A surprising number of Colorado Springs rentals started as someone's home. A service member buys near base, gets orders, keeps the house and rents it out. Years later the equity is substantial, and a cash-out refinance can put it to work.
In short: LendingStreet's DSCR cash-out refinance lets owners of 1-8 unit rentals in Colorado Springs borrow up to 75% of appraised value, qualifying on the property's rent rather than personal income or tax returns. Loans start at $150,000 with no stated maximum, the minimum credit score is 620 and the property can be held in an LLC. The home must be a rental leased to a tenant, and in Colorado Springs the ratio usually turns on the insurance premium and how much leverage the rent can carry.
Many Colorado Springs investors never set out to be landlords. They bought near Fort Carson, Peterson or the Academy, received orders elsewhere and rented the house rather than sell it. If the home is now leased to a tenant and you live elsewhere, it is an investment property, and a DSCR cash-out refinance can replace the original loan and pull out equity based on the rent.
Bring the current lease and proof that rent is being paid. The DSCR uses that rent, or market rent on some programs, to qualify the new loan.
If you converted your former home to a rental recently, bring the lease and a record of the tenant's deposits and rent payments. Rent that is documented and at market makes the ratio easier to support.
Many military owners also keep a property manager in Colorado Springs while stationed elsewhere. Their records, including the rent ledger and maintenance history, help the underwriting and the appraisal.
This example is illustrative and not a quote. An owner kept a Briargate four-bedroom as a rental after moving away and still owes $200,000. It now appraises at $540,000 and leases for $3,250 a month. Taxes are about $234 a month and insurance $215.
At the 75% LTV maximum the new loan is $405,000, which would return about $205,000 before closing costs. Estimated principal and interest is about $2,818, for a payment of about $3,267 and DSCR of about 0.99x, below the 1.0x standard minimum. At 65% LTV the loan is $351,000, cash out is about $151,000, the payment drops to about $2,891 and DSCR is about 1.12x. In higher-priced north-side neighborhoods the rent, not the appraisal, usually sets the cash-out.
These scenarios use the example home. Actual results depend on the appraisal, closing costs and the rent.
| LTV | New loan | Gross cash out | Approximate DSCR |
|---|---|---|---|
| 75% | $405,000 | $205,000 | 0.99x |
| 70% | $378,000 | $178,000 | 1.06x |
| 65% | $351,000 | $151,000 | 1.12x |
El Paso County revalues property every two years, and the state's residential assessment ratio has changed several times recently. A revaluation can raise your tax bill, which raises the payment used in the DSCR. Use the most recent bill, and if a new notice of value has arrived, budget on the higher figure.
Homes in metro districts carry an extra mill levy. Check the bill for those lines before estimating your cash-out.
Ask the assessor's office for the property's current mill levy if the bill is not handy.
If you bought or renovated the property recently, cash-out seasoning rules decide whether the appraised value or your cost basis is used. Seasoning varies by program; our seasoning guide explains the details. A rate-and-term refinance is sometimes the better first step after a recent rehab.
Hail has pushed Colorado Springs insurance premiums up, and a renewal or a new carrier can change your payment. Get a current landlord policy quote before you set a cash-out target. A newer impact-resistant roof can help both the premium and the appraisal.
Ask your insurance agent about the wind and hail deductible on the renewal, not just the premium. A percentage-based deductible on a higher-value home can be large, and some owners choose a higher premium for a lower deductible.
If your roof is near the end of its life, a cash-out to replace it can lower future premiums and protect the rent, but the appraisal will reflect its current condition.
Owners often use the proceeds for a down payment on another rental, a new roof or other capital work, or to pay off higher-cost short-term debt. Proceeds from a business-purpose loan should be used for business purposes.
Before you redeploy the cash into another Colorado Springs rental, run that property's DSCR on its own numbers. Each loan must clear the program minimum on its own rent.
Duplexes and small multifamily buildings near downtown, Hillside and Knob Hill often have stronger rent relative to value than single-family homes in Briargate or Northgate. That means the rent can support a larger share of the 75% LTV maximum. The combined rent of all units is used in the ratio, so bring every lease and a rent ledger.
If the building has owner-paid utilities, include a year of bills; they affect cash flow and, on some programs, the underwriting.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, estimated value, payoff and lease through the form below or call (877) 298-1001. We will show you the cash-out at several LTVs and the DSCR at each.
Yes, if it is leased to a tenant and you live elsewhere. It is then an investment property and can qualify on its rent.
Up to 75% of appraised value minus your existing loan and costs, as long as the rent covers the new payment at about 1.0x or better.
It can. A higher assessed value raises taxes, which raises the payment used in the DSCR. Use the newest figure.
Seasoning rules vary by program and determine whether the new appraised value can be used. See our seasoning guide.
No. The loan qualifies on rent, credit (620 minimum) and reserves.
Yes. 1-8 unit properties qualify using the combined rent of all units.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so the home must be rented to a tenant, not lived in by you.
Take a smaller cash-out. In many Colorado Springs neighborhoods the rent, not the appraisal, sets the loan amount.
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