DSCR Loans in Colorado

Colorado taxes a rental lightly, and hail sets much of what it costs to insure. A DSCR loan, short for debt-service-coverage-ratio loan, qualifies on the property's monthly rent divided by its full monthly payment: principal, interest, property taxes, insurance and any association dues, which lenders shorten to PITIA. In Colorado the tax line is small because the state taxes homes on a fraction of their value, and since 2024 ending a long tenancy has required a reason the statute names.

This guide covers the Colorado rules that move a rental's numbers, with Colorado Springs and Pueblo as the worked examples. Both cities sit along the Front Range south of Denver, and their tax bills on the same house differ by about 70%.

Colorado taxes a rental on a small slice of its value, and the slice changes in 2026

Colorado taxes a home on a fraction of its market value. The county applies a residential assessment rate to the value, then multiplies the result by the local mill levy, each mill being $1 per $1,000 of assessed value. Since a 2024 law, HB24B-1001, local governments and school districts each apply their own rate:

The 2026 figures are published by the Division of Property Taxation. Single-family homes, condos and apartment buildings share the same residential rate, so a fourplex is taxed on the same basis as a house. The school rate is a ceiling the state can lower each year.

3 dates matter for a DSCR file:

• Values reset every odd year. Counties reappraise all real property on a 2-year cycle in odd-numbered years, per the Larimer County Assessor, so the next new values take effect in 2027.
• Protests run on a June deadline. El Paso County's 2026 notice set June 8 as the last day to object to a value. From 2027 the deadline moves to June 1 under SB26-046.
• Ballot measures change mill levies. Colorado Springs School District 11 asked voters on November 3, 2026 to approve $775M of new debt, repaid with up to $49.8M a year of additional property tax, according to El Paso County's election notice. Check the result before you budget a rental inside the district.

Pueblo's mill levy is nearly double Colorado Springs', and it shows in the payment

The rate is statewide; the mill levy is local. A house inside the City of Colorado Springs and School District 11 carries 51.679 mills, per the El Paso County Assessor and Treasurer. A house inside the City of Pueblo and School District 60 carries 92.605 mills, per the Pueblo County Treasurer. On a $350K rental at the 2026 rates and the 2025 levies, that works out to about $1,230 a year in Colorado Springs and $2,107 in Pueblo. Actual 2025 bills on single-family homes in that Pueblo district came to about 0.62% of market value, so pull the bill for the exact parcel.

Here is what that means for an illustrative $350K rental financed at 75% of value, with the same loan and insurance in both cities:

The rate is illustrative, and the insurance line uses the Division of Insurance's average homeowners premium in Denver, $3,040 a year. HUD's Fair Market Rents, effective October 1, 2026, estimate the 40th percentile of gross rent, including tenant-paid utilities, so a well-kept single-family house can rent above them; a lender uses the appraiser's market rent for the actual property.

In Colorado Springs, a house renting at the 3-bedroom benchmark covers this payment at 1.07. In Pueblo, the payment is $73 higher and the benchmark rent is $634 lower, so the same file needs rent well above the benchmark or less loan. At the benchmark rent, a Pueblo house supports about $178K of loan at a 1.00 DSCR, 51% of $350K. You can test your own property in the DSCR calculator.

Hail, not wildfire, is the line that moves most Colorado insurance quotes

The Colorado Division of Insurance collected premium data from 20 homeowners insurers covering 80% of the market. In its hail findings, hail accounted for 26% to 54% of the average homeowners premium depending on the county, and wildfire for 0.9% to 24.6%. In Denver, $1,547 of the $3,040 average premium was hail. The same study estimated that hail mitigation could save a policyholder $82 to $387 a year, against $3 to $25 for wildfire mitigation.

For a rental, that makes the roof the first insurance question: its age, its material and whether it is rated for impact. Get a landlord policy quote during the inspection period or before the refinance appraisal, and put the real premium in the payment.

Colorado also has an insurer of last resort. The FAIR Plan, created by HB23-1288, has written residential policies since April 10, 2025, with property limits up to $750K, according to the Division of Insurance. Ask your agent whether a landlord policy qualifies before relying on it.

After 12 months, a Colorado tenancy ends only for a reason the statute names

HB24-1098, effective April 19, 2024, requires cause to evict a residential tenant. The requirement does not apply to a tenant who has been in the home for less than 12 months, to an owner who lives in a single-family home, duplex or triplex on the property or next door, to employer-provided housing, or to short-term rentals.

