What Does the Colorado Springs Multifamily Market Look Like for Borrowers in 2026?
Colorado Springs' multifamily market has entered a reset phase that presents both challenges and strategic opportunities for borrowers seeking apartment financing. After years of aggressive development that delivered thousands of new units across the metro, the market is normalizing with vacancy settling near 7% and rents declining approximately 7% year-over-year and roughly 14% from their 2022 peak. For multifamily investors who understand the cycle, this adjustment creates a window to acquire properties at more favorable valuations before the supply pipeline contracts and fundamentals recover.
The occupancy picture tells an important story. Colorado Springs closed 2025 with a multifamily occupancy rate of approximately 93%, representing a 40 basis point improvement from 2024. The market absorbed around 3,245 units in 2025 against deliveries of roughly 2,438 units, demonstrating that underlying demand continues to exceed new supply. With approximately 2,800 units under construction and only about 1,350 expected to deliver in 2026, the supply pressure that has weighed on rents and occupancy is measurably easing.
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El Paso County's population of approximately 709,000 and the presence of roughly 45,000 active-duty military personnel create a deep and consistent renter base that differentiates Colorado Springs from markets without institutional employment anchors. Fort Carson, Peterson Space Force Base, Schriever SFB, and the permanent U.S. Space Command headquarters generate housing demand that is largely independent of broader economic cycles. This military-driven demand floor gives multifamily lenders confidence in the long-term occupancy trajectory of Colorado Springs apartment properties.
For borrowers exploring commercial loans in Colorado Springs, the multifamily sector remains the most actively financed property type despite the current market reset. Lenders are underwriting to in-place rents rather than projected recovery, but properties with strong cash flow in well-located submarkets continue to attract competitive financing.
What Multifamily Loan Programs Are Available in Colorado Springs?
Colorado Springs multifamily borrowers have access to a comprehensive range of financing programs, each suited to different property sizes, investment strategies, and borrower profiles. The market's military-anchored demand and population growth support lending activity across the full spectrum of programs.
Agency Loans (Fannie Mae and Freddie Mac) provide the most competitive permanent financing for stabilized Colorado Springs apartment properties with five or more units. Rates range from 5.5% to 6.75% with 5, 7, 10, or 12 year terms and 30 year amortization. Agency loans offer up to 80% LTV for market-rate apartments and up to 85% for affordable housing. Non-recourse terms and interest-only periods of 1 to 5 years are available for qualifying properties. Agency lenders are active in Colorado Springs and view the military-driven demand base favorably.
Conventional Bank Loans from Colorado-based and regional banks offer rates between 6.25% and 7.75% with 5 to 10 year terms and up to 75% LTV. Local banks with Pikes Peak region expertise may offer preferential terms for borrowers with existing banking relationships and properties in preferred submarkets like Briargate, Interquest, and the northeast corridor.
Bridge Loans serve value-add apartment investors in Colorado Springs. Rates range from 8.0% to 11.0% with 12 to 36 month terms and up to 80% of total cost. Bridge financing is particularly relevant in the current market, as the rent correction has created opportunities to acquire apartment complexes below replacement cost, renovate units, and lease up at market rates before refinancing into permanent agency debt.
DSCR Loans qualify investors based solely on property cash flow. Rates range from 7.0% to 9.0% with 30 year terms and no personal income verification. DSCR loans work well for smaller Colorado Springs apartment buildings of 2 to 20 units and for investors who have complex tax situations that make conventional income documentation challenging.
SBA 504 Loans finance owner-occupied apartment buildings where the owner lives on-site or the property includes a commercial component. Rates range from 5.75% to 6.75% with up to 90% financing and 25 year terms.
CMBS Conduit Loans offer non-recourse permanent financing for larger Colorado Springs apartment complexes. Rates range from 5.88% to 7.49% with 5 to 10 year terms. CMBS lenders favor properties with strong occupancy and limited near-term lease rollover risk.
Which Colorado Springs Submarkets Are Best for Multifamily Investment?
Multifamily performance in Colorado Springs varies significantly by submarket, reflecting differences in military proximity, new supply concentration, demographics, and amenity access. Understanding these variations helps borrowers identify where lender confidence and property fundamentals are strongest.
Briargate and Northeast El Paso County represent the premier multifamily submarket in Colorado Springs. Occupancy rates in the Southwest El Paso County submarket are forecast to reach around 93.8%, and the northeast corridor benefits from proximity to the U.S. Air Force Academy, strong school districts, and rising household incomes. Newer Class A apartment communities in the Interquest area command premium rents and attract agency financing on favorable terms. Lenders view this submarket as the lowest risk multifamily lending opportunity in the metro.
