DSCR Loan Colorado

Last updated: November 20, 2024

DSCR loans have become the preferred mortgage loan program for rental property investors in Colorado.

Colorado DSCR Loan Example

We recently funded a single family rental property in Pueblo, CO. Let's take a closer look at the numbers:

• Transaction type: cash out refinance
• Borrowing entity: LLC
• Guarantor credit score: 722
• Property type: single family (1 unit)
• As Is value: $155,000.00
• LTV: 75%
• Loan amount: $$116,250
• Interest rate: 7.005%
• Structure: 30 year term, full amortization, fixed rate
• Principal and Interest (monthly): $773.80
• Insurance (monthly): $51.67
• Taxes (monthly): $91.34
• HOA (monthly): $0.00
• PITIA: $916.81
• Actual rent: $1,475
• Market rent: $1,200
• DSCR: 1.31

In this example, we calculate DSCR as follows:

DSCR = Rent ÷ PITIA

DSCR = $1,200 ÷ ($773.80 + $51.67 + $91.34 + $0)

DSCR = DSCR = $1,200 ÷ $916.81

DSCR = 1.3088

You may be wondering why we used $1,200 for rent instead of $1,475. DSCR loan guidelines require the lower of market rent or actual rent to be used for underwriting DSCR.

What areas in Colorado do you serve?

We serve all major metropolitan, non-rural, areas of Colorado. We aim to provide financing in the areas with highest population densities and sizes. That is one of the reasons we can't lend on rural properties. Here is the list of Colorado areas that we serve and their respected population sizes, largest employers, top university and public school systems as well as most desirable zip codes that benefit the most from their circumstances in those areas.

Denver-Aurora-Lakewood

This is the largest metro area in Colorado, centered around the city of Denver. It includes Denver and surrounding counties like Arapahoe, Jefferson, Adams, and Douglas. Population is 2.9 million.

• Top Employers: UCHealth (27,000+ employees), HealthONE (11,300 employees), Lockheed Martin (10,500 employees), CenturiaHealth (10,000 employees), Denver Public Schools (15,000 employees)
• Top University: University of Colorado Boulder (Ranked 103 Nationally, 35,800 Students, 4,300 Faculty/Staff)
• Top Hospital System: UCHealth (27,000+ employees across the state)
• Major Travel Arteries: I-25, I-70, I-225, I-270, C-470

• 80202 - Downtown Denver (Proximity to major employers like UCHealth, CenturiaHealth, Denver Public Schools)
• 80123 - Aurora (Anschutz Medical Campus, UCHealth University of Colorado Hospital)
• 80401 - Boulder (Close to Boulder employers like IBM, Ball Aerospace)
• 80020 - Centennial (Denver Tech Center, proximity to Denver)

Colorado Springs

Located in El Paso County, the Colorado Springs metro area has a population of around 738,000 people. It includes the cities of Colorado Springs, Monument, and Fountain.

• Largest Employers: Fort Carson (27,000+ military/civilian), Peterson Air Force Base (12,000+ military/civilian), Memorial Health System (4,800 employees), Colorado Springs School District 11 (3,500 employees)
• Top University: University of Colorado Colorado Springs (Ranked 214 Nationally, 11,800 Students, 800 Faculty/Staff)
• Top Hospital System: UCHealth Memorial (2,200+ employees)
• Major Travel Arteries: I-25, E-470, CO-21, CO-83, CO-94

• 80919 - Colorado Springs (Close to Fort Carson, Peterson Air Force Base, Memorial Hospitals)
• 80920 - Colorado Springs (Proximity to US Air Force Academy)
• 80918 - Colorado Springs (Access to I-25 for commuting)

Boulder Metropolitan

This metro encompasses Boulder County and has a population of around 322,000.

