Financial
DSCR Loan Rates: The Complete Pricing Explainer
Why DSCR rates are 100-150 bps above conventional, the full LLPA grid (FICO, LTV, DSCR, property type, occupancy), how rate sheets work, and the math on buying down points.
DSCR loan rates are higher than conventional investment-property rates. That is a fact, not a complaint — and the premium has a specific structural explanation. Understanding why the rates are what they are, what inputs move them, and how to navigate a rate sheet is the difference between investors who overpay and investors who optimize.
This guide covers the full pricing stack: why DSCR rates exceed conventional, how the LLPA grid works, what each variable adds to your rate, how to read a rate sheet, and the math on buying down points vs. taking par.
Current baseline: As of April 2026, 30-year fixed DSCR rates for a 740 FICO / 75% LTV / 1.25+ DSCR borrower paying 1 point price around 6.24% at par, with the broader clean-file range running ~6.12%-7.50% depending on lender and daily market conditions. Check the live rates page for current quotes, as these move daily.
Why DSCR Rates Are Higher Than Conventional
The 100-150 bps premium over conventional investment-property rates is not arbitrary. Three structural factors explain it:
1. Non-QM (Non-Agency) Capital Markets Premium
Conventional investment-property loans are sold to Fannie Mae or Freddie Mac through the agency secondary market. Agency MBS trades at tight spreads — the government guarantee compresses investor risk. DSCR loans are non-QM products sold into private-label securitizations (PLMBS). These bonds carry no government guarantee. Bond buyers demand a 100-200 bps yield premium over agency MBS, and that premium is passed through to borrowers.
2. Income Documentation Waiver
A conventional investment-property loan verifies DTI, employment, tax returns, and Schedule E rental income. A DSCR loan verifies none of those. The lender accepts that they know less about the borrower’s ability to make payments if the property goes vacant. That incremental uncertainty is priced into the rate.
3. Investor-Property Default Risk
Investment properties default at higher rates than primary residences during economic stress — borrowers prioritize their home before their rentals. DSCR loans are exclusively investor-property loans. The elevated default risk in a downturn is priced into the spread.
The trade-off is explicit: You pay more for DSCR because you get no-income-documentation, LLC closing, unlimited properties, and faster speed. It is an efficiency and flexibility premium, not a rip-off.
The DSCR Rate Sheet: How It Works
A DSCR rate sheet is a pricing matrix that starts from a base rate and then adds or subtracts basis points (bps) based on loan characteristics. The add-ons are called Loan Level Price Adjustments (LLPAs).
The math works in one of two ways depending on the lender:
Rate-based adjustments: The LLPA is added to the note rate directly. If the base rate is 6.50% and your LLPAs total +0.625%, your rate is 7.125%.
Points-based adjustments: The LLPA is expressed as additional points at closing. More common on wholesale rate sheets. If you’re targeting a 7.00% rate and your LLPAs add 1.5 points, you can either pay those points or accept a higher rate that prices at par.
Most rate sheets express adjustments in both forms because borrowers choose their combination of rate and points at lock.
The Full LLPA Grid
These are the standard LLPAs across the major DSCR programs in 2026. Values are representative ranges — individual lenders vary, and some lenders bundle LLPAs differently.
