Current rate ranges, what drives your rate, and how to lock the lowest DSCR mortgage rate for your rental property.
DSCR loan rates in 2026 generally range from 6.5% to 9.0%, depending on borrower profile and deal structure. That is typically 1–2% higher than conventional investment property mortgage rates, which reflects the added flexibility of qualifying based on rental income rather than personal income. After the rate volatility of 2023–2024, the DSCR market has stabilized considerably. Increased competition among non-QM lenders has pushed pricing down, and investors with strong profiles — 740+ credit, 25% down, DSCR above 1.25 — are now seeing rates in the mid-6s on 30-year fixed products.
The wide range exists because DSCR rates are highly individualized. Two investors buying identical properties on the same street can receive rates that differ by a full percentage point or more. The difference comes down to credit score, DSCR ratio, loan-to-value, property type, prepayment penalty choice, and whether the loan is a purchase, rate/term refinance, or cash-out refinance. Understanding these variables — and how to position yourself favorably on each one — is the key to locking the best rate available.
Seven primary factors determine where your rate lands within the 6.5–9.0% range. Here is how each one affects pricing and what you can do about it:
| Factor | Impact on Rate | How to Optimize |
|---|---|---|
| DSCR Ratio | 1.25+ gets best rates; sub-1.0 adds 1–2% | Increase rent or reduce loan amount |
| Credit Score | 740+ best; each tier below adds 0.25–0.5% | Pay down credit cards before applying |
| LTV | Lower LTV = lower rate; 65% is the sweet spot | Put more down if possible |
| Loan Amount | $150K–$1M sweet spot; outside range may cost more | Stay in the sweet spot when possible |
| Property Type | SFR best; 2–4 unit slightly higher; STR adds premium | SFR gets best terms from all lenders |
| Prepayment Penalty | 5-year prepay reduces rate vs 3-year or none | Take longer prepay if holding long-term |
| Loan Purpose | Purchase best; rate/term refi middle; cash-out highest | Purchase transactions get the best rate |
The biggest rate drivers are credit score and DSCR ratio. Those two factors alone can swing your rate by 1–2%. An investor with a 760 FICO and 1.30 DSCR will see a dramatically different rate sheet than someone with a 680 FICO and 0.95 DSCR — even on the same property with the same lender.
The 30-year fixed is the most popular DSCR loan product. Your rate is locked for the entire loan term, which makes cash flow projections simple and predictable. It carries the highest initial rate of any DSCR option, but for buy-and-hold investors planning to keep the property for 7 or more years, the stability is worth the premium. You never have to worry about rate adjustments or refinancing on a timeline.
The 5/6 ARM offers the lowest initial rate of any standard DSCR product — typically 0.5–1.0% below the 30-year fixed. The rate is locked for the first 5 years, then adjusts every 6 months based on SOFR plus a margin. Rate caps are generally structured as 2/1/5 (2% max first adjustment, 1% max subsequent adjustments, 5% lifetime cap). This is the go-to product for BRRRR investors and anyone planning to sell or refinance within 5 years.
The 7/6 ARM and 10/6 ARM offer middle-ground options. The 7/6 has become popular with investors planning 5–7 year holds who want a rate cushion if they end up holding longer than expected. The 10/6 provides near-fixed-rate stability with a modest rate savings versus the full 30-year fixed — a good fit for investors who believe rates may come down enough to refinance within a decade.
If you are using the BRRRR strategy and plan to refinance within 3–5 years, a 5/6 ARM can save you 0.5–1.0% on rate versus a 30-year fixed. Just make sure your exit strategy is solid before choosing an ARM.
Calculate your DSCR and test different rate scenarios with interactive sliders.
Calculate Your DSCR →Some DSCR lenders offer interest-only (IO) payment periods of 5–10 years. During this time you pay only interest with no principal reduction, and then the loan fully amortizes over the remaining term. The rate premium for an IO option is typically 0.25–0.50% above a comparable fully amortizing loan — a modest cost for what it delivers in cash flow.
The cash flow impact of interest-only is dramatic. On a $300,000 loan at 7.5%, the fully amortizing 30-year payment is roughly $2,098 per month, while the interest-only payment is $1,875 — a difference of $223/month. That extra $223 goes straight to your bottom line and can be the difference between a borderline DSCR of 1.10 and a strong DSCR above 1.25. For investors evaluating tight deals, IO can turn a marginal property into a qualifying one.
The risk with interest-only is payment shock. When the IO period ends, your payment jumps significantly because you are now amortizing the full original balance over fewer remaining years (typically 20 or 25 instead of 30). Most IO borrowers plan to sell or refinance before amortization begins — if that is your strategy, IO makes excellent sense. If you plan to hold indefinitely, be sure you can absorb the higher payment when it arrives.
Paying discount points upfront can reduce your rate. One point equals 1% of your loan amount and typically buys a 0.25% rate reduction. On a $400,000 loan, one point costs $4,000 and saves roughly $67 per month in lower payments. That is a breakeven of about 60 months — so if you plan to hold the property for more than 5 years, paying a point is a smart investment. If your hold period is shorter, skip the points and keep cash in your pocket.
DSCR loans commonly include prepayment penalties structured as a stepdown. A 5-4-3-2-1 penalty means you pay 5% of the outstanding balance if you pay off in year one, 4% in year two, 3% in year three, and so on until it expires after year five. A 3-2-1 structure is shorter and less punitive. Choosing a longer prepay period typically gets you a lower rate — often 0.25–0.50% lower for a 5-year versus a 3-year prepay — because the lender is guaranteed a longer revenue stream from your loan.
