Colorado DSCR Loans

What is a DSCR Loan Program?

A DSCR (Debt Service Coverage Ratio) loan program is a type of financing designed for real estate investors. It assesses loan eligibility based on the rental income a property produces, rather than the borrower’s personal credit history or income. This makes it an ideal solution for investors looking to secure funding without the hurdles of traditional lending requirements.

How Does a Colorado DSCR Loan Work?

DSCR loans in Colorado prioritize the rental income of the investment property, allowing for a simplified qualification process. Instead of requiring extensive personal financial documentation, DSCR loans evaluate whether the property itself generates enough income to service the loan. This approach offers a faster approval process and greater flexibility for investors looking to scale their portfolios.

How is a Debt Service Coverage Ratio Calculated?

The Debt Service Coverage Ratio (DSCR) is a key metric used to determine a property’s ability to cover its loan payments. It is calculated by dividing the net operating income (NOI) by the total mortgage payments.

For example, if your Colorado rental property generates $6,000 in monthly rental income and your total mortgage expenses amount to $4,500 per month, your DSCR would be:

$6,000 / $4,500 = 1.33

A DSCR above 1.0 means the property is generating sufficient income to cover its debt obligations, with ratios above 1.25 typically considered ideal by lenders.

What is a Good Debt Service Coverage Ratio?

A DSCR of 1.25 or higher is generally considered strong, indicating that the property’s income comfortably covers loan obligations. A ratio of 1.0 means the property is breaking even, while anything below 1.0 suggests that the property is not generating enough income to cover debt payments.

What are the Benefits of a DSCR Loan?

Investors in Colorado can benefit from DSCR loans in several ways:

• Easier Qualification: Unlike traditional loans, DSCR loans focus on property income rather than personal income, making them accessible to self-employed individuals or those with complex financial histories.
• Scalability: Since personal income and credit are not the primary factors, investors can qualify for multiple DSCR loans, allowing them to expand their portfolios more easily.
• Fast Approval Process: With no need for extensive financial documentation, DSCR loans can be approved quickly, giving investors a competitive edge in fast-moving real estate markets.
• Flexible Loan Terms: Capital Fund 1 offers a range of loan options, including long-term rental programs and short-term financing solutions, tailored to meet the needs of different investment strategies.

Long-Term Rental DSCR Loan Requirements

For investors looking to secure long-term financing, Capital Fund 1 offers DSCR loan programs with 15- to 30-year terms. To qualify, your rental property must meet the following criteria:

• Generate sufficient rental income to cover mortgage payments and expenses
  • Meet minimum DSCR requirements, typically 1.25 or higher
  • OR get a no ratio option by reaching out to our experts to learn more about your options
• Be an eligible residential or multifamily investment property
• Provide documentation of rental income, such as lease agreements

These long-term DSCR loans offer stability and predictable financing, making them an excellent choice for investors planning to hold properties for extended periods.

Apply for the Long-Term Rental Program with Capital Fund 1 Today

If you’re ready to grow your real estate portfolio with a DSCR loan, Colorado’s Capital Fund 1 makes the process simple. Our application process is streamlined to get you approved and funded quickly, so you can focus on securing profitable investments.

Here’s how it works:

1. Submit Your Application – Fill out our online application and provide key details about your investment property, including rental income, property type, and loan amount requested.
2. Loan Underwriting – Theunderwriting team reviews your application and evaluates the property’s income potential. Terms can often be provided within the same day.
3. Fast Funding – Once approved, you select your closing date, finalize required documents (escrow, title, and insurance), and receive funding fast.

With over a decade of experience and a strong track record of funding real estate deals, we are the trusted partner for investors across Colorado. Let us help you secure the financing you need to take your real estate investments to the next level. Whether you’re expanding your portfolio or looking for stable, long-term financing, our DSCR loans provide the flexibility and speed you need to succeed.