DSCR loans are one of the most useful financing tools for Colorado real estate investors, but they're also one of the most variable. Unlike conventional loans where Fannie Mae and Freddie Mac set uniform guidelines, DSCR loans are non-QM products where each lender sets its own rates and requirements. That variability means the difference between lenders can be significant, and shopping matters more than it does on a conventional loan.
Core DSCR loan requirements in Colorado
| Requirement | Typical range | Notes |
|---|---|---|
| Minimum credit score | 660-680 | Some lenders go to 620 with larger down payment. Best rates at 720+. |
| Down payment | 20-25% | Some lenders allow 15% with strong credit. |
| Minimum DSCR | 1.00-1.25 | Some lenders allow below 1.0 with compensating factors. |
| Reserves required | 6-12 months | Liquid assets covering 6-12 months of mortgage payments required after closing. |
What DSCR rates look like in Colorado in 2026
DSCR loan rates in Colorado in 2026 are typically 0.5-1.5% above conventional investment property rates. To give you a concrete reference point: a borrower with a 720+ credit score, 25% down, and a DSCR of 1.25 or higher is likely seeing rates in the mid-to-upper 7% range depending on property type and lender. Rates rise meaningfully below those thresholds. Here's what moves your rate:
| Factor | Rate impact |
|---|---|
| Credit score 720+ | Best available rate |
| Credit score 680-719 | Moderate rate increase |
| Credit score 660-679 | Larger rate increase |
| 25%+ down payment | Rate improvement vs 20% down |
| DSCR 1.25 or higher | Best rate tier for most lenders |
| DSCR below 1.0 | Significant rate increase or ineligible |
| Short-term rental property | Rate varies: fewer lenders available |
| 2-4 unit property | Slight rate increase vs single-family |
| Cash-out refinance vs purchase | Slight rate increase |
On a conventional loan, rate differences between lenders are typically small because guidelines are set by Fannie Mae. On a DSCR loan, two lenders looking at the same borrower and property can offer rates that are 0.5-1% apart. A mortgage broker with access to multiple DSCR lenders will typically find a meaningfully better rate than going directly to a single lender.
Which properties qualify for DSCR loans in Colorado
- Single-family homes: The most common DSCR property type. Works well in Denver metro, Colorado Springs, Fort Collins, and other Front Range markets with strong rental demand.
- 2-4 unit properties: Duplexes, triplexes, and fourplexes qualify with most DSCR lenders. Combined rental income from all units is used to calculate DSCR.
- Condominiums: Warrantable condos qualify with most lenders. Non-warrantable condos may still qualify with select DSCR lenders.
- Short-term rentals: Properties in Colorado mountain markets like Breckenridge, Vail, Steamboat, and Telluride can qualify if the lender accepts short-term rental income. Not all do: it requires a lender who specifically underwrites STR properties using Airbnb/VRBO history or market projections from services like AirDNA.
- What does not qualify: Primary residences, properties with more than 10 units, raw land, or commercial properties.
How DSCR is calculated for short-term rentals
For long-term rentals, lenders use the current lease or a market rent appraisal. For short-term rentals, lenders use either historical income (12-24 months of actual Airbnb/VRBO income) or market rent projections from services like AirDNA for properties without rental history. Colorado mountain market STR properties often show strong winter income but lower ratios when averaged year-round. Understanding how your specific lender calculates income is critical before you commit to a purchase.
DSCR cash-out refinance in Colorado
DSCR loans are also available for refinancing existing investment properties. A DSCR cash-out refinance lets you pull equity from a rental property based on the property's income rather than your personal income. Most DSCR cash-out refinances in Colorado allow up to 75% loan-to-value (LTV). The DSCR calculation uses the new, higher loan amount, so the property's rental income must still support the refinanced payment.
Chris Cartwright is a licensed mortgage broker working with real estate investors across Colorado, Washington, Texas, California, Arizona, and Florida. He has access to multiple DSCR lenders and can run your specific property scenario to find the best combination of rate and requirements.
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DSCR loan rates and requirements vary by lender and are subject to change. Rate examples are illustrative only. This content is for informational purposes only. All loans subject to credit approval. Equal Housing Lender.