DSCR Loans for Telluride Vacation Rentals in 2026 — How It Works

Published: July 2026

Telluride is one of the most active vacation rental markets in Colorado. A 3-bedroom Mountain Village condo with ski-in/ski-out access can rent for $1,500–$4,000 per night during peak ski season and $500–$1,500/night during summer festival season (Telluride Bluegrass, Jazz Fest, Film Festival). The Telluride Ski Resort's annual snowfall average of 309 inches and the summer festival calendar create a rental market with meaningful year-round demand.

That income is real. And DSCR loans are built to capture it.

What Is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio. It's an investment property loan that qualifies based on the property's rental income rather than the borrower's personal income.

The formula: Gross Monthly Rental Income ÷ PITI (Principal + Interest + Taxes + Insurance + HOA) = DSCR ratio

A ratio of 1.0x means the rental income exactly covers the payment. Most lenders require 1.0x–1.25x. Some allow ratios below 1.0x for strong-credit borrowers with larger down payments.

The Telluride Math

Let's use a real example. A Mountain Village 2-bedroom condo listed at $1.8M:

• 25% down: $450,000
• Loan amount: $1,350,000
• Rate (estimated, 30-year fixed): 7.5%
• P&I: ~$9,450/month
• Taxes + insurance + HOA (Mountain Village HOA fees run $800–$2,000/month for ski condos): ~$3,500/month
• Total PITI: ~$12,950/month

Rental income estimate for this property:

• Ski season (December–March): 60 nights × $1,800/night = $108,000
• Summer festivals (June–August): 30 nights × $900/night = $27,000
• Shoulder season: 40 nights × $500/night = $20,000
• Annual gross: ~$155,000 / 12 = ~$12,900/month

DSCR: $12,900 ÷ $12,950 = ~1.0x — right at the minimum threshold. For stronger rentals or properties with lower HOA fees, the ratio improves significantly.

This is why Telluride DSCR deals require careful property selection. Not every Mountain Village condo produces a 1.0x ratio. We review the projected rental income against the PITI for every property you're evaluating and tell you honestly whether the deal works before you make an offer.

How Rental Income Is Documented

Two methods:

Actual income: If the property already has a rental history, the lender uses 12–24 months of documented gross rental revenue from Airbnb, VRBO, or a property manager.

Market rate rent schedule: An independent appraiser provides a market rent estimate using comparable Telluride/Mountain Village short-term rental properties. This is used for new rentals with no history.

Both methods work. For high-profile Mountain Village properties with documented Telluride rental histories, actual income often produces stronger DSCR ratios.

Who DSCR Is Right For in Telluride

• Self-employed buyers with significant write-offs who can't document sufficient income on tax returns
• Buyers purchasing through an LLC (DSCR allows LLC ownership; conventional loans do not)
• Out-of-state investors building a mountain resort portfolio without personal income scrutiny
• Buyers who've already tapped their conventional loan limit with multiple investment properties
• High-net-worth buyers who prefer asset privacy over income disclosure

What DSCR Doesn't Allow

DSCR loans are for investment/rental properties — not primary residences or second homes. If your primary intent is personal use with occasional rental, a second-home conventional loan (10% down) is more appropriate.

Working With Tayton Capital for Telluride DSCR

We're headquartered in Telluride and close DSCR deals in Mountain Village and Telluride proper regularly. We know which lenders have experience with San Miguel County properties, which HOA fee structures affect the DSCR ratio most significantly, and which rental income projections are realistic vs. optimistic.

Call or apply online to discuss a specific Telluride property. NMLS #2106875.

📧 tj@taytoncapitalllc.com
📞 970-708-9624