DSCR loan rates
We do not publish one rate, because DSCR loan rates are set for each file. Instead, we show what changes the rate and how each step affects the ratio.
Why no DSCR loan rate is published
Our lender table lists no lender with a fixed rate shown on the page we review. After reviewing the ratio, credit report, down payment and property, each one sets the price for the file. Changes in the bond market then alter that price between weeks. Publishing a rate here would mean offering a guess in the form of a quote, so we do not do that.
We can show the arithmetic: how the rate shifts the monthly payment and how that payment shifts the DSCR.
How rate changes affect both payment and DSCR
One sample rental appears in the table: $220,000 borrowed over 30 years, with $250 a month for property tax, $150 for insurance and $2,000 in rent. The rate is the only figure that changes between rows.
| Rate | P&I per $100,000 | P&I on the loan | PITIA | DSCR |
|---|---|---|---|---|
| 6.00% | $600 | $1,319 | $1,719 | 1.16 |
| 6.50% | $632 | $1,391 | $1,791 | 1.11 |
| 7.00% | $665 | $1,464 | $1,864 | 1.07 |
| 7.50% | $699 | $1,538 | $1,938 | 1.03 |
| 8.00% | $734 | $1,614 | $2,014 | 0.99 |
| 8.50% | $769 | $1,692 | $2,092 | 0.95 |
| 9.00% | $805 | $1,770 | $2,170 | 0.92 |
For every $100,000 you borrow, a half point adds roughly $32 to $36 each month. A move from 6.5% to 7.5% on this rental lowers the ratio to 1.03 from 1.12, which can be the difference between meeting a 1.10 minimum and missing it.
What raises or lowers a DSCR loan rate
The ratio matters too: files at 1.25 or above usually receive better pricing than those just over 1.00, and some lenders charge more below 1.00 if they lend at that level.
With LTV (loan-to-value, which means the loan's share of the property price), a 25% down payment usually receives better pricing than 20%. Cash-out loans also carry higher rates than purchases at the same LTV.
Usually, a file prices best when the score is higher, the loan is mid-sized and the property is a single-family house. Small loans, condos and buildings with 2 to 4 units often cost slightly more.
A prepayment penalty buys a lower rate when you accept one for 3 to 5 years. Loans that you may repay whenever you like cost more. Points paid at closing and interest-only periods move the rate as well.
How to read a rate quote
Compare quotes that use the same LTV, prepayment terms and points. After that, use our DSCR loan calculator with the quoted payment to find out if rent still meets the lender's minimum at that rate.