The Quick Read: A DSCR lender turns rent into one counted number and divides it by the full monthly housing obligation: principal, interest, taxes, insurance, and any HOA dues. The counted rent is usually the lower of the lease and the appraiser’s market rent. Denver Tech Center (DTC) is a useful case study because office, apartment, and conversion income all sit within a few miles of each other, and only some of that income fits a residential DSCR loan.
- Only 1–4 unit residential property fits. A condo, townhome, single-family home, or duplex to fourplex works. Office suites and 5+ unit apartment buildings use commercial or multifamily underwriting.
- The lower rent usually wins. On most programs in the network, a lease above market rent adds nothing, and a lease below market can pull the number down.
- Each property stands alone. Rent from your other rentals is not pooled in.
- Clearing 1.00 is not positive cash flow. The ratio ignores repairs, vacancy, management, utilities, and capex.
- Restricted rents are underwritten as restricted. That matters in DTC, where some converted buildings cap what a unit can charge.
DSCR stands for debt service coverage ratio. It asks one question: does the property’s rent cover its own payment? DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. The complete DSCR loans guide covers the basics. This piece shows how that logic plays out in one specific submarket.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 29, 2026
Prefilled with starting assumptions — enter your own rent or nightly figures, taxes, insurance, and HOA for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 29, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
Key Terms Defined
PITIA: Principal, interest, taxes, insurance, and HOA or association dues. It is the full monthly obligation on the property.
Market rent: What the appraiser concludes the unit would rent for today, based on comparable rentals nearby.
Form 1007: The appraiser’s single-family comparable rent schedule. It supports a monthly rent conclusion for a one-unit property.
Form 1025: The small residential income property appraisal report, used for two- to four-unit properties. It supports rent per unit.
Counted rent: The one rent figure the lender puts in the numerator. It is not always the rent you collect.
LTV: Loan-to-value. The loan amount as a percentage of the property’s value or price.
Seasoning: The waiting period a lender wants before certain transactions, such as a cash-out refinance after purchase.
Step 1: Does the Property Fit the Box?
Classification comes before any math. A residential DSCR loan covers one- to four-unit properties. Near DTC, that means condos, townhomes, single-family homes, and small multiplexes.
DTC’s large office buildings are a different product. So are apartment complexes with five or more units. Those go through commercial or multifamily underwriting, built on rent rolls and net operating income. An “office suite in DTC” does not qualify for a 1–4 unit DSCR loan, however good the lease looks.
The network also does not offer DSCR on manufactured homes (single- and double-wide), log homes, or barndominiums. Those property types are not offered, full stop.
Short-term rental programs carry stricter eligibility. The rest of this piece assumes a standard long-term rental unless noted.
Which Rent Number Does the Lender Use?
The counted rent depends on the property’s situation. Most programs we place files with follow this pattern:
| Situation | Rent source | What the lender tests |
|---|---|---|
| Leased property | Lease vs. market rent | Usually the lower of the two |
| Vacant or purchase | Appraiser’s market rent | The 1007 or 1025 carries the whole number |
| Above-market lease | Market rent | Surplus rent adds nothing |
| Family or below-market lease | Market rent | Usually triggers a market-rent test |
| Short-term rental | Hosting history or projection | Program-specific rules apply |
This is where borrowers get surprised. Say you buy a DTC-area condo and the tenant signs a lease well above what comparables support. The signed lease feels like income. The lender sees a number the appraiser can’t back up and counts the lower figure.
The reverse also bites. A below-market lease to a relative or a long-time tenant can drag the counted rent down. Lendmire’s piece on how a lender reads rental income on a Memphis property walks through the same lease-versus-appraisal logic in a different market.
How the Appraisal Builds the Market Rent
The appraiser builds market rent from comparable rentals. For a one-unit property, the rent schedule is Form 1007. The Fannie Mae Selling Guide names it as the Single-Family Comparable Rent Schedule. For two- to four-unit properties, the same guide names Form 1025, the Small Residential Income Property Appraisal Report.
Here is the contrast that matters. Fannie Mae requires the 1007 only when a one-unit borrower uses rental income to qualify for its own loans. DSCR programs are business-purpose, non-agency products. They borrow the forms as rent documents, but agency rules do not govern them. Each program sets its own rent treatment. The Fannie Mae Learning Center lists both forms in its appraiser forms index if you want to see what they look like.
