DSCR Loans in Colorado Springs, CO: A Complete Guide for Rental Property Investors

Colorado Springs has quietly become one of the best mid-size cities in the country for rental property investors. A massive military presence, a booming tech sector, and a population that's grown by over 15% in the past decade create persistent rental demand. DSCR loans let you tap into this market based on the property's income rather than yours — no tax returns, no W-2s, no employer verification.

Here's how to make DSCR lending work in the Springs.

How DSCR Loans Work

A DSCR loan uses one metric to determine if you qualify: the property's Debt Service Coverage Ratio.

DSCR = Gross Monthly Rent ÷ Monthly PITIA

PITIA includes your Principal, Interest, Taxes, Insurance, and any Association dues. If the rent exceeds the total payment, the property "covers" its debt — and you qualify.

Most lenders set a minimum DSCR of 1.0 to 1.25. A DSCR of 1.25 means the property generates 25% more income than its debt obligations. Higher ratios get better rates.

Why Colorado Springs Works for DSCR Investors

The city's economic engine is unusually diversified for its size:

• Five military installations (Fort Carson, Peterson SFB, Schriever SFB, Cheyenne Mountain, USAFA) — roughly 50,000 active duty and 40,000+ military-affiliated civilians
• Growing tech and defense sector — companies like Amazon, Northrop Grumman, and L3Harris have expanded here
• University of Colorado Colorado Springs and Colorado College add student rental demand
• Tourism — Pikes Peak, Garden of the Gods, and the Olympic Training Center draw over 20 million visitors annually

Military towns are DSCR goldmines because service members are reliable tenants with guaranteed income and BAH (Basic Allowance for Housing) that often exceeds market rents.

Colorado Springs Rental Market Snapshot

• Median home price: $430,000–$465,000
• Median rent (single-family): $2,000–$2,300/month
• Median rent (3BR apartment): $1,650–$1,850/month
• Property tax rate: 0.49% (El Paso County — one of the lowest in the nation)
• Vacancy rate: 4–6%
• BAH for E-5 with dependents: ~$2,064/month (2026)
• BAH for O-3 with dependents: ~$2,502/month (2026)

Colorado's low property tax rate is a significant advantage for DSCR calculations. Lower taxes mean lower PITIA, which means a higher DSCR on the same rent.

DSCR Calculation: Colorado Springs Example

Property: 4BR/2.5BA single-family home near Fort Carson
Purchase price: $420,000
Down payment: 25% ($105,000)
Loan amount: $315,000
Interest rate: 7.5% (30-year fixed)
Monthly P&I: $2,203
Property taxes: $171/month ($2,058/year at 0.49%)
Insurance: $160/month
Total PITIA: $2,534/month

Market rent: $2,250/month

DSCR = $2,250 ÷ $2,534 = 0.89

This doesn't qualify with most lenders. But watch what happens with a slightly different property:

Property: 3BR/2BA in Fountain (just south of Fort Carson)
Purchase price: $360,000
Down payment: 25% ($90,000)
Loan amount: $270,000
Interest rate: 7.5%
Monthly P&I: $1,888
Property taxes: $147/month
Insurance: $145/month
Total PITIA: $2,180/month

Market rent: $2,100/month

DSCR = $2,100 ÷ $2,180 = 0.96

Still under 1.0, but some lenders offer sub-1.0 DSCR programs with 30% down. Increase the down payment to 30% ($108,000), and the loan drops to $252,000 with a PITIA of $2,051. DSCR: 1.02. Now you're in business.

Colorado Springs isn't a high-cash-flow market like the Midwest, but the combination of low taxes, strong appreciation, and reliable military tenants makes it work for DSCR investors who pick the right properties.

Best Neighborhoods for DSCR Loan Investments

1. Fountain / Security-Widefield

This area immediately south of Fort Carson is the strongest military rental market in the Springs. Service members stationed at Fort Carson overwhelmingly rent in Fountain because of the short commute.

• Typical purchase price: $330,000–$400,000
• Typical rent: $1,900–$2,200/month
• Investor angle: BAH-driven rents, low vacancy, and tenants who maintain properties because housing inspections are part of military life. Newer construction in Fountain keeps maintenance costs low.

2. Southeast Colorado Springs (Powers Corridor)

The Powers Boulevard corridor is the commercial heart of the east side — retail, restaurants, and easy access to Peterson SFB and Schriever SFB. Renters here include military families, defense contractors, and healthcare workers from nearby hospitals.

• Typical purchase price: $370,000–$440,000
• Typical rent: $2,000–$2,300/month
• Investor angle: Diverse tenant pool reduces your dependence on any single employer. Newer subdivisions from the 2010s offer low-maintenance 3–4BR homes.

3. West Side / Old Colorado City

The west side has seen significant gentrification over the past five years. Proximity to Garden of the Gods and Manitou Springs makes this area attractive for both long-term renters and short-term rental guests.

• Typical purchase price: $350,000–$450,000
• Typical rent: $1,800–$2,200/month
• Investor angle: STR potential near tourist attractions. A well-positioned property can generate $3,000–$4,500/month on Airbnb during peak season (May–October). Year-round averages are lower, so model conservatively.

4. Northeast (Briargate / Northgate)

The most affluent suburban corridor in the Springs. Higher home prices but also higher rents, attracting officers, tech workers, and professionals.

• Typical purchase price: $475,000–$600,000
• Typical rent: $2,400–$2,800/month
• Investor angle: Higher price points make DSCR harder to achieve, but properties here attract long-term, stable tenants. Best suited for investors prioritizing appreciation over cash flow.

