Quick answer: Colorado is the cheapest state on our list to close in and one of the least predictable to hold. There is no real estate transfer tax — frozen by constitutional amendment in 1992 — only a documentary fee of one cent per $100, about $50 on a $500,000 purchase. But the fee's actual purpose is to feed the public sale-price record county assessors use to value property, and Colorado's assessment rates are on a legislated schedule rather than sitting still. So budget almost nothing at closing and treat the tax line in your ratio as a moving figure.
Running a Colorado deal?
Ten minutes with a loan officer: the ratio on the current assessment rate, with a real insurance number. No obligation, no charge.
Get My QuoteColorado inverts the usual state-page story. Most states here have a closing-cost or classification trap you need to find before you buy. Colorado's closing costs are almost nominal. Its complication arrives afterwards, in a tax system that has been repeatedly re-legislated and in a fee whose real function is to tell the assessor what you paid.
Key takeaways
- No transfer tax. A 1992 constitutional amendment froze existing transfer taxes and prohibits new ones.
- Documentary fee: one cent per $100 of consideration — roughly 10 cents per $1,000, or about $50 on a $500,000 purchase.
- The fee's purpose is the sale-price record that county assessors use to value property. Your closing feeds the assessor's data.
- Assessment rates are on a schedule, not static — nonresidential steps from 29% toward 25% by 2027, agricultural at 25% from 2026, with a cap on statewide property tax revenue growth.
- Check the current rate rather than reusing an older model's number.
- Wildfire exposure moves insurance, and insurance is inside PITIA.
- Front Range price-to-rent is tight, so equity often does the work.
The closing cost that barely exists
Colorado imposes no real estate transfer tax. A constitutional amendment passed in 1992 froze transfer taxes then in place and prohibits the imposition of new ones. In their place is a documentary fee of one cent per $100 of consideration on sales above a small threshold — about 10 cents per $1,000.
Put that next to the other states in this cluster and the contrast is stark. Florida charges doc stamps on the deed and the note plus an intangible tax. Georgia taxes the note at $1.50 per $500. Pennsylvania charges 1% at state level before local tax. Maryland stacks state transfer, county transfer and recordation taxes. Colorado charges roughly $50 on a half-million-dollar purchase.
You will still pay title, recording and closing fees, and those are real. But the state-level transfer cost is close to a rounding error, and an investor comparing states should weight that accordingly.
What the documentary fee is actually for
The interesting part is not the amount, it is the function. The documentary fee exists to build the public record of property sale prices that county assessors rely on when valuing property for tax purposes.
So the sequence is worth seeing clearly. You pay a trivial fee at closing. That fee records what you paid. What you paid becomes part of the sales data the assessor uses — to value your property, and to value comparable properties nearby, at future valuation cycles.
Colorado is not unusual in using sales data to assess; every state does. It is unusual in having a named, tiny fee whose stated job is to capture it. For an investor the takeaway is practical rather than alarming: your purchase price is not a private number, and it will show up in the assessment process later. Model your tax line on the assumption that the assessor knows what you paid.
A moving tax target
Colorado's assessment rates have been the subject of sustained legislative attention, and rather than sitting at a fixed figure they move on a legislated schedule. Nonresidential assessment rates step down from 29% toward 25% by 2027; agricultural property is set at 25% from 2026. There is also a cap on annual growth in statewide property tax revenue.
For a DSCR file the consequence is procedural. The tax figure inside your ratio is not a constant you can carry over from a model you built last year, and neither is the figure a seller or agent quotes from an older bill. Get the current rate and the current valuation for the parcel from the county assessor at the time you are underwriting.
This is a different kind of instability from the one North Carolina presents. There, the level is predictable and the timing jumps on a county revaluation cycle. Here, the framework itself has been moving. Both argue for underwriting off current figures rather than inherited ones.
Wildfire and insurance
Insurance sits inside PITIA, so it sits inside your ratio. Wildfire exposure along the Front Range and in mountain communities has tightened availability and pricing, and some properties end up with arrangements that price quite differently from a standard landlord policy.
The discipline is identical to California's wildfire problem and Florida's windstorm problem, even though the peril and the market differ: quote the actual address before you rely on any number, and re-run the ratio once you have it.