Fort Carson and Southeast Colorado Springs serve the military housing market with a concentration of Class B and C apartment properties. The approximately 25,000 military personnel at Fort Carson and their families create reliable renter demand. The Venture on Venetucci project, bringing 336 new units near Pikes Peak State College and Fort Carson, reflects continued investment in this submarket. Military housing allowances (BAH) provide a predictable income floor that lenders factor positively into underwriting.
Downtown Colorado Springs is attracting new multifamily development as part of the city center's broader revitalization. The planned OneVela tower with 404 residential units and over $2 billion in announced downtown investment signal growing institutional confidence in urban apartment demand. Downtown multifamily properties appeal to young professionals working in the defense and technology sectors who prefer walkable urban living.
Powers Corridor offers mid-market multifamily opportunities at price points below the northern suburbs. Proximity to Peterson Space Force Base generates tenant demand from military personnel and defense contractors. The planned diverging diamond interchange at Airport Road and Powers Boulevard will improve access and support property values in this submarket.
West Side and Old Colorado City provide value-add multifamily opportunities in established neighborhoods with character and proximity to attractions like Garden of the Gods and Manitou Springs. These areas attract lifestyle renters and tourism industry workers, offering cap rate premiums over newer suburban product.
What Are Current Multifamily Cap Rates and Valuations in Colorado Springs?
Understanding cap rate dynamics helps Colorado Springs multifamily investors evaluate acquisitions and structure financing that aligns with current market pricing.
Colorado Springs multifamily cap rates have adjusted upward from the compressed levels seen during the 2021 and 2022 peak. Class A apartment properties trade at cap rates between 4.74% and 5.25%, reflecting institutional investor demand for stabilized, newer product in prime locations. Class B assets have seen cap rates compress to approximately 4.92%, benefiting from strong rent-to-income ratios and the military demand base. Value-add Class C properties trade at cap rates between 5.75% and 7.0%, offering higher returns for investors willing to execute renovation and lease-up strategies.
The rent correction of approximately 7% year-over-year has created a disconnect between seller expectations and buyer underwriting in some segments of the market. Sellers anchored to peak valuations are meeting resistance from buyers underwriting to current rents and elevated interest rates. This bid-ask spread is narrowing as sellers adjust expectations and buyers recognize the improving supply picture heading into 2026.
Concessions have become a significant factor in the Colorado Springs apartment market, with concession spending up roughly 107.5% year-over-year as property owners compete for tenants. Approximately half of all rental listings in Colorado Springs included concessions in early 2025, well above the national average of 28%. Borrowers should factor current concession levels into their underwriting and discuss with lenders how concessions affect effective gross income calculations.
Use the DSCR calculator to model how current Colorado Springs rents and concession levels affect your property's debt service coverage ratio before approaching lenders.
How Do You Qualify for a Multifamily Loan in Colorado Springs?
Qualifying for multifamily financing in Colorado Springs requires meeting lender criteria across property performance, borrower strength, and market positioning. The current market environment has made lenders more selective, placing greater emphasis on in-place cash flow and borrower experience.
Debt service coverage ratio (DSCR) requirements for Colorado Springs multifamily loans typically range from 1.20x to 1.35x, meaning the property's net operating income must exceed annual debt service by 20% to 35%. Agency lenders (Fannie Mae and Freddie Mac) generally require 1.25x DSCR using in-place income. Bridge lenders may accept lower DSCR at origination if the business plan projects improvement through renovation and rent increases.
Loan-to-value ratios for Colorado Springs apartment financing range from 65% to 80% depending on the loan program and property quality. Agency loans offer the highest leverage at up to 80% LTV for market-rate properties and 85% for affordable housing. Conventional bank loans cap at 70% to 75%. Bridge loans may reach 80% of total project cost including renovation budgets.
Borrower net worth requirements generally equal or exceed the loan amount for recourse financing. Agency non-recourse loans require net worth equal to the loan amount and liquidity equal to 9 to 12 months of debt service. Credit score minimums start at 660 for agency loans, 680 for conventional bank loans, and as low as 640 for DSCR programs.
Experience requirements have become more stringent in the current market. Lenders prefer borrowers with a track record of successful multifamily ownership and management, particularly experience navigating down cycles and executing value-add business plans. First-time apartment investors may need to partner with experienced operators or accept lower leverage.
What Value-Add Strategies Work Best in the Current Colorado Springs Apartment Market?
The multifamily market reset in Colorado Springs has created specific opportunities for value-add investors who can execute renovation and repositioning strategies while maintaining occupancy through the recovery period.