FICO Add-Ons
| FICO Range | Rate Add-On vs. 740 Baseline |
|---|---|
| 780+ | -0.00 to -0.125% |
| 760–779 | 0.00% (baseline often stated here) |
| 740–759 | 0.00–0.125% |
| 720–739 | +0.125–0.25% |
| 700–719 | +0.25–0.375% |
| 680–699 | +0.375–0.50% |
| 660–679 | +0.50–0.75% |
| 640–659 | +0.75–1.00% |
| 620–639 | +1.00–1.50% |
LTV Add-Ons
| LTV | Rate Add-On vs. 65% Baseline |
|---|---|
| ≤60% | -0.125% |
| 60.01–65% | 0.00% (baseline) |
| 65.01–70% | +0.125–0.25% |
| 70.01–75% | +0.25–0.375% |
| 75.01–80% | +0.375–0.625% |
DSCR Add-Ons
| DSCR Band | Rate Add-On vs. 1.25+ Baseline |
|---|---|
| 1.50+ | 0.00% (some lenders discount) |
| 1.25–1.49 | 0.00% (baseline) |
| 1.10–1.24 | +0.125–0.25% |
| 1.00–1.09 | +0.25–0.50% |
| 0.75–0.99 (sub-1.0) | +0.50–0.875% |
| No-ratio | +0.75–1.00% |
Loan Purpose Add-Ons
| Purpose | Rate Add-On vs. Purchase Baseline |
|---|---|
| Purchase | 0.00% (baseline) |
| Rate-and-term refinance | +0.125–0.25% |
| Cash-out refinance | +0.25–0.75% |
Property Type Add-Ons
| Property Type | Rate Add-On vs. SFR Baseline |
|---|---|
| Single-family residence (1 unit) | 0.00% (baseline) |
| 2-unit (duplex) | +0.125–0.25% |
| 3-4 unit | +0.25–0.375% |
| 5-10 unit multifamily | +0.375–0.75% |
| Warrantable condo | +0.125–0.25% |
| Non-warrantable condo | +0.50–1.00% |
| Short-term rental | +0.25–0.50% |
| Mixed-use | +0.25–0.50% |
Additional LLPAs (Situational)
| Characteristic | Rate Add-On |
|---|---|
| Loan amount under $150,000 | +0.25–0.50% |
| Loan amount $1.5M–$2.5M | +0.00–0.25% |
| Loan amount $2.5M+ | +0.25–0.50% |
| Foreign national borrower | +0.375–0.75% |
| First-time investor | +0.125–0.25% (at some lenders) |
| Rural property | +0.25–0.50% |
| Declining market | +0.25–0.50% |
| High-cost state (NY, NJ, CT, MA) | +0.125–0.25% |
How LLPAs Stack: A Worked Example
An investor is buying a duplex in Miami (non-SFR, Florida insurance costs) with 75% LTV, 710 FICO, 1.12 DSCR, and wants cash-out refinance in 18 months so they choose no-PPP.
Base rate at 740/65%/1.25+/SFR/purchase/30-yr fixed: 6.50%
| Adjustment | Basis | Add-On |
|---|---|---|
| FICO 710 vs. 740 | -30 points | +0.25% |
| LTV 75% vs. 65% | +10 points LTV | +0.375% |
| DSCR 1.12 vs. 1.25 | -0.13 below threshold | +0.25% |
| 2-unit duplex | vs. SFR | +0.25% |
| No-PPP buydown | vs. 5/4/3/2/1 | +0.375% |
| Total add-ons | +1.50% | |
| All-in rate | 8.00% |
That 1.5% premium over a clean deal is real money. On a $350,000 loan over 18 months, the 8.00% rate vs. 6.50% rate difference is approximately $6,100 in extra interest. Understanding how each LLPA contributes lets you see exactly where to focus improvement — in this case, the FICO and LTV alone account for 0.625% of the 1.50% add-on. Getting to 740 FICO and 70% LTV would cut the all-in rate by over half a point.
The Points Decision: Buy Down, Take Par, or Accept Negative Points?
Most DSCR rate sheets offer three basic positions:
Par rate: The rate you receive without paying any points (lender absorbs their full margin in the rate).
Below-par (discount points): Pay points upfront to receive a lower rate. Typical: 1 point buys ~0.25% of rate; 2 points buys ~0.375-0.50% additional reduction (diminishing returns).
Above-par (negative points / lender credit): Lender pays you a credit at closing (applied to closing costs) in exchange for accepting a higher rate.
Points Break-Even Math
On a $400,000 loan, choosing between 6.75% (1 point = $4,000) and 7.00% (0 points):
- Monthly P&I at 6.75%: $2,594
- Monthly P&I at 7.00%: $2,661
- Monthly savings at 6.75%: $67
- Upfront cost of 1 point: $4,000
- Break-even: $4,000 ÷ $67 = 59.7 months (~5 years)
If you hold past 5 years, paying the point was the right call. If you sell, refinance, or the property underperforms within 5 years, zero-point pricing wins.
The standard DSCR prepayment penalty is a 5/4/3/2/1 step-down — meaning most borrowers who stay in the loan 5+ years (past the PPP window) are exactly the profile where paying points makes sense.