Whether the ratio actually clears
Honest answer: it depends on submarket more than in most states on this list. Front Range price-to-rent relationships are considerably less favourable than in a low-cost state, which pushes PITIA up relative to achievable rent. Low closing costs do not compensate for that; they are a one-off saving against a monthly problem.
What tends to work: more equity, which shrinks principal and interest inside PITIA — the ranges and the reserve requirement are on the down payment page — and looking outside the highest-price submarkets, where the arithmetic is materially kinder.
Getting the Colorado file right
- Get the current assessment rate and valuation from the county assessor. Do not reuse an older figure.
- Quote insurance on the address, with particular care on wildfire-exposed parcels.
- Budget almost nothing for state transfer cost — but do budget title, recording and closing fees.
- Confirm current landlord-tenant requirements with a Colorado attorney; this area has moved recently.
- Then run the ratio, and expect equity rather than optimism to close a Front Range gap.
Valley West Mortgage is a Las Vegas–based mortgage lender, NMLS #65506, licensed in 32 states and the District of Columbia, Colorado among them. We say that plainly rather than implying a local storefront — on a business-purpose loan underwritten to the property, what matters is that the licence is real and the underwriting understands the market.
DSCR loans in Colorado: FAQ
Does Colorado charge a real estate transfer tax?
No. Colorado froze real estate transfer taxes by constitutional amendment in 1992 and prohibits new ones. What you pay instead is a documentary fee of one cent per $100 of consideration on sales above a small threshold — roughly 10 cents per $1,000. On a $500,000 purchase that is about $50. It is, by a wide margin, the cheapest state-level transfer cost on any state page we publish.
If the fee is that small, what is it for?
This is the part investors find interesting. The documentary fee is not really a revenue measure. Its purpose is to build the public record of property sale prices that county assessors rely on when valuing property for tax purposes. So the fee you pay at closing is the mechanism by which your purchase price enters the data the assessor will use — on your property and on your neighbours'. Cheap to pay, and directly connected to what you will be assessed on later.
Are Colorado assessment rates stable?
Less than in most states, and that is worth planning around. Colorado's assessment rates have been the subject of repeated legislative attention, and changes are scheduled rather than static — nonresidential rates step down from 29% toward 25% by 2027, with agricultural property at 25% from 2026. There is also a cap on annual growth in statewide property tax revenue. The practical consequence for a DSCR investor is that the tax input in your ratio is a moving figure, so check the current rate rather than reusing a number from an older model.
How does wildfire risk affect a Colorado file?
Through insurance, which sits inside PITIA and therefore inside the ratio. Wildfire exposure along the Front Range and in mountain communities has tightened availability and pricing, and some properties require arrangements that price very differently from a standard landlord policy. Quote the specific address early rather than a regional comparable, then re-run the ratio.
What are the DSCR loan requirements in Colorado?
The same as anywhere: non-owner-occupied, genuinely business-purpose, rent supporting the full monthly housing cost, and documentation of credit, reserves and the entity if title is held in one. Common practice is around 20–25% down with three to six months of PITIA in reserves. Colorado changes the closing cost and the volatility of the tax input, not the underwriting.
Is there rent control in Colorado?
Colorado has preempted local rent control for many years, so rent growth has generally been a market question rather than a statutory one. Landlord-tenant law has, however, seen active legislative change in recent sessions, including in the area of eviction grounds. Because this is a moving area, confirm the current position with a Colorado attorney rather than relying on a summary — including this one.
Do Denver-area price points clear a DSCR threshold?
It depends heavily on submarket, and it is the honest tension in Colorado. Front Range price-to-rent relationships are considerably less favourable than in a low-cost state, so the arithmetic is tighter than the low closing costs might suggest. More equity is often the lever — see the down payment page — and properties outside the highest-price submarkets frequently pencil where central ones do not.
The bottom line
Colorado costs almost nothing to close and asks you to pay attention afterwards. There is no transfer tax and the documentary fee is about $50 on a half-million-dollar purchase — but that fee's job is to tell the assessor what you paid, and Colorado's assessment framework has been repeatedly re-legislated. Underwrite off current figures, price wildfire insurance on the actual address, and judge the ratio on the submarket rather than the state.
If you have an address in view, send us the property and the expected rent and a loan officer will run the ratio on the numbers that will actually apply to you. Before you commit to anyone, it is worth putting the six questions to every lender you are considering. Valley West Mortgage is a mortgage lender, NMLS #65506. Equal Housing Opportunity.
