Standard bank financing — sold to Fannie / Freddie or held in portfolio.
A conventional loan is a residential mortgage that meets the underwriting guidelines of Fannie Mae or Freddie Mac (called "conforming"). Conventional loans are the standard product for primary homes, second homes, and small investment property — but their reliance on borrower DTI makes them difficult to scale beyond 4–10 properties.
Conventional loans are the workhorse mortgage product for the residential market. They're standardized to Fannie Mae and Freddie Mac guidelines (the "conforming loan" framework), which lets banks sell them on the secondary market and recycle their balance sheet — keeping rates competitive. Around 65–70% of US mortgages are conventional.
For investors, conventional loans offer the lowest rates in the market — typically 100–200 bps below DSCR or hard money. But they come with DTI gates, document-heavy underwriting (tax returns, W-2s, bank statements), and a Fannie Mae cap of 10 financed properties per borrower. Most investors hit a DTI wall well before the 10-property cap — typically around properties 3–5.
Loan limits are set annually. As of 2026, the conforming limit on a single-family home is around $766k (much higher in high-cost areas). Loans above the conforming limit are "jumbo" and have different underwriting. Investment property loans require slightly higher down payments (typically 20–25% minimum) and price 50–100 bps above primary residence rates.
For the first 1–4 investment properties, conventional financing is usually the right tool — cheapest rate and longest-term debt available. After that, most investors transition to DSCR loans, which bypass DTI entirely and scale with the portfolio. The strategic move is using conventional financing early when DTI is still manageable, then switching to DSCR for portfolio growth.
| Loan amount | $285,000 |
| Property type | 4-unit rental |
| Conventional rate (30-yr fixed) | 6.50% |
| Conventional monthly P&I | $1,801 |
| DSCR rate (30-yr fixed) | 7.75% |
| DSCR monthly P&I | $2,042 |
| Monthly P&I differential | $241 |
| Annual cash flow impact | $2,892 |
| But — conventional caps out at 10 properties total | |
| DSCR has no portfolio cap |
Yes — most conventional programs allow up to 10 financed investment properties per borrower (Fannie Mae limit). Down payment is typically 20–25%, with rate priced 50–100 bps above owner-occupied.
2026 conforming limit on a single-family in standard markets is approximately $766k; high-cost areas (CA, NY, certain metros) have higher limits up to ~$1.15M. Loans above the limit are "jumbo" with different underwriting.
Conventional uses borrower DTI and full income docs (tax returns, W-2s); DSCR uses property income with no personal income docs. Conventional is cheaper but caps out at portfolio scale; DSCR is slightly more expensive but scales unlimited.
620 minimum for most programs; best pricing typically at 740+. Below 680, expect rate hits or LLPAs (loan-level price adjustments).
Yes — typically up to 75% LTV on investment property cash-out, subject to DTI qualifying. Most investors find DSCR cash-out easier above 2–3 properties due to DTI.
Matrix funds DSCR loans for investors who've outgrown conventional. No DTI, no portfolio cap, no tax returns. Up to 80% LTV, 30-year terms.