After 12 months, the landlord needs either a cause, such as nonpayment or a lease violation, or one of the no-fault grounds the statute lists. Each no-fault ground requires at least 90 days' written notice and generally takes effect at the end of the lease term:

• Selling the home. For a single-family home, townhome, duplex, triplex or condo, the landlord may end the tenancy to sell, and may not list it as a long-term or short-term rental for 90 days after the tenant leaves unless it was listed for sale on the MLS.
• A history of late rent. A tenant who pays more than 10 days late more than 2 times during the lease, after proper written demand each time, can be given notice at the end of the term.
• Moving in, demolition or substantial renovation, or a tenant who refuses a new lease with reasonable terms.

The underwriting point is that a tenant who has been in place for a year is likely to stay, and a plan that depends on clearing a building for a sale or a renovation needs a 90-day runway built into it.

Nonpayment cases move on a 10-day demand and a short court calendar

Collection still moves quickly once rent is unpaid:

graph LR
    A[Rent unpaid] --> B[Written demand<br/>10 days to pay]
    B --> C[Case filed]
    C --> D[Return date<br/>7 to 14 days]
    D --> E[Trial 7 to 10 days<br/>later if answered]
    E --> F[Order executed at least<br/>10 days after judgment]

• The demand. A standard lease requires 10 days' written demand before filing. A landlord who owns 5 or fewer single-family homes can use 5 days if the lease waives the 10, according to the Judicial Branch's demand form. Properties covered by the federal CARES Act, such as those with a federally backed mortgage, require 30 days.
• The court. The court sets a return date 7 to 14 days after filing, and a tenant who answers gets a trial 7 to 10 days after that, per the Judicial Branch's eviction clinic materials. The order cannot be carried out until at least 10 days after judgment under HB21-1121.

The rest of Colorado's recent rental law sets the economics around that timeline:

• Late fees cannot be charged until rent is 7 days late, and are capped at the greater of $50 or 5% of the past-due amount (SB21-173).
• Rent increases are limited to 1 per 12 months, with 60 days' notice where there is no written lease (HB21-1121).
• Security deposits are capped at 2 months' rent (SB23-184) and, from January 1, 2026, must be returned within 30 days of the lease ending, or up to 60 days if the lease says so (HB25-1249).
• Habitability. A landlord who fails to fix a condition that threatens a tenant's health or safety can be required to provide a comparable unit or a hotel room for up to 60 days (SB24-094). Since 2023, a landlord must also give a written radon disclosure before a lease is signed (SB23-206).
• Fees. From January 1, 2026, HB25-1090 requires an all-in price in rental advertising and bars certain fees, so ancillary income a property collected before may not survive into the rent a lender counts.

A quick court calendar shortens a bad tenancy; it does not refill the vacant months, which is what reserves are for.

Colorado Springs limits short-term rentals that the owner does not live in

Colorado still taxes a short-term rental as residential property; bills in 2024 to reclassify it as lodging property, SB24-033 and HB24-1299, did not pass. The cities set the operating limits:

• Colorado Springs issues 2 kinds of permits. An owner-occupied short-term rental requires the owner to live there at least 185 days a year. Non-owner-occupied permits applied for after December 26, 2019 are not allowed in single-family zoning districts and must be 500 feet from another non-owner-occupied rental elsewhere. Since June 30, 2025, a property with an accessory dwelling unit cannot hold a short-term rental permit. Each permit costs $124.95 a year and requires $500K of liability coverage (City of Colorado Springs).
• Pueblo charges a 4.3% lodger's tax on stays under 30 days (City of Pueblo).
• Statewide, booking platforms collect state sales tax and state-administered local taxes on stays under 30 days (Colorado Department of Revenue).

A lender counts short-term income from documented bookings or market data, as the short-term rental DSCR guide explains. A property that cannot hold a permit is underwritten on long-term rent.

