Thinking About Buying a Rental in the Denver Metro? Start Here.
A rental property gets financed under a different rulebook than the house you live in. Most of what people know about getting a mortgage still applies, but four things change — and the ones that surprise people are the ones worth knowing before you start looking, not after you've found a place.
Here's the short version.
Two separate things happen to the rent a property will produce.
First, it gets discounted. Under Fannie Mae's rules a lender doesn't use the full rent figure. It uses 75% of the gross rent, then subtracts the property's own monthly cost — principal, interest, taxes, insurance and any HOA dues. What's left is the number that goes into your file. So if you're budgeting off the full rent, you're budgeting off a number the lender won't use.
Second — and this is the one that catches first-time landlords — the rent may not count as income at all. Fannie Mae's guide: "Lenders may only use positive rental income for qualifying income if the borrower(s) has at least 12 months of property management experience."
If you've been a landlord for a year or more, the rent can count as income. If you haven't, the rent can only offset that property's own payment. It can't add to your income to help you qualify for anything else.
That's not a dead end. Offsetting the payment is often all that's needed. But it's a different math problem than most people expect, and it's worth finding out which one you're solving before you start writing offers.
You also don't set the rent number yourself — an appraiser gives a market rent opinion alongside the appraisal. A signed lease doesn't automatically override it.
(Fannie Mae restructured these rules in 2026 and lenders must apply the new version to applications dated on or after December 1, 2026. If you read something different a while ago, that's probably why.)
Most rental purchases go the conventional route described above, where you qualify on your income and your credit.
There's also a category of investor financing — DSCR loans, for debt service coverage ratio — where the property's cash flow does more of the work and your personal income documentation does less. Your credit and the property's value still matter. It's not a magic door. But for some buyers the math works out very differently between the two, and they're worth pricing side by side rather than assuming the first one is the answer.
Ask for both. It's a reasonable request and it takes one conversation.
Investment property purchases carry a reserve requirement — money you still have after the deal closes, not money you spend on it.
There are two layers. One is tied to the purchase itself. The second only applies if you already own other financed properties, and it's calculated against those other loans. People budget for the first, don't know about the second, and find out late.
Ask your loan officer for both figures at the start. It's a two-minute answer and it changes what you can shop for.
Whether a specific property needs a license, and which one, is a question for the municipality.
Denver requires a residential rental license to operate a long-term rental, and it covers single-family houses — not just apartment buildings. A detached home, a rowhouse unit, a condo unit. The requirement reached multi-unit properties in January 2023 and single-unit properties in January 2024.
Getting one requires an inspection by a certified third-party inspector.
Denver raised its maximum penalty for operating without a license to $5,000, issued the first one in January 2026, and began a coordinated enforcement effort with the health department that March. Boulder has its own long-term licensing requirement, also reaching single-family homes.
Other Front Range cities vary. Check the specific municipality before you write an offer, not after inspection — and go to the city directly, because fees and requirements change.
This section describes documents that apply to us as a lender. It is not legal advice.
Don't buy it as a primary residence with the plan of renting it out.
Occupancy isn't marketing language. The security instrument you sign contains an occupancy covenant, and it identifies your occupancy statements as material representations. Fannie Mae lists misrepresentation of occupancy among the fraud types lenders are required to report. Misstating it on a loan application can carry consequences well beyond the loan, including criminal ones under federal law.
Plans genuinely change, and someone whose circumstances shift after closing is in a different position from someone who intended to rent it from the start. But if the plan today is a rental, finance it as a rental today. Tell your loan officer the real plan at the first conversation — it changes which path you're on, and it costs less to know that at the beginning.
This is not legal or tax advice, and no one at a mortgage company can give you either.
A Colorado real estate attorney. Colorado has materially rewritten the rules for operating a rental over the past several years — habitability, eviction, and how landlords may screen applicants, which changed again effective January 1, 2026. Fair housing law constrains screening independently. These are real operating obligations and they're different from other states.
A CPA. Whether to hold the property personally or in an entity is a legal and tax question with real consequences. It belongs to your attorney and your accountant, not to your loan officer.
Get both in place before you close, not after.
A note on sending documents: your tax returns, paystubs and bank statements contain your Social Security number and full account numbers. Don't email them, and don't text them. Everything goes through our secure upload portal at [PERMANENT SECURE UPLOAD URL] — or call and ask, and we'll send you the link. If you've already emailed documents to anyone, tell us and we'll get them re-sent securely. We will never ask you for a password or login credentials by email.
This article is general information about how lenders and Fannie Mae's published rules treat rental properties. It is not legal, tax or financial advice, it is not a commitment to lend or an offer of credit, and it does not describe any particular loan. Rules, municipal ordinances and program requirements change — including some described here. Loan approval depends on a full review of your application, credit, income, assets and the property. For legal questions, consult a Colorado attorney; for tax questions, consult a tax professional; for municipal licensing questions, contact the municipality directly.
We are not affiliated with, endorsed by, or acting on behalf of Fannie Mae — a government-sponsored enterprise, not a government agency — or the City and County of Denver, the City of Boulder, or any government agency. Statutes, regulations and agency guides are cited for general reference.
Thinking about a first rental in the Denver metro?
This is a conversation, not an application — no cost, no obligation, and nothing here is a commitment to lend. If you want pricing, we'll tell you up front what that requires, including whether it involves a credit check and your authorization for it.
Jimmy Everetts, Loan Originator, NMLS #1719458 · Edge Home Finance, NMLS #891464 ·
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