The Quick Read: A DSCR purchase loan usually takes 20% to 25% down, which matches the 75% to 80% loan-to-value tiers most programs in Lendmire’s wholesale network use, and strong files with roughly a 700 score can reach 85% LTV with 15% down through select high-leverage programs. Colorado does not change those tiers, because no state-specific LTV overlay is in force in the network’s guidelines. Your credit, your rental coverage, and the property type decide where you land.
- Purchase: most files land at 75% to 80% LTV, so 20% to 25% down, subject to lender guidelines.
- Cash-out refinance: tops out around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation.
- Short-term rentals: lower leverage, with purchases up to 75% LTV.
- Reserves: separate cash on top of the down payment, commonly around 6 months of PITIA.
- Zero down: not a normal DSCR purchase product.
DSCR is short for debt service coverage ratio. Lenders compare the rent to the monthly housing payment. That is why the property, not your paycheck, does most of the qualifying work.
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Run the numbers in Colorado
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 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 15, 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.
Why Is the Down Payment Set by the Lender?
The down payment is the flip side of the maximum loan-to-value ratio, and each lender sets that cap in its own program grid. DSCR loans are non-QM, meaning they sit outside the standard box built for owner-occupied consumer mortgages. No single national rule fixes the number.
LTV is the loan amount divided by the purchase price or appraised value, whichever is lower. A 75% LTV means the loan covers three-quarters of the value, and you cover the rest. So 75% LTV is 25% down, and 80% LTV is 20% down. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Across a wholesale network, you see many of these grids side by side. Most programs we place files with cap purchases at 75% to 80% LTV. A few will go to 85% for strong borrowers. The strictest overlays pull leverage down when credit or coverage is thin. The 20% figure you see everywhere is a program convention. It is not a law.
What Does a Typical Down Payment Look Like?
On a purchase, plan on 20% to 25% down for most files, 15% down for select high-leverage programs, and more when something about the file looks weaker. Here is how the tiers generally stack up, subject to lender guidelines.
| Scenario | Typical LTV | Typical down payment |
|---|---|---|
| Standard rental purchase | 75%–80% | 20%–25% |
| Strong credit, select high-leverage program | Up to 85% | 15% |
| Short-term rental purchase | Up to 75% | 25% or more |
| Cash-out refinance, standard rental | Around 75% | Equity-based |
| Cash-out refinance, short-term rental | Around 70% | Equity-based |
The 85% tier is the exception, not the starting point. It generally wants roughly a 700 score or better and a clean property. Treat 75% to 80% as the planning range and anything higher as a bonus if the file earns it.
How Does Your Credit Score Move the Number?
Credit sets how much leverage a lender will extend, and 700-plus scores unlock the strongest tiers. A 620 floor exists in parts of the network. Most programs want around 660. Tiers at 680 and 700 each add room.
In practice, a borrower near the floor should expect the lower end of the leverage range. That means more down payment and often tighter terms. A borrower at 700 or above has the most choices. Two investors can buy the same duplex and wire different amounts of cash because their scores sit in different tiers.
How Does Rent Coverage Change the Cash You Wire?
Coverage often decides your down payment more than the headline LTV cap does. DSCR is monthly rent divided by PITIA, which stands for principal, interest, taxes, insurance, and any HOA dues. A bigger down payment shrinks the loan, which shrinks the payment, which lifts the ratio.
The tradeoff is real, so run it as a model. Assume a rental whose rent covers about 0.94x of the payment at 80% LTV. That sits below 1.00. Cut the loan to 75% LTV and the payment falls by about a sixteenth, so coverage rises to roughly 1.00x. Same property, same rent, five more points down, and the file crosses the line. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Here is where programs split. Coverage of 1.00 is where many select programs start, and stronger ratios open better pricing and leverage. A separate path takes coverage below 1.00 through select lenders in the network, with leverage and terms adjusted. That usually means more cash down.
The stronger play is often to bring slightly more cash and move into a better tier. The deal may also work with less cash and a thinner ratio, so the decision is a genuine toss-up. It depends on how much the next deal needs that money.
One caution about the ratio itself. DSCR compares rent to PITIA and nothing else. Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation, so budget for them separately.
What About No-Ratio and Zero-Down Deals?
A no-ratio structure is available only through select lenders, generally for borrowers who already own a primary residence. It sets rent aside and prices the file differently, so expect leverage and terms to adjust. It does not make the down payment smaller.
True zero-down DSCR purchase financing is not a normal product. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, and pairs that with real equity. Lenders want you to have skin in the game, since the property is the repayment source.
If you want the full breakdown of low-cash structures, Lendmire’s explainer on DSCR loans with no down payment options walks through what is and is not realistic.
Does Colorado Change Anything?
No. The network’s guidelines carry no state-specific LTV overlay, and every state takes the same purchase tiers described above. A Denver-area duplex and an Ohio fourplex face the same standard grid on leverage. The differences come from the file itself: credit, coverage, property type, and loan size.
Property type matters more than geography. Single-family homes and small multifamily properties are the core of the program. Condos can carry extra project review. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in the network’s DSCR programs, so no amount of down payment changes that.
Loan size matters too. Standard programs run from roughly $100,000 up to $3,000,000. Above $2,500,000, the network generally holds to 30-year fixed structures. That is relevant if you are eyeing an expensive Colorado property, where bigger balances also tend to bring bigger reserve expectations.
