Key Takeaways
- The four products differ most in what they qualify — your income (conventional), the property's cash flow (DSCR), a banking relationship (portfolio), or the asset's NOI and your track record (commercial).
- Conventional often offers attractive pricing for borrowers who qualify, but with the strictest documentation, a limit on financed properties, and a rental-income path that uses long-term market rent rather than your nightly revenue (though a lender may instead treat STR income as business income).
- DSCR trades a somewhat higher rate for property-based qualification, LLC vesting, and room to scale — which is why it fits so many STR investors.
- Portfolio and commercial loans exist for the situations the first two reject: unusual profiles, larger or multi-unit assets, and portfolio-scale borrowers.
- The right choice is a matter of fit — qualification path, LTV, term, and scale — not the lowest advertised rate.
They compete on qualification, not on rate
The four loan types aren't four prices for the same thing — they're four different questions a lender can ask to decide whether to lend. The product that fits is the one whose question your deal can answer best. Get that framing right and the choice mostly makes itself.
A conventional loan asks about you: your documented income, your debt-to-income ratio, your credit. A DSCR loan asks about the property: does its rent cover its payment. A portfolio loan asks about the relationship: what will this bank do for a customer it knows, holding the loan on its own books. A commercial loan asks about the asset and the operator: what NOI does the property throw off, and have you run one before. Rate matters, but it's downstream of that question — and choosing the lane where your deal is strongest usually beats shaving an eighth of a point in a lane where it's weak.
The four, side by side
Each product has a qualification basis it's built around, a rate posture, an LTV and term profile, and a borrower it fits — and for STRs, one of them (conventional) carries a specific limitation worth naming up front. Read the table for the shape, then the notes for the STR-specific edges.
| Conventional (agency) | DSCR (non-agency) | Portfolio (bank) | Commercial | |
|---|---|---|---|---|
| Qualifies on | your income + DTI + docs; property market rent | property cash flow (rent ÷ PITIA) | blend of income, property, + bank relationship | property NOI + sponsor experience |
| Rate posture | typically lower-cost when eligible | modestly above conventional | relationship-dependent | varies widely by deal |
| Down / LTV | 15% (1-unit) / 25% (2–4 unit) | ~20–25% down | negotiable, often 20–30% | ~25–35% down |
| Term | 30-yr fixed | 30-yr fixed; IO options | often ARMs / balloons | ~25-yr am, 3–8 yr balloon |
| STR income | rental path uses LT market rent; business-income treatment may be available | yes, lender-derived | negotiable | via property financials |
| Best fit | documented-income buyers, early portfolio | self-employed, LLC, scaling, STR income | unusual profiles + a bank relationship | 5+ unit / commercial-type asset; larger or specialized |
Current, representative posture — every cell varies by lender and deal. The column that fits is the one whose "qualifies on" row your property and profile answer most strongly.
Three STR-specific edges the table can't fully carry:
Conventional's hidden catch. Its pricing is often attractive when you qualify, but the rental-income path uses long-term market rent rather than your nightly revenue (a lender may instead treat STR income as business income under separate rules), and Fannie Mae's DU framework allows up to 10 financed properties for second-home and investment transactions — so conventional financing eventually becomes a constraint for a scaling investor. (There's nuance about what counts toward the limit; certain LLC-held properties you're not personally obligated on may be excluded — Fannie Selling Guide B2-2-03.) It's a fine tool for an early, documented-income buyer — and a trap if you assume it will underwrite your STR performance. (See How Lenders Calculate STR Income.)
Why DSCR often fits STR investors. It qualifies the property, not your paycheck, allows LLC vesting, and doesn't stop at the conventional financed-property limit — so it fits the self-employed, the scaling, and anyone who needs the STR's own income to carry the file. The cost is a somewhat higher rate and program-by-program variation. (See DSCR Loan Requirements and How to Qualify.)
When portfolio or commercial is the answer. Portfolio loans live at community and regional banks that keep the loan in-house, so they can flex on the rules for a borrower they know — useful for an unusual profile or a property the agencies reject, often at the cost of an ARM or balloon structure. Commercial loans take over for larger multi-unit or commercial-type assets — Fannie's residential eligibility stops at one-to-four units — underwritten on the asset's NOI and your experience, typically on a shorter amortization with a balloon.
