddie Mac, with no government-backed guarantee behind them, and the borrower's income is not verified. The investors price that risk into the rate and want protection against early payoff, which is why prepayment penalties are common. Strong files narrow the gap, and conventional investment loans carry their own extra charges.
Do DSCR loan rates follow the Fed?
Indirectly. DSCR rates track long-term bond yields, chiefly the 10-year Treasury and mortgage-backed securities, which react to inflation, the economy and expectations about the Federal Reserve. A Fed rate cut does not lower DSCR rates by the same amount, and they can even rise after a cut if long-term yields move up.
Are DSCR rates higher for short-term rentals?
Usually a little. Short-term rentals commonly price about 0.125% to 0.25% above the same loan on a long-term rental, and many programs also lend about 5 points less, so you put more down. Some lenders price short-term rental income with no extra charge but use a lower share of the projected income.
Can I refinance a DSCR loan if rates drop?
Yes, but run the numbers first. A refinance inside the prepayment window triggers the penalty, often 1% to 5% of the balance, and a new loan brings new closing costs and points. Add those up and divide by the monthly saving to see how long the new rate takes to pay for itself.
Is it worth buying down a DSCR rate?
Only if you will keep the loan long enough. Divide the cost of the points by the monthly saving to get a rough break-even in months, then compare it with how long you expect to hold before selling or refinancing. On a DSCR loan with a penalty that ends in three to five years, many investors refinance soon after it ends.
How often do DSCR rates change?
Lenders publish new rate sheets every business day, and they can reprice during the day when bond yields move sharply. That is why a quote is only an estimate until the rate is locked, and why the lock period and its extension cost matter as much as the rate itself.
Sources
- FRED, Federal Reserve Bank of St. Louis: 30-year fixed rate mortgage average (Freddie Mac survey)
- FRED, Federal Reserve Bank of St. Louis: 10-year Treasury constant maturity rate
- Consumer Financial Protection Bureau: How to use lender credits and points
- Consumer Financial Protection Bureau: Regulation Z, 1026.3, business-purpose credit
- BiggerPockets forum: Getting a real rate lock on a DSCR loan
- BiggerPockets forum: Comparing DSCR loan offers
General education, not financial, tax or legal advice. Figures are examples: rates, rules and programs change, and every lender sets its own. Last checked November 4, 2026.