One more point on the form: it is a monthly-rent schedule. It is built on long-term comparables, not nightly rates.
Step 2: The Denominator
The bottom of the fraction is PITIA. Principal and interest depend on the loan size and terms. Taxes and insurance get added, and so do HOA or condo dues.
Dues matter more near DTC than many investors expect. A lot of the nearby residential stock is condos and townhomes. A dues increase raises the denominator just as a tax or insurance increase does. The lender uses the figures documented at the time of the file.
Here is how the ratio reads in plain terms. Rent used for lender review divided by PITIA gives a result like 1.00x or 1.20x. At 1.00x, the counted rent exactly matches the monthly obligation. Above 1.00x, the rent has room to spare. Below it, rent falls short.
Each property is tested alone. A strong fourplex in your portfolio does not rescue a weak condo.
A Worked File Walkthrough
Picture an investor buying a DTC-area condo with a tenant already in place. The lease sits slightly above what the appraiser’s comps support. The lender counts the lower figure, the appraiser’s market rent.
Run the numbers this way, with modeled ratios rather than dollars. Using the lease, the file looks like roughly 1.25x coverage. Using the market rent, it drops to roughly 1.15x. The lender uses 1.15x. That still clears 1.00, but it may land in a different leverage tier than 1.25x would have.
Now stress the denominator. Suppose a tax reassessment and a condo-dues increase raise PITIA enough to pull that 1.15x down toward 1.05x. The deal still clears the 1.00 line, but with very little margin. A small further move, such as a lower appraisal rent, would push it under.
The lesson: run the ratio on market rent, not on the lease, before you make an offer.
What the Lender Reviews Besides Rent
Rent coverage is one test. A second test runs alongside it. The strongest files clear both: enough equity and enough coverage.
- Leverage. Most purchase files land at 75%–80% LTV on an investment property, which means 20%–25% down. Select high-leverage programs reach 85% LTV (15% down) with roughly a 700+ score.
- Credit. A 620 floor exists in parts of the network. Most programs want around 660. A 700+ score unlocks the strongest leverage tiers.
- Reserves. Commonly about 6 months of PITIA, stepping up to about 9 months on loans above $1,500,000. Conservative rate-and-term files at modest leverage can see reserves waived. It varies by lender, leverage, and transaction type.
- Loan size. Roughly up to $3,000,000 on standard programs. Above $2,500,000 the network generally holds to 30-year fixed structures.
- Property. The appraisal, insurance, title, and entity documents all get reviewed, and condo projects get their own eligibility look.
A larger down payment lowers the monthly payment and can lift the ratio. It never erases leverage caps, credit floors, reserve rules, or property eligibility. All of this is subject to lender guidelines and not a commitment to lend.
Why Denver Tech Center Complicates the Picture
DTC is an employment hub, and many investors assume that makes rent safe. The reality is mixed. The office market around DTC is soft, and vacancy figures depend on who draws the boundary. One broker write-up on the DTC office market shows CBRE’s Southeast submarket well above a CoStar-based DTC-to-Lone Tree corridor. Another broker piece comparing DTC and downtown puts CBRE’s DTC figure between those two. Read together, roughly one-fifth to one-quarter of office space is empty, depending on the source.
Why does this matter for a residential DSCR file? Two reasons. First, office income does not belong in a 1–4 unit DSCR loan at all. Second, a soft submarket makes stable comps harder to find. The appraiser’s rent conclusion rests on comparable rentals, so thin or shifting comps can lower the number.
Underwriting does not credit “tech jobs equal safe rent.” The lender counts the rent the appraiser can support. Demand shows up in the comps, in lease terms, and in vacancy, not in a headline about nearby employers.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Edge Case: Office-to-Residential Conversions
DTC now has converted office space. Lofts on Monaco is a 143-unit conversion of an office building. CPR reports the units are income-restricted, serving tenants at or below 70% of area median income, with rents capped under state housing finance limits.
The underwriting principle is simple. Restricted-rent units are underwritten on the restricted rent, not on open-market comps. A unit in a restricted building cannot be valued for rent like the market-rate apartment next door. Check whether any rent restriction applies before you run the ratio.