• Largest Employers: University of Colorado Boulder (12,800 employees), IBM (3,800 employees), Boulder Valley School District (3,700 employees), Ball Aerospace (3,300 employees)
• Top University: University of Colorado Boulder (Ranked 103 Nationally, 35,800 Students, 4,300 Faculty/Staff)
• Top Hospital System: Boulder Community Health (1,600 employees)
• Major Travel Arteries: US-36, CO-119, CO-7

• 80305 - Boulder (University of Colorado Boulder campus area)
• 80301 - Boulder (Downtown, access to major employers)

Greeley

Centered around Greeley in Weld County, this northern Colorado metro area has a population of around 324,000.

• Largest Employers: JBS USA Holdings Meat Processing (4,000+ employees), Banner Health (3,000+ employees), Aims Community College (1,000+ employees), Hensel Phelps Construction (900 employees)
• Top University: University of Northern Colorado (Ranked 197 Nationally, 12,100 Students, 1,000 Faculty/Staff)
• Top Hospital System: Banner Health (3,000+ employees in northern Colorado)
• Major Travel Arteries: US-34, US-85, I-25

• 80634 - Greeley (Access to major Greeley employers like JBS, Banner Health)
• 80538 - Windsor (Newer residential development)

Fort Collins

With a population of around 350,000, this metro encompasses Larimer County and the cities of Fort Collins and Loveland.

• Largest Employers: Colorado State University (7,500 employees), UCHealth (3,800 employees), Woodward Inc. (1,200 employees),Broadcom Inc. (1,100 employees)
• Top University: Colorado State University (Ranked 149 Nationally, 27,000 Students, 1,800 Faculty/Staff)
• Top Hospital System: UCHealth Poudre Valley Hospital (3,800 employees in northern Colorado)
• Major Travel Arteries: I-25, US-287, CO-14

• 80521 - Fort Collins (Colorado State University campus area)
• 80524 - Fort Collins (Downtown, close to major employers)

Pueblo

Located in southern Colorado, our most popular market for DSCR loans, the Pueblo metro has around 168,000 residents, primarily in Pueblo County.

• Largest Employers: Parkview Medical Center (2,700 employees), Pueblo County School District 70 (1,700 employees), Transportation Technology Center Inc (1,000 employees), EVRAZ Rocky Mountain Steel Mills (1,000 employees)
• Top University: Colorado State University Pueblo (Ranked 55 Regional Universities West, 4,200 Students, 385 Faculty/Staff)
• Top Hospital System: Parkview Medical Center (2,700 employees)
• Major Travel Arteries: I-25, US-50, CO-47, CO-96

• 81004 - Pueblo (Access to Pueblo's largest employers and Parkview Medical Center)
• 81001 - Pueblo (Historic downtown area)

Where can I find investment properties in Colorado?

There are many online and offline places where you can find investment properties. Some of them include:

1. OfferMarket - Get an instant email alert when a new property is listed in your target area. Instant off market listing alerts
2. Craigslist - Craigslist's local marketplace is perfect for finding sellers who want to work directly with the buyer.
3. Zillow - Zillow should always be part of any experienced real estate investor just to keep tabs on what the general market in their target area is doing. You can save search on zillow to get email updates regarding your target area.
4. Redfin - Redfin should also be used for understanding local market trends. Set up email notifications for Redfin here.
5. Facebook Marketplace - Facebook Marketplace is a new comer to the list. Should be part of everyone's toolkit.
6. Ebay - Yes, you heard it right, ebay can also be a great place to find properties.

Are you able to lend on rural properties?

We can't lend on rural properties. How can I find out, if my property is rural? Here are more detail on how to verify if your property is rural in our Rural Designation Search Tools. The 2 search tools are hosted by USDA Rural Development Property Eligibility and CFPB Rural and Underserved Areas Checker. Both of the tools must flag the property as not rural for it to be eligible for our funding. Use these instruction to find out if your property is considered rural

Do you do cash out refi no seasoning for Colorado loans?

We do offer refinance options with no seasoning requirements. Here is the general criteria for cash out refi no seasoning for Colorado loans. Easiest way to see if you qualify is to answer a few question in our online quoter. It will compare all of our lending criteria against your answers and give you a response in under 1 minute without you needing to read anything. If in case you want to do it the hard way, please read on to see some of the guidelines below with a full list of our requirements here.

