DSCR loans in Colorado: Denver, Colorado Springs, Aurora, Fort Collins and Pueblo rentals

A DSCR loan qualifies an investment property on its rent instead of your tax returns. I compare the monthly rent to the full payment: principal, interest, taxes, insurance and any association dues. In Colorado, the two things I check hardest are what kind of renting the city actually allows and what insurance costs on that address. Both can make or break the ratio.

If you would rather keep personal income off the application entirely, read about the no income DSCR loan, which is for investment property only.

Denver requires a license for any rental under 30 days, and the property has to be the host's primary residence. The city looks at things like where you vote, where your car is registered and how often you live there. Claiming it as a residence on a tax form isn't enough by itself.

A DSCR loan is for investment property, and a home you don't live in can't be your Denver primary residence. So in Denver I underwrite on long term rent. Long term rentals in Denver need their own residential rental license, and I check that it's in place.

Fort Collins started a rental registration program in 2024. Most rentals of 30 days or more have to register every year, name a local contact and self certify that the unit meets safety codes. Owner occupied rentals are exempt. It's a modest fee, but it's a yearly step to plan for, and student demand around Colorado State keeps the market active.

Colorado Springs has steady rental demand from the military installations around the city, including Fort Carson and Peterson Space Force Base. Military tenants move on set schedules, so I look at how a property has handled turnover. Aurora sits east of Denver with a lot of newer single family homes and townhomes, which often means HOA dues. Those dues go into the payment, so I get the exact amount.

Pueblo has lower purchase prices than the Front Range cities to its north. Lower prices can help the ratio, but I still use a realistic rent for the neighborhood and a real insurance quote.

Security deposits. Since August 2023, Colorado caps a deposit at two months' rent. The landlord has 30 days to return it, or up to 60 if the lease says so, with written reasons for anything kept.

Wildfire and hail insurance. Homes in or near the wildland urban interface, and much of the Front Range hail belt, can carry high premiums or limited options. I want a bound quote, not an estimate, because the premium is part of the payment.

Property tax. Colorado's residential assessment rate has changed several times in recent years. I use the current county bill and treasurer data for the parcel.

A lease or the appraiser's rent estimate, the tax bill, an insurance quote and the HOA dues if there are any. I finance 1 to 9 unit properties, including condos, but never mobile or manufactured homes. You can close in an LLC or in your personal name in Colorado. Lenders still review credit, down payment and reserves, and requirements vary by lender.

This is an illustrative example, not a real client. An investor wants a townhome in Aurora as a long term rental. I get the exact HOA dues, a bound insurance quote that accounts for hail and the county tax bill. With the market rent from the appraisal, I can check the ratio in one pass. If the investor had asked about renting it nightly in Denver instead, I'd explain the primary residence rule before we went any further.