A refinance appraisal meets a market where list prices are slipping

On a refinance, the appraisal sets the loan, and Colorado's listing data for September 2026 shows why a value from last year is the wrong starting point. Realtor.com's metro data shows median list prices down in every large Colorado metro and price cuts more common than nationally:

A rate-and-term refinance that only replaces the existing balance has more room to absorb a softer appraisal than a cash-out does. A cash-out refinance sized on last year's value may not, so size the request on recent closed sales, and check the payment against the rent before choosing how much to take out. The DSCR refinance guide compares the 2 structures, and the cash-out refinance guide covers pulling equity to buy the next property.

Colorado keeps closing and entity costs small

• No transfer tax. The Taxpayer's Bill of Rights in the state constitution bars new or increased real estate transfer taxes (art. X §20(8)(a), quoted in a Secretary of State filing).
• A 1-cent documentary fee. The state documentary fee is $0.01 per $100 of price on a sale over $500, or $35 on a $350K purchase, and the county clerk charges a flat $43 per recorded document, per the El Paso County Clerk and Recorder.
• A cheap LLC. Forming a Colorado LLC costs $50 online and the annual periodic report costs $25, per the Secretary of State fee schedule. A lender will ask for a current certificate of good standing for the borrowing LLC.

The rest of the closing costs are covered in our investment property closing cost breakdown.

What to send for a Colorado DSCR file

• Purchase contract, or the payoff statement and current mortgage statement for a refinance
• Leases and a rent roll, with move-in dates, since tenancies past 12 months are subject to the for-cause rules
• The current tax bill and notice of value from the county
• An insurance quote or declarations page showing the roof's age and the hail deductible
• For a short-term rental, the city permit and 12 months of booking history
• LLC documents, EIN letter and a current certificate of good standing from the Secretary of State
• Bank statements showing reserves

The full list is in the borrower file readiness checklist. Sphinx Capital's published DSCR terms run from $100K to $20M, up to 80% LTV, rates from 6.25% and coverage as low as 1.00, with a 660 minimum FICO and closings as fast as 15 days from a complete file; the refinance program covers rate-and-term and cash-out on the same sheet. A Colorado file that arrives with its tax bill, insurance quote and leases already in order is the kind that can move that quickly.

Sources

• HB24B-1001, Property Tax — Colorado General Assembly
• Residential Local Government Assessment Rate — Colorado Division of Property Taxation
• Residential School Assessment Rate — Colorado Division of Property Taxation
• Assessor FAQ — Larimer County Assessor
• SB26-046, Property Tax Protest Deadline — Colorado General Assembly
• Notice of Election to Increase Taxes or Debt, November 3, 2026 — El Paso County
• Property record and levies, tax area FBC — El Paso County Assessor
• Mill Levies, tax year 2025 — El Paso County Treasurer
• Tax account, tax district 60B — Pueblo County Treasurer
• Fair Market Rents, FY2027 — U.S. Department of Housing and Urban Development
• Hail is the Number One Cost Driver of Insurance in Colorado — Colorado Division of Insurance
• FAIR Plan — Colorado Division of Insurance
• HB23-1288, Fair Access to Insurance Requirements Plan — Colorado General Assembly
• HB24-1098, Cause Required for Eviction of Residential Tenant — Colorado General Assembly
• JDF 99A, Demand for Compliance or Right to Possession — Colorado Judicial Branch
• Eviction clinic materials, June 2025 — Colorado Judicial Branch
• HB21-1121, Residential Tenancy Procedures — Colorado General Assembly
• SB21-173, Rights in Residential Lease Agreements — Colorado General Assembly
• SB23-184, Protections for Residential Tenants — Colorado General Assembly
• HB25-1249, Tenant Security Deposit Protections — Colorado General Assembly
• SB24-094, Safe and Habitable Residential Premises — Colorado General Assembly
• SB23-206, Radon Protections for Residential Tenants — Colorado General Assembly
• HB25-1090, Protections Against Deceptive Pricing — Colorado General Assembly
• SB24-033 and HB24-1299, short-term rental property tax bills — Colorado General Assembly
• Short Term Rentals — City of Colorado Springs
• Lodger's Tax — City of Pueblo
• Rooms and Accommodations — Colorado Department of Revenue
• Initiative filing quoting art. X §20(8)(a) — Colorado Secretary of State
• Recording Fees — El Paso County Clerk and Recorder
• Business fee schedule — Colorado Secretary of State
• Inventory Core Metrics, Metro, September 2026 — Realtor.com Economic Research
• Inventory Core Metrics, Country, September 2026 — Realtor.com Economic Research