Minimum loan amount has to be above $55,000. Minimum As-Is value on the appraisal has to be $100,000. Between 1-4 units. Must have an active lease with proof of security deposit collected. Property condition must be C4 or better. Minimum credit score of 680. Credit score between 680 to 699, gets maximum LTV of 70%, credit score of 700+ gets maximum LTV of 75%. Max LTC, 100% (less than 90 days seasoning), 140% (90 to 179 days seasoning). Minimum verified rehab, 20% of purchase price (less than 90 days seasoning), n/a (90+ days seasoning). Minimum verified rehab, is an improvement that has been done to the unit to verify increase in as-is value in such as short period of time (less then 90 days) to justify the no seasoning period. Origination fee of 1 to 2 points depending on the loan amount to keep the lights on. Lender fee, $1,995 (doesn't go to OfferMarket), includes multiple fees to several different 3rd party verification services, necessary to certify the information in the Loan File for closing. Appraisal at AMC market price, we also have a promotion that new clients get 100% of their appraisal refunded at closing and 50% refund for existing clients. Time to close, 20-25 days.

I know this is a lot of information. You don't have to lift a finger to calculate any of this to see if you qualify, all you have to do is answer 14 simple questions about your deal and we will tell you if we are a good fit for you and what kind of deal we can offer you. To get an answer on your specific situation, please answer 14 simple questions here in our online quoter for Colorado DSCR loans.

Can you lend on properties worth less then $100k?

In short, no, appraisal as is value must come in at above 100k. We can only lend on properties that are less then $100k if they are in a portfolio with other properties and the portfolio's total as-is value on the appraisal is above $250k. In order to qualify for our loans, the property must appraise for at least $100k as-is at the time of the appraisal, however, total loan amount may be less then 100k, minimum loan amount is $55k.

Do I need to have my property insured to qualify for funding?

Yes, but if you don't already have insurance, we can roll it into the lending process with no extra charge or effort to you. Our insurance team works with thousands of carriers and is intimately familiar with the insurance requirements of your loan. They will be able to ether talk to the agent of your choice or find the most competitive offer without our network of carriers to complement your loan with no extra effort or expense to you. If you already have insurance, you should get an instant quote to see if we can offer you a more competitive rate and save you thousands of dollars over the lifetime of your policy. Get you instant insurance quote here.

How Do DSCR Loans Work in Colorado?

The overall process of getting a DSCR Loan in Colorado is approximately as follows. You submit an application for a loan (you can get started on your loan with an instant quote) answering 14 questions about your property. An instant quote will tell you if you qualify for the loan in under 1 minute of your time. It will also show you the a preliminary interest rate and loan amount. Once you select desired LTV (which can be changed later), your quote will be converted to a Loan File for processing purposes.

You will have to submit documents as part of your Loan File for underwriting. Documents we may ask for will include personal and property documents such as purchase contracts, current leases, borrowing entity documents, deeds, title work (we will engage a title company or an attorney on your behalf to draw up these documents), background and credit reports (that we will order), bank statements for liquidity verification as well as other documents that may be applicable to your specific deal. Full list of requirements can be found here in DSCR loan requirements.

We will also handle all the aspects of scheduling and appraisal for you. Please note that we have a promotion, where new clients receive a 100% refund at closing for their appraisal and existing clients forever get a 50% refund for their appraisal at closing as our way to say thank you for allowing us to partner with you! Once all the loan documents are submitted, the Loan File goes through underwriting, at which point the underwriting committee may ask for additional documents depending on their discretion. Once the committee receives all the documents and approves the file, closing can be scheduled.

The closing, will be handled by the title company or at the office of closing attorney. Once closing is complete, funds will be wired. Post closing, the loan will be entered into servicing and you will receive information regarding setting up auto-pay or other options that may be available for your loan depending on the specific servicer's capabilities.