Private Money Hawaii

DSCR for Airbnb & Short-Term Rentals in Hawaii (Fast 2025 Guide)

Short-term rentals in Hawaii continue to be one of the most profitable strategies for investors across Oahu, Maui, Kauai, and the Big Island. High nightly rates, strong year-round tourism, and limited supply create an opportunity few markets can match. But financing these properties is where most investors get stuck — especially with banks that require tax returns, W-2s, and strict income documentation.

That’s where DSCR loans for Airbnb in Hawaii come in. These loans qualify you based on property income, not personal income, allowing you to scale STR portfolios faster, close quickly, and stay competitive in a market where good deals don’t last long.

In this guide, you’ll learn exactly how DSCR financing works for Airbnb in Hawaii, what lenders look for, STR-specific underwriting rules, zoning considerations, and how to get approved quickly in 2025.

Why DSCR Loans Are Perfect for Airbnb Investors in Hawaii

Traditional lenders don’t know how to evaluate STR income in Hawaii. They prefer long-term leases and ignore your real revenue potential.

DSCR lenders, however:

• Accept Airbnb/Vrbo income
• Allow STR underwriting
• Approve based on cash flow, not tax returns
• Close fast (often 7–14 days)
• Are investor-friendly and flexible
• Allow vesting in LLCs

This is why DSCR financing has become the #1 loan option for Hawaii short-term rental investors.

How DSCR Works for Airbnb Properties in Hawaii

The core of the approval is the Debt Service Coverage Ratio (DSCR):

DSCR = Rental Income ÷ Monthly Payment

If the property produces enough income to cover the mortgage, you’re already on the path to approval.

STR-specific DSCR benefits in Hawaii:

• Lenders often accept 12 months of Airbnb income
• Income can be averaged or annualized to reflect seasonality
• Higher cash flow means easier approval and better pricing
• No personal income documents required

A strong STR property with high occupancy can qualify for top-tier pricing even in high-cost areas like Waikiki, Kihei, Kona, and Princeville.

Income Documentation for Airbnb & STR DSCR Loans

To use Airbnb income, most Hawaii DSCR lenders require:

12 months Airbnb/Vrbo statements

Direct from Airbnb, Vrbo, or property manager.

P&L showing monthly gross income

If professionally managed.

Bank statements showing deposits (optional)

Useful for lenders verifying revenue consistency.

If the property has no STR history?

You can still qualify using:

• Market rent estimate (1007 form)
• STR projections from select lenders
• Long-term rent estimates

But STR history always produces easier approvals.

DSCR Ratio Requirements for Hawaii Airbnb Properties

Most lenders look for:

• 1.20+ DSCR → best pricing
• 1.00–1.19 DSCR → standard approval
• Below 1.00 DSCR → possible with larger down payment

Why STR properties usually qualify easier:

Hawaii short-term rentals often generate 2–3× more income than long-term rentals, pushing DSCR ratios higher even with:

• Higher acquisition prices
• Higher insurance premiums
• Higher utility costs

This makes STR-focused investors ideal candidates for DSCR loans.

Down Payment Requirements for Hawaii STR DSCR Loans

Because STR income is variable, many lenders have slightly adjusted LTV guidelines.

Typical LTV (Down Payment) Requirements:

• 20% down — strong DSCR and STR history
• 25% down — no STR history or DSCR < 1.20
• 30%+ — condotels, high-risk buildings, or DSCR < 1.00

Higher down payment required for:

• Maui resort zone condos
• Waikiki condotels
• Properties without recent upgrades
• Buildings with high HOA fees

But strong Airbnb income can still overcome many of these factors.

Reserve Requirements for Hawaii Airbnb Investors

Most DSCR lenders require:

• 6 months reserves for STR properties
• 9–12 months for higher-risk or luxury STRs
• More reserves for multi-unit STR investments

Reserves matter more in Hawaii due to:

• Seasonal tourism patterns
• Higher operating costs
• Natural disaster insurance costs