The strategy is straightforward: if you plan to hold the property for 5 or more years, take the longer prepayment penalty and enjoy the lower rate — you will never pay the penalty because you will hold past its expiration. If you are doing BRRRR or plan to sell within 3 years, choose the shortest prepay option available (or no prepay if the lender offers it) even if the rate is slightly higher. The math almost always favors matching your prepay term to your actual hold period.
Maximize your DSCR above 1.25. This is the single most effective thing you can do to lower your rate. Lenders price in tiers, and 1.25 is the threshold where the best rate sheets unlock. If your property is at 1.15, look for ways to push it over — increasing rent by $100–150/month, shopping for cheaper insurance, or appealing a property tax assessment can all move the needle. Use our free calculator to test different scenarios.
Get your credit score to 740 or above before applying. This puts you in the top pricing tier at virtually every DSCR lender. If you are sitting at 710–730, a few weeks of paying down credit card balances below 30% utilization can be enough to push you over. The 0.25–0.50% rate savings over 30 years far outweighs a short delay in your application.
Put down 25% or more if your capital allows it. Moving from 80% LTV to 75% LTV typically improves your rate by 0.125–0.375%. That marginal capital deployed earns an outsized return through lower borrowing costs over the life of the loan. If you can comfortably go to 70% or 65% LTV, the rate improvement is even more pronounced.
Choose a longer prepayment penalty if you plan to hold long-term. As discussed above, a 5-year prepay can save 0.25–0.50% versus a 3-year or no-prepay option. For investors who plan to hold for 5 or more years, this is free money — the penalty expires before you would ever trigger it.
Use a mortgage broker who shops multiple DSCR wholesale lenders. DSCR pricing varies substantially between lenders because each has different capital structures, risk appetites, and rate sheet overlays. A broker who submits your deal to 5–6 wholesale lenders simultaneously can often find pricing 0.25–0.50% better than going direct to a single retail lender. The broker's access to wholesale rate sheets is something you simply cannot replicate on your own.
Compare at least 3–5 quotes on the same day. DSCR is a competitive market, and lenders know investors shop. Getting multiple term sheets on the same day gives you an apples-to-apples comparison and real leverage to negotiate. Even small rate differences compound dramatically over a 30-year loan term.
Watch the 10-year Treasury yield and lock at the right time. DSCR rates, like all mortgage rates, are influenced by the broader bond market. When the 10-year Treasury drops, DSCR rates tend to follow within 1–2 weeks. If you have flexibility on your closing timeline, monitoring Treasury movements and locking during a dip can save you a meaningful amount over the life of the loan.
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Request Your Quote →The following scenarios illustrate how different borrower and property profiles translate to estimated DSCR rate ranges in early 2026:
| Scenario | FICO | DSCR | LTV | Est. Rate Range |
|---|---|---|---|---|
| Strong profile | 740+ | 1.30 | 75% | 6.5% – 7.0% |
| Good profile | 720 | 1.20 | 75% | 7.0% – 7.5% |
| Average profile | 700 | 1.10 | 80% | 7.5% – 8.0% |
| Marginal profile | 680 | 0.95 | 75% | 8.0% – 9.0% |
| STR / Airbnb | 720 | 1.25 | 75% | 7.25% – 7.75% |
These rate ranges are illustrative estimates based on general market conditions in early 2026. Your actual rate will depend on the specific lender, property, and your complete borrower profile. Rates shown assume a 30-year fixed with a 5-year prepayment penalty on a long-term rental. Use our free DSCR calculator to run your own numbers.
Enter your rental property numbers and instantly see your DSCR ratio and qualification tier.
Calculate Your DSCR →DSCR loan rates in 2026 generally range from 6.5% to 9.0%. Borrowers with strong profiles — 740+ credit score, DSCR above 1.25, and 75% LTV or less — are seeing rates in the mid-6s on 30-year fixed products. The wide range reflects the fact that DSCR rates are highly individualized based on credit, DSCR ratio, LTV, property type, and prepayment penalty choice.
DSCR rates are typically 1–2% higher than conventional investment property rates because they qualify borrowers based on rental income rather than personal income. This added flexibility for the borrower comes with higher perceived risk for the lender, which is priced into the rate. The trade-off is worth it for investors who cannot qualify conventionally due to self-employment, multiple financed properties, or complex income structures.
It depends on your hold period. A 30-year fixed is best for long-term buy-and-hold investors who want payment stability. A 5/6 ARM offers 0.5–1.0% lower initial rates and works well for BRRRR investors or anyone planning to sell or refinance within 5 years. The 7/6 and 10/6 ARM offer middle-ground options for investors with 5–10 year hold horizons.
Focus on maximizing your DSCR above 1.25, getting your credit score to 740 or above, putting down 25% or more, choosing a longer prepayment penalty, and using a mortgage broker who shops multiple wholesale lenders. Comparing 3–5 quotes on the same day gives you real leverage to negotiate. Together these strategies can reduce your rate by 0.5–1.5% compared to going in unprepared.
Yes, most DSCR loans include prepayment penalties structured as a stepdown — for example, 5-4-3-2-1 means you pay 5% of the balance if you pay off in year one, stepping down to 1% in year five. Choosing a longer prepay period typically gets you a 0.25–0.50% lower rate. If you plan to hold for 5 or more years, the longer prepay is a smart trade-off since it expires before you would sell.