Private Money Hawaii

DSCR Loan Requirements in Hawaii (2025 Update)

If you’re investing in rental property anywhere in Hawaii — Oahu, Maui, Kauai, or the Big Island — understanding the latest DSCR loan requirements in Hawaii is key to moving fast, qualifying easily, and staying competitive in a market where good deals don’t wait.

DSCR loans are built for investors who want flexible approval, no tax returns, and fast closings. They evaluate the property’s cash flow, not your personal income, making them one of the smartest financing tools for Hawaii investors in 2025.

This guide breaks down every requirement, including credit score minimums, DSCR thresholds, Hawaii-specific rules, reserve guidelines, LTV limits, condo restrictions, and STR considerations — all explained in a simple, benefit-first way.

Why DSCR Requirements Matter in Hawaii’s 2025 Market

Hawaii remains one of the most competitive real estate markets in the country:

• Limited inventory
• High demand from mainland investors
• Rapidly moving deals
• Strong STR and rental markets
• Varied zoning rules across islands

Because DSCR loans don’t use W-2s, DTI, or tax returns, the approval process is much faster — often within days. But understanding the requirements helps you:

• Lock in fast term sheets
• Avoid unnecessary delays
• Choose properties that qualify easier
• Reduce your down payment
• Get better pricing and fees

Let’s break down everything you need.

DSCR Requirement #1 — Minimum DSCR Threshold (The Core of Approval)

The Debt Service Coverage Ratio (DSCR) is the most important requirement. It measures:

DSCR = Rental Income ÷ Monthly Mortgage Payment

Most Hawaii lenders require:

• 1.20+ DSCR for best pricing
• 1.00–1.19 DSCR for standard approval
• Below 1.00 DSCR with higher down payments

Property Type	Income	Payment	DSCR	Outcome
Waikiki Condo	$3,200	$2,700	1.18	Approved, mid-tier pricing
Maui STR	$9,800	$6,300	1.55	Strong approval
Kona SFR	$3,800	$4,100	0.92	Possible with larger down

Hawaii-specific DSCR challenges:

• High HOA fees on condos
• Leasehold units with lower appraised rents
• STR properties with seasonal cash flow
• Island-specific insurance premiums

Strong DSCR makes approval faster and pricing better.

DSCR Requirement #2 — Credit Score (Simple but Important)

DSCR loans look at credit, but it’s not the dominating factor.

Typical Hawaii credit requirements:

• 620 min
• 660–679 = average pricing
• 680–699 = better pricing
• 700–739 = strong tier
• 740+ = best pricing available

Lower credit doesn’t disqualify you — it only adjusts:

• Pricing
• Origination fees
• Reserve requirements
• Maximum LTV

DSCR Requirement #3 — Down Payment (LTV Limits)

Your down payment depends on the DSCR ratio and property risk.

Standard DSCR Down Payments in Hawaii:

• 20% down for DSCR 1.20+
• 25% down for DSCR 1.00–1.19
• 30%+ down for DSCR under 1.00
• 30–35% down for condotels or complex buildings

Higher down payments required for:

• STR properties with no rental history
• High-rise Waikiki condos
• Buildings with litigation or low reserves
• Leasehold properties
• Homes needing rehab

DSCR Requirement #4 — Reserves (Varies by Hawaii Property Type)

Most Hawaii lenders require:

• 3–6 months PITI for single-family rentals
• 6–12 months for multifamily or higher-risk properties
• 12 months+ for STR/Airbnb properties

Higher reserves increase approval speed, especially in Hawaii’s high-priced markets.

DSCR Requirement #5 — Rental Income Verification

How lenders verify income affects your DSCR approval.

Long-Term Rentals

• Use the lease agreement
• Use Form 1007 (market rent from appraiser)

Short-Term Rentals (Airbnb / Vrbo)

Allowed by many Hawaii-friendly DSCR lenders:

• 12 months Airbnb/Vrbo statements
• Property management statements
• Historical financials
• STR P&L with seasonality accounted for

A few lenders do not allow STR income, so choosing the right lender is critical.

Condos With High HOA Fees

HOA is included in the PITI calculation → lowering DSCR.