Short-term rentals deserve their own note, since resort and mountain markets lean that way. 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. On the financing side, a short-term rental purchase goes up to 75% LTV with a 1.00 coverage floor. Refinances sit around 70% LTV, also with a 1.00 floor, and cash-out is capped at 70%. Expect a 640-plus score and about 12 months of hosting history. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
How Do Reserves Fit on Top of the Down Payment?
Reserves are liquid cash left over after the down payment and closing costs. They are a separate requirement, not part of the down payment. Commonly the network asks for about 6 months of PITIA, though it varies by lender, leverage, loan size, and transaction type.
Conservative rate-and-term refinances at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months. Those are patterns, not promises.
Add it up before you shop. The cash you need is the down payment, plus closing costs, plus reserves. An investor who budgets only for the down payment often gets surprised at the table.
Where Does the Down Payment Money Have to Come From?
Lenders verify that your funds are yours and where they came from. Expect to document your down payment and reserves with bank statements. Many programs restrict gifts and borrowed funds, and rules differ by lender, so check the specific guideline before you count on either.
This scrutiny is not paranoia. Investment-property files draw close review of funds and occupancy. Clean, seasoned money in your own account makes the file simpler.
If you buy in an LLC, the entity paperwork gets added to the file, subject to lender program eligibility. A larger loan balance does not change what counts as acceptable funds.
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.
How Can You Reduce the Cash You Need?
Improve the file rather than hunt for loopholes. Four levers work legitimately, each with a tradeoff.
1. Raise your credit score. Moving into a higher tier can lift the leverage available.
2. Strengthen the rent side. A lease or market rent schedule that supports stronger coverage can open a higher LTV tier. Appraisers document this with the 1007 rent schedule for single-family homes and the 1025 for 2-4 unit small residential income properties.
3. Choose a different term structure. The spine is the 30-year fixed. Extended terms such as 40-year and interest-only periods are available through select lenders in the network, and ARM structures exist for investors who want them. These can improve the coverage ratio, but the structure changes your long-term cost.
4. Buy at a higher tier with less cash, on a stronger file. The 85% tier can cut cash needs, though it asks for strong credit.
A bigger down payment never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Do Business-Purpose Rules Change the Math?
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 CFPB’s Regulation Z § 1026.3 sets out the business-purpose exemption, and the ABA Banking Journal notes that the outcome turns on the loan’s purpose.
None of this sets your down payment. The equity requirement comes from lender programs, not from a statute.
Key Terms Defined
- LTV (loan-to-value): the loan amount divided by the property’s price or appraised value, whichever is lower.
- DSCR: monthly rent divided by the full monthly housing payment, used to test whether the property supports the loan.
- PITIA: principal, interest, taxes, insurance, and any HOA dues, which together make up the monthly payment lenders test.
- Non-QM: a loan outside the standard qualified-mortgage box built for owner-occupied consumer loans.
- Reserves: liquid cash you keep after the down payment and closing costs, measured in months of PITIA.
- Seasoning: the waiting period a lender wants before a refinance, such as time owned or time a lease has been in place.
Frequently Asked Questions
Can I buy a rental with 15% down?
Sometimes. Select high-leverage programs reach 85% LTV on a purchase, which means 15% down, and they generally want roughly a 700 score or better. Most files in the network sit at 75% to 80% LTV, so 20% to 25% down is the realistic planning range. Eligibility depends on lender guidelines, credit, coverage, and the property.
Is the down payment lower for a cash-out refinance?
There is no purchase down payment on a refinance, so the question becomes how much equity you keep. Cash-out tops out around 75% LTV across most of the network on standard rentals, and about 6 months of seasoning is the common expectation. Short-term rental cash-out sits lower, at 70%. Leaving more equity in the property lowers the loan and can improve coverage. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Does a larger down payment guarantee approval?
No. More down payment lowers the payment and can lift your coverage ratio, but it does not override credit floors, reserve rules, or property eligibility. Each file is underwritten individually. The strongest files show both enough equity and enough rental coverage.
Will my down payment be different because the property is in Colorado?
Not because of the state. The network’s guidelines carry no state-specific LTV overlay, so Colorado purchases take the standard tiers. What can differ is the property: a condo, a short-term rental, or a large loan balance can each change the leverage and reserves.
Do I need reserves on top of the down payment?
Usually yes. Reserves commonly run around 6 months of PITIA and step up to about 9 months on loans above $1,500,000. Conservative rate-and-term refinances at modest leverage under that size can see reserves waived. Reserves are separate from the down payment and closing costs.
Next Steps
Tax treatment varies, so consult a qualified professional before relying on any deduction tied to your financing.
To see how leverage and coverage connect across the whole program, read the complete DSCR loans guide. For the nuts and bolts of what lenders ask for, Lendmire’s page on DSCR loan down payment requirements goes deeper.
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. As a broker, Lendmire arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.; it is not a commitment to lend.
Run your own coverage math before you shop, because the investors who clear both the equity test and the rent test walk in with the most options.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 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. CFPB – Regulation Z § 1026.3
2. ABA Banking Journal – business-purpose exemption Q&A
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Down Payment Does a DSCR Loan in Indiana Require? · How Much Down Payment Does a DSCR Loan in South Carolina Require? · Can a First-Time STR Buyer Get an Airbnb DSCR Loan Under 20% Down?
Guides: DSCR Loans in Colorado
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.