For real estate investors
DSCR Loan
Qualify based on a rental property’s income, not your personal income - built for real estate investors.
A DSCR (debt service coverage ratio) loan lets real estate investors qualify based on the rental income the property brings in, not on personal income, tax returns or employment. If the rent covers the property’s payment, the property can largely qualify on its own. That makes it easier to keep growing a portfolio of Colorado rentals.
How DSCR is calculated
The ratio compares the property’s monthly rent to its monthly housing payment: principal, interest, property taxes, insurance and any HOA dues.
- Rent equals the payment: a DSCR of 1.0
- Rent is higher than the payment: above 1.0, which generally means better terms
- Rent is lower than the payment: below 1.0, which some programs still allow, with tighter requirements
For example, $3,000 a month in rent against a $2,500 payment is a DSCR of 1.2. Rent is usually based on the appraiser’s market rent estimate, or the current lease.
Who it’s a good fit for
- Investors buying or refinancing long-term rentals
- Self-employed investors whose tax returns show low income
- Investors who own several properties and want to keep adding more
- Investors who want to hold properties in an LLC, which many DSCR programs allow
What lenders usually look for
- A larger down payment than an owner-occupied loan, often 20% or more
- A solid credit score
- Reserves, usually several months of payments
- An investment property, not a home you’ll live in
Short-term rentals
Some DSCR programs accept short-term rental income, such as vacation rentals in mountain towns. Many Colorado cities and counties have their own short-term rental rules and licenses, so it’s worth confirming those before you buy.
Common questions
Do you need my tax returns?
Usually not. Qualifying is based mainly on the property, your credit and your assets.
Is there a prepayment penalty?
Some DSCR loans have one, and some don’t. We’ll go over the options and their trade-offs.
Can I use DSCR for a cash-out refinance?
Yes, many programs allow cash-out to fund your next purchase.
Growing your rental portfolio? Call us at 303-931-3239, or get prequalified online.