The two-point math:
Most DSCR rate sheets offer a second point for diminishing benefit — often buying an additional 0.125-0.25% beyond the first point. The breakeven on a second point extends to 8-10 years, which is a very long hold assumption for rental investors. The second point usually does not pencil unless you plan to hold the property essentially forever and rates are unlikely to fall.
Negative Points (Lender Credits)
When rates are expected to fall — or when you plan to refinance within 18-24 months — accepting a lender credit at +0.375% to +0.75% over par makes sense. The credit can be $3,000-$8,000 on a mid-size loan, enough to offset most origination costs. The downside: you’re paying a higher rate for however long you hold the loan.
Term Options and Their Rate Relationships
Different term products price differently. Here is how they relate in the 2026 market:
| Product | Typical Rate vs. 30-yr Fixed | Best For |
|---|---|---|
| 30-year fixed, fully amortizing | Baseline | Long-term buy-and-hold |
| 30-year fixed, 10-year IO | -0.00 to +0.25% vs. 30-yr (IO adds LLPA at some lenders) | High-cost property, tight DSCR |
| 40-year fixed, 10-year IO | -0.125–0.25% vs. 30-yr on payment basis | Extreme DSCR compression |
| 5/1 SOFR ARM | -0.375 to -0.50% vs. 30-yr fixed | Hold under 5 years |
| 7/1 SOFR ARM | -0.25–0.375% vs. 30-yr fixed | Hold 5-7 years |
| 10/1 SOFR ARM | -0.125–0.25% vs. 30-yr fixed | Hold 7-10 years |
ARM note: After the fixed period, SOFR ARMs reset annually to SOFR + margin. The margin is fixed at origination (typically 2.50%-3.50%). In April 2026, 30-day SOFR is approximately 3.55%, so a 2.75% margin ARM would adjust to ~6.30% in year 6 if SOFR doesn’t change. In a rising-rate environment, ARMs can reprice materially higher. Model the worst case before choosing an ARM.
How to Shop DSCR Rates
DSCR rates vary across lenders by 50-100 bps on identical files. This is not because lenders are randomly inefficient — it reflects different capital sources, different securitization pipelines, different overlays, and different competitiveness on specific loan profiles.
Step 1: Get 3-5 competing quotes on the same parameters. Provide identical loan amount, LTV, FICO, DSCR estimate, property type, and purpose to each lender or broker. Quotes are meaningless unless they’re based on identical inputs.
Step 2: Compare APR, not just rate. A lender with a 6.875% rate and 2 points may be more expensive than a 7.125% rate and 0.5 points. Use the Annual Percentage Rate (or just model total 5-year cost) to compare apples to apples.
Step 3: Ask about all PPP options. Some lenders post artificially low rates on 5/4/3/2/1 PPP structures. When you ask for no-PPP pricing, the gap may close or reverse. Always compare at the same PPP structure.
Step 4: Watch for junk fees. Origination fees, underwriting fees, processing fees, and administrative fees add up. A “low rate” with $5,000 in junk fees may be worse than a slightly higher rate with $1,500 total lender fees.
Step 5: Confirm the quote is based on actual credit pull. A pre-qualification rate based on a stated FICO may change after the actual tri-merge pull. If you have a complex credit profile, encourage the lender to pull credit before locking so there are no surprises.
Step 6: Check lender speed and reliability. Rate means nothing if the lender misses close. Ask for references from recent closings, check their Better Business Bureau profile, and look at investor forums (BiggerPockets, Reddit r/realestateinvesting) for recent experiences. Compare vetted DSCR lenders based on actual investor feedback.
Rate Transparency: What to Watch For
A few practices that can obscure the true cost of a DSCR loan:
Teaser rates with hidden overlays: Some lenders post a floor rate that only applies to 60% LTV, 780+ FICO, 1.50+ DSCR files. When your file comes in at 75% LTV / 720 FICO / 1.15 DSCR, the actual rate is 75-100 bps higher. Always ask “what is the rate on my exact file?”
Float-down clauses with strings: Some lenders offer a “float down” option — if rates fall after lock, you can re-lock at the lower rate. The strings: there’s usually a fee (0.125-0.25 points), and the rate must fall by a minimum threshold (often 0.25-0.375%) to qualify. Model whether you’d actually use the option before paying for it.
