DSCR loans have become one of the most popular financing tools for real estate investors. But many borrowers don’t understand why their DSCR rate is higher—or lower—than someone else’s. The answer lies in the pricing tiers lenders use to assess risk.
1. DSCR Ratio: The Most Important Tier
DSCR measures whether the property’s rent covers the mortgage payment.
Higher DSCR creates lower risk, which leads to better pricing.
Ranges:
- 1.25+ = Preferred
- 1.15–1.24 = Standard
- 1.05–1.14 = Higher
- Below 1.05 = DSCR-low programs
2. Credit Score Pricing Tiers
Your personal credit score significantly affects DSCR pricing.
- 740+ = Lowest rates
- 700–739 = Strong
- 660–699 = Moderate pricing
- < 660 = Limited options
Lenders need to see financial discipline.
3. Loan Purpose Tiers
Purpose affects risk level.
- Rate & term refinance = Best pricing
- Purchase = Moderate
- Cash-out = Highest pricing
Cash-out refis add risk for lenders.
4. Property Type Pricing Tiers
Some properties are harder to underwrite.
- SFR = Best
- 2–4 units = Higher pricing
- Condos = Even higher
- Short-term rentals = Premium tiers
- Specialty assets = Highest risk
5. Loan Amount Tiers
Loan size affects pricing efficiency.
- $200K–$1M = Standard
- $1M+ = Better pricing
- <$125K = Higher pricing due to fixed processing costs
6. Prepayment Penalty Tiers
More commitment lowers your rate.
- 5-year prepay = Best
- 3-year = Mid-tier
- 0–1 year = Highest cost
Flexibility comes at a price.
7. Documentation Tiers
Stronger documentation reduces risk.
- Signed leases + rent history = Preferred
- Market rent only = Higher pricing
- STR underwriting = Premium pricing
- Alternative-income DSCR = Highest pricing
Clean files get better rates.
Final Thoughts
DSCR pricing tiers aren’t arbitrary—they’re structured.
Your rate is calculated by stacking multiple risk factors across DSCR performance, credit quality, property type, loan size, documentation strength, and loan purpose.
Improve even one tier and your pricing improves.
Smart investors structure their deals to maximize DSCR, protect credit, choose stronger prepay terms, and present clean documentation.
Master these pricing tiers—and you’ll get better DSCR rates every time.
CONTACT;:WhatsApp: +1 448-230-7488 & phone no : +1-201-680-0991
Email: annie@insightflending.com
phone no : +1-201-680-0991
