DSCR Loan Colorado

What You Need To Know About Colorado DSCR Loans

There are a couple of things you should know about DSCR Loans in Colorado.

First off, the average property price in Colorado is extremely expensive. In fact, the average home value in Colorado ($543,143) is $200,000 more than the average home value in the US ($348,853).

This puts the Colorado market out of reach for many aspiring real estate investors. You, or your company, need to have particularly good financials in order to qualify for a high value DSCR Loan.

In addition to extremely expensive properties, the Colorado housing market is currently going through a down turn. For instance, over the past year, home values in CA have dropped by 4.4%. This can be good news or bad news depending on your perspective. If you currently own a property in Colorado, it probably isn’t the best time to sell. However, if you are looking to buy, you can potentially score a slightly discounted price on a very valuable home that should appreciate nicely over the long term.

 

DSCR Loan Colorado Requirements

• Interest Rate: from 7.5%
• Minimum DSCR: None
• Minimum FICO: 660
• Down Payment Required: 20%
• Loan To Value: up to 80%
• Loan To Purchase Price: up to 80%
• Minimum Loan Amount:$150,000
• Maximum Loan Amount: $3,000,000
• Origination Fee: 2-3%

If you are looking for a Colorado DSCR Loan, it’s important to keep the following DSCR Loan Requirements in mind.

Interest Rate: The Colorado DSCR loan carries a fixed interest rate of 7.5%, impacting the overall borrowing cost and influencing the investment’s financial feasibility.

Minimum DSCR: Notably, there is no minimum debt service coverage ratio (DSCR) mandated, providing greater flexibility in loan structuring.

Credit Score: Eligibility for the loan requires a minimum FICO score of 660, indicating a relatively good credit history for the borrower.

Down Payment: A 20% down payment based on the property’s purchase price is necessary, reducing the lender’s risk and ensuring the borrower’s significant stake in the investment.

Loan-to-Value (LTV): The loan can cover up to 80% of either the property’s value or purchase price, necessitating a minimum 20% down payment from the borrower.

Minimum & Maximum Loan Amounts: The loan is available for amounts between $150,000 and $3,000,000.

Origination Fee: A lender’s origination fee of 2-3% of the loan amount applies to cover administrative costs.

Colorado DSCR loan offers a fixed interest rate of 7.5%, without a minimum DSCR requirement. To qualify, borrowers need a minimum FICO score of 660 and must provide a 20% down payment. The loan-to-value and loan-to-purchase price ratios permit up to 80% financing, and the loan amount can range between $150,000 and $3,000,000. Additionally, an origination fee of 2-3% is applicable. Careful consideration of these factors will enable potential borrowers to evaluate whether a Colorado DSCR loan aligns with their investment needs.

 

DSCR Loan Colorado Down Payment

Real estate investors are required to make a 20% down payment in order to secure a DSCR Loan in Colorado. Some DSCR lenders may allow lower down payments if you are a repeat borrower and have an excellent track record and credit score. However, for most lenders, a 20% deposit is required.

 

DSCR Loan Colorado Interest Rates

The interest rates for DSCR Loans in Colorado currently start at 7.5%. However, it is important to recognize that there several factors that determine the final interest rate offered to rental property investors in CO. These factors include:

• FICO Score & Credit History
• The Investment Property
• Real Estate Investing Experience
• The Current Repo Rate
• The Local Property Market Where The Property Is Situated

There are also other considerations that the lending team will consider before offering the final terms of the DSCR loan.

 

How To Use DSCR Loans To Buy Rental Properties In Colorado

One of the best aspects of a Colorado DSCR Loan is that the rental income of the investment property is factored into the loan terms. So, instead of being responsible for making the full monthly loan repayment, the rental income that the property can produce helps determine if the loan can be granted.

To use DSCR Loans to Buy Rental Properties In Colorado, these are the main steps to follow:

• Step 1: Find a property that can produce good rental rates
• Step 2: Ensure you have the finances to cover the down payment
• Step 3: Apply for a DSCR Loan with top-rated DSCR Lender

Obviously, there are additional complexities involved in each of these key steps, but from a high-level perspective, these steps outline what you need to do.