Conversions also add supply. Bisnow reports nearly 3,000 units planned across Denver, with metro office vacancy near 27%. That is metro-level data from a trade outlet. New supply can press on rents and muddy the comps an appraiser uses.
Edge Case: Short-Term and Furnished Rentals
The rent schedule is a monthly, long-term form. It often sits well below short-term potential, so an investor who plans to host guests cannot rely on it to carry the number.
Short-term rental programs in the network follow different rules. Purchase leverage tops out at 75% LTV, refinance runs around 70%, and cash-out runs 70%. Expect a 640+ score and about 12 months of hosting history. Coverage floors are 1.00 on purchases and refinances. Some programs weigh a market projection, and the appraiser may need to add a separate narrative. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
Furnished mid-term rentals and corporate-lease arrangements sit between a standard lease and a short-term rental. A corporate lease is just a lease. It gets compared with market rent like any other, and it gets no automatic credit for the tenant’s name. If the unit is furnished and rented in short stints, the file can look more like a short-term rental, and the program rules change.
If Coverage Comes In Borderline
When the ratio lands near 1.00, several levers exist:
| Lever | What it moves |
|---|---|
| More down payment | Lowers the denominator |
| Stronger credit | May open better leverage tiers |
| Interest-only period | Lowers the monthly obligation (select lenders) |
| Extended 40-year term | Lowers the monthly obligation (select lenders) |
| Better rent support | Raises the counted rent if comps allow |
Coverage below 1.00 is a separate path. A select-lender route in the network takes coverage below 1.00 with leverage and terms adjusted. No-ratio qualification is available only through select lenders, generally for borrowers who already own a primary residence. Both are real options for the right file, though neither works like the standard route.
Where DTC Files Stall
Based on how these files tend to run, these issues cause most of the trouble:
- Appraisal rent below the lease. The lender counts the lower number, and the ratio shrinks.
- Condo project problems. The building itself may not meet program eligibility.
- Vacancy at purchase. With no tenant, the appraiser’s number carries everything.
- Unsupported rent claims. A lease or a seller’s rent figure the comps do not back up.
- Wrong property type. Office or 5+ unit buildings sent into a residential DSCR box.
- Dues and tax creep. A higher denominator than the borrower modeled.
Fixing these before you submit usually costs less than discovering them at the appraisal.
DSCR Versus Conventional in Brief
A conventional loan looks hard at your personal income and debt ratios. A DSCR loan looks at the property. For a DTC-area investor with several properties, the practical difference is that the property’s rent, not your tax returns, drives the decision.
Frequently Asked Questions
Can I use a DTC office or retail space for a DSCR loan?
Not under the residential product. Residential DSCR covers one- to four-unit properties. Office, retail, and 5+ unit buildings go through commercial or multifamily underwriting, which relies on rent rolls and net operating income.
Which rent counts if my lease is higher than the appraisal?
Usually the lower figure. On most programs in the network, the counted rent is the lower of the lease and the appraiser’s market rent. An above-market lease adds nothing to the number.
Does a ratio above 1.00 mean the property cash flows?
No. The ratio compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside the calculation, so a property can clear 1.00 and still lose money.
How do HOA dues affect a DTC condo?
They go into the denominator. Higher dues lower the ratio, just as higher taxes or insurance would. Condo projects also face their own eligibility review.
What if the unit has restricted rents?
Then the restricted rent is what gets counted. Underwriters do not use open-market comps for units with capped rents, so the ratio runs on the lower, capped figure.
Practical Next Steps
Confirm the unit type first. Check for any rent restriction. Pull comps and run the ratio on market rent before you offer. If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
DTC’s mix of soft office space, new conversions, and condo-heavy residential stock means the appraiser’s rent comps, not the neighborhood’s reputation, decide what the lender counts.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Selling Guide B4-1.2-01
2. Fannie Mae Learning Center, Appraisers
3. Core Real Estate Brokers, DTC update
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Close a DSCR Loan on a Carolina Beach Rental · How Much a DSCR Lender Lends on a Rental Held in an LLC · How a DSCR Lender Reads an Auction Purchase Price and Appraisal
Guides: DSCR Loans in Denver, CO · DSCR Loans in Colorado
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.