Private Money Hawaii
How to Calculate DSCR in Hawaii (Fast 2025 Guide)
If you’re investing in rental property in Hawaii, understanding how to calculate DSCR is one of the most important skills you can have. DSCR — or Debt Service Coverage Ratio — determines whether a property cash flows well enough to qualify for financing. It affects your loan terms, your down payment, your rates, and even whether a deal is worth pursuing.
Because Hawaii has higher acquisition costs, higher HOA fees, island-specific insurance requirements, and unique short-term rental rules, calculating DSCR correctly matters more here than anywhere else.
In this fast guide, you’ll learn exactly how to calculate DSCR in Hawaii, how lenders evaluate it in 2025, how to estimate DSCR for condos and Airbnbs, and how to model your numbers using the Hawaii DSCR Calculator.
What DSCR Actually Measures (Simple Explanation)
DSCR tells lenders and investors:
“Can the rental income cover the mortgage payment?”
The formula is simple:
DSCR = Monthly Rental Income ÷ Monthly Mortgage Payment (PITIA)
Where PITIA =
- Principal
- Interest
- Taxes
- Insurance
- Association fees (very important in Hawaii)
Example:
If a Waikiki condo produces $3,200/month in rent and the payment is $2,700:
DSCR = 3,200 ÷ 2,700 = 1.18
This means the property earns 18% more than it costs to operate.
Why DSCR Matters More in Hawaii Than Other States
Hawaii has factors that strongly influence DSCR:
High HOA fees (especially Waikiki + Maui condos)
This lowers DSCR dramatically.
Island-specific insurance costs
Hurricane insurance, flood zones, and lava zones affect the payment.
STR zoning complexity
Airbnb income is seasonal, so lenders evaluate it differently.
Higher property taxes in certain areas
Kauai STR zones and some Big Island areas can increase PITIA.
Higher purchase prices
Meaning every decimal in DSCR matters.
Accurate calculation = better approval, better pricing, and better deal decisions.
How to Calculate DSCR Step-by-Step (Hawaii Version)
Here is the exact formula used by lenders in 2025:
Step 1: Determine Gross Monthly Rental Income
This comes from either:
For Long-Term Rentals:
- Lease agreement
- Market rent from appraisal (1007 report)
For Short-Term Rentals (Airbnb/Vrbo):
- 12 months actual STR income
- Property management statements
- Software projections (some lenders allow)
Hawaii-specific STR note:
Lenders annualize income because of seasonality (summer and winter peaks).
2: Determine Monthly Payment (PITIA)
This is where most Hawaii investors miscalculate.
PITIA includes:
- Principal
- Interest
- Taxes
- Insurance
- HOA dues (huge factor for condos)
- Lease rent (if leasehold)
- Special assessments (sometimes required)
If HOA fees are $1,200/month, that alone can drop your DSCR by 0.20–0.30.
3: Apply the DSCR Formula
DSCR = Rent ÷ PITIA
Good DSCR:
1.20+
Acceptable DSCR:
1.00–1.19
Challenging DSCR:
Below 1.00
(Still possible but with bigger down payments.)
How Lenders Calculate DSCR in Hawaii (Updated 2025 Rules)
1. Lenders use appraiser rent unless STR income is allowed
Some lenders accept actual Airbnb statements; others won’t.
2. HOA is always included
This is where most investors miscalculate.
3. Insurance is a major factor
Especially Maui and Big Island.
4. DSCR requirements vary by property type:
- SFR: DSCR 1.00–1.25
- Condo: 1.05–1.25
- Condotel: 1.10–1.30
- Airbnb/STR: 1.15–1.45
5. DSCR below 1.00 is possible
But requires 25–35% down.
These rules differ from mainland DSCR lending.
Why You Should Use a DSCR Calculator (Especially in Hawaii)
Manually calculating DSCR can be tricky because of:
- High HOA variation
- STR seasonality
- Different insurance variables
- Appraisal-based rent differences
- Leasehold factors
- Tax zoning differences
This is why we recommend using the
Hawaii DSCR Calculator
(Internal link inserted).
It automatically accounts for Hawaii’s unique factors and gives you:
- Instant DSCR
- Required down payment
- Estimated loan terms
- Lender-accepted ratios
- STR vs long-term rental comparison
- Payment breakdown
How to Improve Your DSCR Fast (Hawaii-Specific Tips)
Lower HOA impact
Choose buildings with < $700/mo HOA when possible.
Use STR income if allowed
Airbnb income can boost DSCR by 2–3x.
Increase down payment
A 5% bump can turn DSCR 1.05 → 1.20.
Shop insurance
Cutting insurance by $100/mo can boost DSCR significantly.
Look for tax-light areas
Certain Big Island and Maui areas have lower tax assessments.
Buy fee simple when possible
Lease rent drags DSCR down.
These tactics are especially valuable in the Hawaiian market.
Common DSCR Calculation Mistakes (Hawaii Edition)
Forgetting HOA
This is the #1 reason investors miscalculate.
Using peak Airbnb income instead of annualized numbers
Lenders won’t accept summer-only numbers.
Underestimating insurance
Island-specific risks matter.
Using mainland calculators
They do not include Hawaii-specific fields.
Ignoring special assessments
Some condos require them annually.
Avoiding these mistakes saves deals.
FAQ — DSCR Calculation in Hawaii (2025)
What is a good DSCR in Hawaii?
1.20+ is considered strong.
Do HOA fees count in DSCR?
Yes — always.
Can I use Airbnb income to calculate DSCR?
Yes, with lenders who allow STR underwriting.
Do taxes and insurance affect DSCR?
Absolutely — they increase PITIA and lower DSCR.
Can a property with DSCR below 1.0 qualify?
Yes, but with larger down payments.
What’s the best way to calculate DSCR?
Use the Hawaii DSCR Calculator for accurate numbers.
Looking for fast, flexible financing in Hawaii? Private Money Hawaii offers 7–14-day closings, local underwriting, and asset-based approvals designed for investors who want to move fast and invest smarter across all islands.
Offering Rates Starts at 9%
At Private Money Hawaii, we are proud to fund commercial properties, multi-family residential, investment residential properties, fix and flip projects, land, and construction in Honolulu and across the Hawaii Islands.
Ready for a Honolulu Hard Money Loan? Fast, Flexible Financing Across Hawaii
Act Fast with a Trusted Local Partner
Secure funding in as little as 7–14 days. No bank delays—just Honolulu hard money loans designed for investors who need speed and certainty.
Tailored Loan Programs
From fix-and-flip loans in Oʻahu to bridge loans in Honolulu, DSCR rental financing, and construction loans across Hawaii, we customize terms around your project’s needs. With interest-only payment options, LTV up to 70%, and clear origination fees, you’ll have flexible funding that works for you.
Local Expertise You Can Trust
Led by veteran lender David Ige, with nearly 30 years of experience funding Hawaii investment property loans, we combine deep local insight with transparent terms to help investors succeed.
Private Money Hawaii
Address: 411 Hobron Ln #3912, Honolulu, HI 96815
Call: +1(808) 753-1204
Email: funding@privatemoneyhawaii.com