Unit interior renovations remain the most proven value-add strategy in Colorado Springs. Upgrading kitchens, bathrooms, flooring, and fixtures in Class B and C apartments can generate rent premiums of $100 to $250 per unit per month, depending on the submarket and quality of renovation. Properties near Fort Carson and along the Powers corridor offer particularly strong renovation ROI because the military renter base values updated interiors and modern amenities.
Amenity additions drive both occupancy and rent premiums. Adding or upgrading fitness centers, dog parks, co-working spaces, and outdoor recreation areas resonates with Colorado Springs' active-lifestyle renter demographic. Properties near UCCS can differentiate through study spaces and technology infrastructure. Lenders view amenity improvements favorably because they support both occupancy and rental rate stability.
Operational improvements can add significant value without capital expenditure. Implementing professional property management, reducing operating expenses through utility submetering, and optimizing marketing and leasing processes can improve NOI by 10% to 20%. These improvements are particularly impactful for Colorado Springs apartment properties acquired from mom-and-pop owners who may not have maximized operational efficiency.
Bridge loan programs designed for multifamily value-add provide the capital structure to execute these strategies. A typical Colorado Springs apartment bridge loan funds the acquisition at 70% to 75% LTV plus a renovation holdback of up to 100% of budgeted improvements, releasing funds as work is completed.
How Does Military Housing Demand Affect Multifamily Lending in Colorado Springs?
The military presence in Colorado Springs creates a distinctive dynamic in multifamily lending that borrowers should understand and leverage in their financing applications.
Basic Allowance for Housing (BAH) rates for Colorado Springs military personnel provide a predictable income floor for apartment properties near military installations. BAH rates are set annually by the Department of Defense and adjusted for local housing costs, rank, and dependency status. For a married E-5 stationed at Fort Carson, the 2025 BAH rate provides a monthly housing allowance that supports rents at most Class B and C apartment communities in the Fort Carson area.
Lenders evaluating multifamily properties near military installations in Colorado Springs factor BAH rates into their underwriting as a demand indicator. Properties where a significant portion of tenants are military personnel benefit from the reliability and predictability of BAH-supported rental income. This military demand component often supports higher LTV ratios and lower interest rates compared to otherwise similar properties without military tenant exposure.
U.S. Space Command's permanent basing in Colorado Springs is projected to add around $450 million annually to the regional economy and attract additional military and civilian personnel to the area. This growth creates incremental multifamily demand that will support occupancy recovery and rent stabilization as the current supply cycle winds down.
The defense and aerospace sector's approximately 111,000 employees also generate significant civilian multifamily demand. Defense contractors including Lockheed Martin, Northrop Grumman, Raytheon, and L3Harris maintain substantial operations in Colorado Springs, and their employees represent a high-quality renter pool for apartment properties across the metro.
What Should Colorado Springs Multifamily Borrowers Know About the Loan Process?
The multifamily loan process in Colorado Springs follows a structured timeline that borrowers should understand and prepare for to ensure smooth execution.
Start with a comprehensive property analysis that includes a current rent roll, trailing 12-month operating statements, capital expenditure history, and a unit-level condition assessment. For Colorado Springs apartment properties, include data on military tenant concentration, BAH rate analysis, and submarket vacancy trends that support your investment thesis.
Prepare your borrower package before approaching lenders. This includes a personal financial statement, schedule of real estate owned, two years of tax returns, and a narrative describing your multifamily investment experience and strategy for the specific property. Borrowers with military community lending experience should highlight this specialization.
Select the right lender for your property profile. Agency lenders (Fannie Mae and Freddie Mac correspondents) are best for stabilized properties with strong occupancy. Local banks with Colorado Springs expertise work well for smaller deals and borrowers with existing relationships. Bridge lenders serve value-add strategies where the property needs renovation or lease-up before permanent financing.
Expect underwriting timelines of 30 to 45 days for bridge loans, 45 to 60 days for bank loans, and 60 to 90 days for agency loans. Having complete documentation ready at application can shorten these timelines by 1 to 2 weeks.
Use the commercial mortgage calculator to model different loan scenarios and understand how rate, term, and amortization assumptions affect your monthly payments and cash-on-cash returns.
How Can Colorado Springs Multifamily Investors Position for the Market Recovery?
The current market reset in Colorado Springs creates strategic positioning opportunities for multifamily investors who take a 3 to 5 year view on the recovery cycle.
The supply pipeline is contracting meaningfully. With only about 1,350 units expected to deliver in 2026, down from the peak delivery years, the supply-demand balance will shift in favor of landlords as population growth and military expansion continue to add renters to the market. Investors who acquire during the current correction and hold through the recovery stand to benefit from both rent growth and cap rate compression.
