DSCR loans in Colorado
A DSCR loan qualifies a rental property mainly on the rent it earns, so your tax returns are not the deciding factor. Each lender sets its own ratio, down payment and property rules. Max compares DSCR lenders and tells you whether the numbers work.
A short call. No obligation,
no paperwork to start.
Max Henry · Senior Loan Officer · NMLS #2186109
- Qualifies on
- The property’s rental income
- Personal income docs
- Not the deciding factor
- Use
- Investment properties only
- Ownership
- Many lenders allow an LLC
Who it is for
- Self-employed investors whose tax returns understate their income
- Investors adding a rental to an existing portfolio
- Investors who hold property in an LLC
- Buyers of long-term rentals and, with some lenders, short-term rentals
What it takes
- The DSCR
- Debt service coverage ratio: the property’s rent divided by its monthly payment, including taxes, insurance and any association dues. Lenders want the rent to cover the payment, and each sets its own minimum.
- Down payment
- Lenders commonly ask for 20% to 25% down on DSCR loans.
- Credit and reserves
- Lenders set a minimum credit score and usually want several months of payments in reserve.
- Rent evidence
- A lease, or the appraiser’s estimate of market rent for the property.
- Investment use only
- DSCR loans cannot be used for a home you will live in.
General guidelines. Lenders set their own requirements, and Max confirms what applies to you.
Check the DSCR on a property
Rent divided by the full monthly payment: principal, interest, taxes, insurance and any association dues.
1.17The rent covers the payment. Each lender sets its own minimum ratio.
How the ratio is calculated
Divide the monthly rent by the full monthly payment: principal, interest, taxes, insurance and any association dues. A property that rents for $2,400 with a $2,000 payment has a DSCR of 1.2. A ratio of 1.0 means the rent exactly covers the payment.
Each lender sets its own minimum, and a stronger ratio usually means better terms. Use the calculator on this page to check a property before you call.
DSCR loan or conventional investment loan?
DSCR loans usually carry higher rates than conventional loans. In exchange, they do not depend on your personal income documents, and many lenders let you close in an LLC. If you can qualify for either, Max shows you both side by side. See all the options on the investor loans page.
On the call with Max
DSCR lending has no single rulebook. Each lender sets its own ratios, down payments and property rules, so the lender you pick changes the deal.
Tell Max about the property and the rent. He tells you whether the ratio works and which lenders fit. DSCR terms from different lenders side by side: rate, down payment, reserves and prepayment terms.
DSCR loan questions
- What DSCR do lenders want?
- It varies by lender. Lenders want the rent to cover the payment and each sets its own minimum. Bring the rent and the price and Max will tell you where the property stands.
- Can I buy a rental property without using my personal income?
- Often, yes. A DSCR loan qualifies the purchase mainly on the property’s expected rental income instead of your pay stubs or tax returns.
- Can I close in the name of an LLC?
- Many DSCR lenders allow it. Tell Max how you plan to hold the property so he looks at the right lenders.
- Do DSCR loans work for short-term rentals?
- Some lenders accept short-term rental income and some do not, and local rules also apply. Bring the address and Max will tell you what is possible.
- Can I use a DSCR loan for the home I live in?
- No. DSCR loans are for investment properties only.
Check the numbers on your rental
One call tells you which loan fits, what it takes and what comes next.