Rate-lock periods shorter than the close timeline: Standard DSCR rate locks are 30-45 days, matching the typical close timeline. Lenders sometimes quote aggressive rates on 15-day locks they know will need extensions. Extensions cost 0.125-0.25 points per additional 15 days. Ask about the standard lock period and typical close time before locking.
Key Takeaways
- DSCR rates are 100-150 bps above conventional because of non-QM capital markets premium, income-doc waiver risk, and investor-property default risk.
- LLPAs stack. A combination of below-740 FICO + above-65% LTV + below-1.25 DSCR + non-SFR property type + cash-out purpose can add 1.00-1.50% above a clean file.
- 1 point typically buys 0.25% of rate; breakeven on paying 1 point is approximately 5 years.
- IO products reduce the payment (not the rate), which improves DSCR on tight deals.
- ARM products price 25-50 bps below 30-year fixed but carry rate-reset risk after the fixed period.
- Shop 3-5 lenders with identical inputs, compare APR not just rate, confirm PPP structure, and verify fees.
- Lock periods matter — match your lock to your realistic close timeline to avoid extension fees.
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Today's DSCR Loan Rates
Live DSCR rate ranges by credit tier, LTV, and product type.
Frequently asked questions
What are typical DSCR loan rates in 2026?
As of April 2026, 30-year fixed DSCR rates for a well-qualified borrower (740+ FICO, 75% LTV, 1.25+ DSCR, 1 point) range from approximately 6.12% to 7.50%, with par pricing typically clustering around 6.24%. That range reflects lender competition and daily market movement. Interest-only and ARM products price 25-75 bps lower on the fixed-rate equivalent.
Why are DSCR rates higher than conventional mortgage rates?
DSCR loans are non-QM (non-qualified mortgage) products that are not eligible for sale to Fannie Mae or Freddie Mac. They are sold into private-label securitizations that demand a higher yield to compensate for the non-agency risk, no income documentation, and typically investor-only collateral. The premium over conventional is typically 100-150 bps.
What is an LLPA in DSCR pricing?
LLPA stands for Loan Level Price Adjustment — an add-on to the base rate (or to points) based on specific risk characteristics of the loan. Common DSCR LLPAs include adjustments for FICO below 740, LTV above 65%, DSCR below 1.25, cash-out purpose, 2-4 unit property, short-term rental, and non-warrantable condo. They stack on top of each other.
How do points work on a DSCR loan?
One point equals 1% of the loan amount paid at closing. On most DSCR rate sheets, paying 1 point typically buys the rate down by approximately 0.25%. Paying 2 points buys it down another 0.25% (roughly). The breakeven on paying points is typically 4-6 years — if you hold longer, paying points wins; if you exit sooner, zero-point pricing wins.
Does the lender's rate sheet change every day?
Yes. DSCR rate sheets are repriced daily (sometimes multiple times per day) based on movement in the 10-year Treasury, SOFR, CMBS spreads, and MBS pricing in the secondary market. A rate you receive on Monday may no longer be available by Wednesday. This is why locking quickly after you're satisfied with a rate is critical.
What is the rate difference between purchase and cash-out on a DSCR loan?
Cash-out DSCR refinances typically price 25-75 bps higher than purchase loans on identical credit, LTV, and DSCR profiles. Rate-and-term refinances add about 12-25 bps over purchase. The cash-out premium compensates for the higher loan-to-value (borrower is extracting equity) and slightly elevated default risk associated with cash-out transactions.
Can I get a no-cost DSCR loan?
No-cost DSCR loans exist — the lender builds their fee into the rate rather than charging it as points. You pay a higher rate in exchange for lower upfront cash. These are appropriate when you expect to refinance within 2-3 years and don't want to pay points twice. The rate premium for no-cost is typically 0.375-0.75% above market.
How do ARM DSCR rates compare to fixed rates?
5/1 ARM DSCR products typically price 25-50 bps below 30-year fixed at time of origination. The risk: after year 5, the rate adjusts annually to SOFR plus a margin (typically 2.5-3.5%). In a rising-rate environment, ARM loans can reprice materially higher. ARMs make sense for investors who are confident they'll sell or refi within 5 years.