What is a DSCR loan? A Debt Service Coverage Ratio loan is a specialized mortgage designed for real estate investors, particularly those buying rental properties. Unlike traditional loans that qualify borrowers based on personal income and credit, a DSCR loan focuses on the property’s ability to generate rental income to cover the mortgage payment. This makes it a popular choice for investors in Colorado Springs looking to expand their portfolios with short-term or long-term rentals.
For details and current rates, see Angel Oak DSCR Loan Calculator.
How DSCR Loans Work: Lenders calculate the DSCR by dividing the property’s gross monthly rental income by the total monthly mortgage payment (principal, interest, taxes, insurance, and HOA fees if applicable). A DSCR of 1.0 means the rent exactly covers the payment; most lenders require 1.0–1.25 or higher for approval. For example, if a property rents for $2,500/month and the payment is $2,000, the DSCR is 1.25—qualifying in most cases.
Benefits for Colorado Springs Investors: In our market, where short-term rentals thrive near Pikes Peak, Garden of the Gods, Woodland Park and military bases like Peterson AFB, DSCR loans offer flexibility. They require no personal income verification, making them ideal for self-employed investors or those with multiple properties. Rates in 2026 typically range 6.5–8%, slightly higher than conventional mortgages, but the streamlined process and ability to scale a portfolio outweigh the cost for many. Neighborhoods like Fountain, Peyton, and Manitou Springs see strong rental demand, supporting DSCR qualification.
Key Considerations
- Higher Down Payments: Expect 20–30% down (higher than conventional loans).
- Rental Income Proof: Lenders use market rent estimates or lease agreements—short-term rental projections (Airbnb/Vrbo) are often accepted.
- No Personal Debt-to-Income Check: Focus stays on the property’s cash flow.
Ready to explore investment properties or DSCR financing in Colorado Springs? Call, text, or visit thebaconpartners.com/contact for personalized guidance.
Want to learn more about short-term rental investing? Check out my article here: Owning Your First Short Term Rental in Colorado Springs.
I’m Andrew Bacon, a Top Colorado Springs Real Estate Broker in Colorado Springs. I take care of my clients as family and aim to provide them with the necessary information and tools to navigate the complex markets in Colorado and around the US.
As a member of the Pikes Peak & Denver Metro Association of Realtors, I enjoy staying aware of current cultural trends and economic drivers.Check back regularly for new articles on all things real estate along Colorado’s Front Range.
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