"Fit the loan to the deal, not the deal to the loan."
Each product qualifies on a different thing and suits a different borrower. The right loan is the one whose qualification your property and profile answer most strongly — not the one with the lowest advertised rate, and not the one you used last time. Choose the lane first; price it second.
How to choose
Pick the lane by asking which question your deal answers best — then compare rate and terms within that lane, not across lanes. The sequence matters: lane first, price second.
Run yourself through the four questions. Do you have clean, documented income and are you early in your portfolio — and can the deal work on long-term rent rather than nightly income? Conventional may give you the cheapest money. Are you self-employed, buying in an LLC, scaling, or reliant on the STR's own income? DSCR is likely your lane. Do you have a real relationship with a community bank and a situation that doesn't fit a box? Ask them about a portfolio loan. Is this a larger multi-unit asset or a portfolio play, and have you operated before? You're in commercial territory. Once the lane is chosen, then shop rate, term, and structure among lenders in that lane — and let the deal itself (and the seasonal-cash-flow work in How Loan Structure Interacts With Seasonal STR Cash Flow) guide the fixed-vs-adjustable and amortization choices.
shopping for the lowest rate across all four products and defaulting to conventional because it wins on price. Conventional's rate is only relevant if you can actually qualify there — and on an STR whose case rests on nightly income, or once you're past the financed-property limit, you often can't. Chasing the cheapest lane instead of the fitting lane is how investors end up declined on a deal that a DSCR or portfolio lender would have closed.
Your action plan
- Name your qualification strength. Documented income, property cash flow, a bank relationship, or asset NOI + experience — which is your strongest card?
- Match it to a lane. Conventional, DSCR, portfolio, or commercial — pick where your strength is the thing being tested.
- Check the STR fit. If your case rests on nightly income, know the conventional rental-income path uses long-term rent (business-income treatment is the lender's call); if you're scaling, watch Fannie's 10-financed-property limit.
- Confirm the structural profile. Term, amortization, and fixed-vs-adjustable differ by lane (ARMs/balloons are common in portfolio and commercial) — make sure it suits a seasonal asset.
- Then compare within the lane. Shop rate and terms among lenders in your chosen lane, not across lanes.
- Re-check as you scale. The lane that fit your first property may not fit your fifth — reassess with each deal.
The bottom line
Conventional, DSCR, portfolio, and commercial loans aren't four prices for one product — they're four different qualification questions, and the one that fits is the one your deal answers best. Conventional is often cheapest when you qualify, but its rental-income path uses long-term rent rather than your nightly revenue (business-income treatment aside) and eventually runs into the 10-financed-property limit; DSCR qualifies the property and fits many STR investors' real situation; portfolio and commercial exist for the profiles and assets the first two turn away. Choose the lane by fit, confirm the structure suits a seasonal cash flow, and only then compete on rate. The cheapest loan you can't qualify for isn't cheap — it's a decline.
The STR Loan-Type Fit Finder
A one-page decision aid: answer four short questions about your income documentation, entity, portfolio size, and whether your deal depends on nightly income, and it points you to the lane (conventional, DSCR, portfolio, or commercial) your profile qualifies for most strongly — plus the two questions to ask a lender in that lane before you apply.
Matt Nunn is the founder of Builders Finance. He has spent two decades working with the financial side of real estate businesses, and started Builders Finance to give short-term-rental operators the financial systems, frameworks, and plain-language education that most hosting advice skips over. Builders Finance publishes educational content for STR owners and is not a substitute for advice from your own qualified financial or tax professional.
Continue learning
DSCR Loan Requirements and How to Qualify
the deepest dive on the lane most STR investors land in.
Concept GuideHow Lenders Evaluate Short-Term Rentals
why the same property reads differently across these systems.
Decision GuideWhich Loan Structure Fits This Deal?
the decision guide that turns this comparison into a choice for your specific property.
The STR Financial Bible
the complete financial system for short-term-rental operators, from underwriting a deal to financing it to keeping the books to the exit. ---
Explore the book →Educational information only — not individualized tax, legal, or investment advice. The worked example is an illustrative model, not a projection or a recommendation.