Focus on properties with below-market rents that can be brought to market rate through targeted renovations. The 7% rent decline from peak levels has compressed the spread between Class A and Class B/C rents in some submarkets, creating opportunities to acquire older properties at attractive per-unit pricing and capture the recovery through strategic capital investment.
Target submarkets with the strongest demand fundamentals. Properties near Fort Carson, Peterson Space Force Base, and the Interquest corridor benefit from military and population growth drivers that will fuel the recovery. The northeast corridor's combination of defense employment, strong schools, and retail amenities makes it the most resilient submarket for multifamily investment.
Structure acquisitions with flexible financing that allows refinancing as the market improves. A 3 year bridge loan with extension options provides the time to execute a value-add business plan and refinance into permanent agency debt at improved valuations and potentially lower rates.
Contact Clearhouse Lending to discuss multifamily financing options for your Colorado Springs apartment investment.
Frequently Asked Questions About Multifamily Loans in Colorado Springs
What is the minimum down payment for an apartment loan in Colorado Springs?
The minimum down payment for a Colorado Springs apartment loan depends on the financing program. Agency loans (Fannie Mae and Freddie Mac) require 20% to 25% down for market-rate apartments and as little as 15% for affordable housing. Conventional bank loans require 25% to 35% down. DSCR loans require 25% to 30% down. Bridge loans require 20% to 30% of total project cost. The specific amount depends on property occupancy, condition, location, and borrower qualifications.
How many units do I need for a commercial multifamily loan in Colorado Springs?
Commercial multifamily loans in Colorado Springs start at 5 units. Properties with 2 to 4 units are financed through residential loan programs. Properties with 5 or more units qualify for commercial agency, bank, bridge, and DSCR financing. Larger properties with 50 or more units may access CMBS conduit financing and institutional agency loan programs with the most competitive rates and terms.
Are Colorado Springs apartment properties good investments given the current rent decline?
The current rent correction of approximately 7% year-over-year creates a buying opportunity for investors with a medium-term horizon. The supply pipeline is contracting, with deliveries expected to drop to roughly 1,350 units in 2026. Colorado Springs' military demand base of around 45,000 active-duty personnel provides a floor for occupancy that most markets lack. Investors who acquire at current pricing and hold through the recovery cycle are well-positioned for rent growth and appreciation as supply and demand rebalance.
What DSCR do Colorado Springs apartment lenders require?
Colorado Springs apartment lenders typically require a DSCR of 1.20x to 1.35x for permanent financing, meaning the property's net operating income must cover annual debt service by 120% to 135%. Agency loans generally require 1.25x. Bridge lenders may accept lower DSCR at origination (1.0x to 1.10x) if the business plan demonstrates a clear path to stabilized DSCR through renovations and rent increases. Use the DSCR calculator to model your specific property.
Can I get a multifamily loan for a property that needs significant renovation in Colorado Springs?
Yes. Bridge loan programs are specifically designed for Colorado Springs apartment properties requiring renovation. Bridge lenders provide acquisition financing at 70% to 75% LTV plus a renovation holdback that funds improvements as work is completed. Typical bridge loan terms are 12 to 36 months with extension options, providing time to complete renovations and stabilize the property before refinancing into permanent debt. Value-add bridge loans are among the most active financing types in the current Colorado Springs apartment market.
How does the U.S. Space Command headquarters affect Colorado Springs multifamily lending?
The permanent basing of U.S. Space Command in Colorado Springs is a significant positive for multifamily lending. The headquarters is projected to add around $450 million annually to the regional economy and attract additional military and civilian personnel who will need housing. Lenders factor this growth catalyst into their underwriting of Colorado Springs apartment properties, particularly those near Peterson Space Force Base and the northern corridor. The Space Command designation provides a long-term demand signal that supports loan approval and competitive terms.
Moving Forward With Colorado Springs Multifamily Financing
Colorado Springs' multifamily market offers a compelling combination of cyclical buying opportunity, military-anchored demand, and a contracting supply pipeline that supports a medium-term recovery thesis. Whether you are acquiring a stabilized apartment complex in Briargate, executing a value-add renovation near Fort Carson, or building new units in the Interquest corridor, understanding the financing options available and the underwriting dynamics of the current market is essential to structuring a successful investment.
The key to securing competitive multifamily loan terms in Colorado Springs is demonstrating strong in-place cash flow, a credible business plan, and an understanding of the military and defense demand drivers that differentiate this market from other Mountain West metros.
Contact Clearhouse Lending to discuss your Colorado Springs multifamily financing needs and receive a customized rate quote for your apartment property.