5. Cimarron Hills / East Side

More affordable pockets east of Powers. Older housing stock from the 1970s–1990s, but lower price points that can produce solid DSCRs.

• Typical purchase price: $300,000–$370,000
• Typical rent: $1,700–$2,000/month
• Investor angle: A $320,000 home renting at $1,900/month with 25% down produces a DSCR near 1.10 — workable with most lenders. Budget for more maintenance on older homes.

Property Types for Colorado Springs DSCR Investors

Single-Family Homes

The backbone of the Springs rental market. Military families want yards, garages, and good school districts. 3–4BR homes in the $330,000–$420,000 range are the sweet spot for DSCR calculations.

Townhomes and Paired Homes

Colorado Springs has a large inventory of townhomes and paired patio homes, especially in newer communities. These typically carry HOA dues of $150–$300/month, which hurts your DSCR. Run the numbers carefully — if the HOA pushes your PITIA too high, the deal breaks.

Small Multifamily

True duplexes and triplexes are harder to find in Colorado Springs than in older Eastern cities, but they exist — particularly in the west side and older central neighborhoods. When you find one, the math usually works. A duplex at $400,000 with combined rents of $3,200/month produces strong DSCRs.

New Construction

Several builders offer investor-friendly new builds in Fountain and the east side. New construction means lower insurance, minimal maintenance for the first 5–10 years, and builder warranties. Some DSCR lenders will use projected rents for new construction based on comparable properties in the area.

Investment Strategies for the Springs

Strategy 1: Fort Carson BAH Play

Target 3–4BR homes in Fountain within 10 minutes of the Fort Carson gate. Price: $340,000–$380,000. Rent at BAH rates ($2,000–$2,100/month). Military tenants have reliable income and typically sign 12-month leases. With 25% down and Colorado's low taxes, you can hit a DSCR of 1.0–1.10.

Strategy 2: West Side STR

Buy a 2–3BR home near Garden of the Gods for $380,000. Furnish it ($15,000–$20,000) and list on Airbnb/VRBO. Project $3,200–$3,800/month in average annual revenue. Against a PITIA of $2,200, your DSCR hits 1.45–1.73 on projected income. Check El Paso County STR regulations — some areas require licenses.

Strategy 3: Value-Add East Side

Buy an older 3BR home on the east side for $310,000. Renovate ($25,000–$35,000) to bring it to modern standards. After renovation, rent at $1,900/month. Based on the original purchase price, your DSCR on a $232,500 loan (25% down) is about 1.15. Plus, the post-renovation appraisal may support a cash-out refinance later.

Strategy 4: Appreciation Bet in Briargate

Buy a 4BR in the Briargate area for $520,000. Rent at $2,600/month. DSCR at 25% down is around 0.90 — you'll need 30–35% down to make the numbers work, or a lender with a sub-1.0 program. The play here is long-term appreciation in the Springs' best neighborhood. Not a cash flow play, but a wealth-building one.

DSCR Loan Requirements for Colorado Springs Properties

• Minimum DSCR: 1.0–1.25 (some lenders go to 0.75)
• Down payment: 20–25% (30%+ for sub-1.0 DSCR)
• Credit score: 660 minimum, 720+ for best pricing
• Eligible properties: SFH, 2–4 unit, condo, townhome
• Loan amounts: $100,000–$2,000,000+
• No personal income docs required
• Appraisal with rental survey (Form 1007 for SFH, Form 1025 for 2–4 unit)
• Reserves: 6–12 months PITIA typically required

Frequently Asked Questions

How do Colorado's low property taxes help with DSCR loans?

El Paso County's effective tax rate is about 0.49% — roughly half the national average. On a $400,000 home, you're paying $1,960/year in taxes versus $4,000+ in many other states. That's $170/month less in your PITIA, which directly improves your DSCR by 0.05–0.10 points. It's a meaningful edge.

Can military BAH be used to calculate DSCR?

DSCR lenders don't look at the tenant's income source — they look at the market rent determined by the appraisal. However, BAH rates effectively set a floor for rents near military bases because service members will pay up to their BAH allowance. This creates a reliable rent baseline.

Are there short-term rental restrictions in Colorado Springs?

El Paso County and Colorado Springs require STR licenses. The city has been relatively friendly to STRs compared to some Colorado mountain towns, but regulations can change. Always verify current rules, obtain permits, and factor licensing costs into your analysis.

What credit score do I need for a DSCR loan in Colorado Springs?

Most lenders require a minimum 660 FICO. You'll get the best rates at 740+. Between 660–720, expect to pay 0.5–1.0% higher in rate, which can be the difference between a DSCR of 1.05 and 0.95.

Can I use a DSCR loan for a house hack in Colorado Springs?

DSCR loans are for investment properties only — the property can't be your primary residence. If you want to house hack (live in one unit, rent the others), you'd use an FHA or conventional loan. But once you've house-hacked your first property and want to scale without income documentation, DSCR loans are the next step.

Final Thoughts

Colorado Springs isn't a market where you'll see 1.5+ DSCRs on every deal. Home prices have grown faster than rents in recent years, and the math is tighter than it was in 2020. But the fundamentals are strong: a diversified economy, low property taxes, persistent military-driven rental demand, and steady population growth.

The investors who do well here pick the right sub-markets (Fountain, east side, west side STRs), keep purchase prices below $400,000 when possible, and use Colorado's tax advantage to squeeze out DSCRs that wouldn't work in higher-tax states. Run every deal through the DSCR formula before you make an offer — the numbers don't lie.