For real estate investors in Hawaii, DSCR (Debt Service Coverage Ratio) loans offer one of the most effective ways to finance rental properties in today’s market. This comprehensive guide will walk you through everything you need to know about securing DSCR financing across the Hawaiian islands, including current 2025 requirements, island-specific considerations, and how to qualify for the best terms available.
Why DSCR Loans Are Ideal for Hawaii Real Estate
Hawaii’s unique real estate market makes DSCR loans particularly advantageous:
✅ No personal income verification – Perfect for mainland investors
✅ Non-recourse options – Protect your personal assets
✅ Short-term rental friendly – Great for vacation properties
✅ No state income tax – Improves cash flow calculations
✅ Multi-property financing – Finance across multiple islands
2025 Hawaii DSCR Loan Requirements
Here are the current standards from top lenders like Truss Financial Group:
| Requirement | Hawaii Standard (2025) | Notes |
|---|---|---|
| Credit Score | 620+ (580 for portfolio) | Higher for non-residents |
| Down Payment | 25-35% | Varies by island |
| DSCR Ratio | No minimum (1.0+ preferred) | Lower for Oahu/Maui |
| Property Types | 1-12 units, including: – Single-family – Condos – Ohana units – Vacation rentals | |
| Loan Terms | 30-year fixed, 5/1 ARM, 7/1 ARM | 25-year for condos |
| Interest Rates | 7.25-9.75% | Higher than mainland |
| Reserves | 6-12 months PITI | Must cover HI insurance costs |
Island-by-Island DSCR Loan Considerations
1. Oahu (Honolulu County)
- Special Requirements:
- Additional review for flood zone properties
- Higher insurance requirements
- Preferred Properties:
- Waikiki vacation rentals
- Ewa Beach long-term rentals
2. Maui (After 2023 Wildfires)
- 2025 Updates:
- Stricter building codes in affected areas
- Higher insurance premiums
- Lender Preferences:
- 30% down for West Maui properties
- 1.1+ DSCR for Lahaina/Kula
3. Hawaii Island (Big Island)
- Unique Opportunities:
- Agricultural-residential properties
- Vacation rentals in Kona/Kohala
- Challenges:
- Longer appraisal times
- Higher construction costs
4. Kauai
- Market Trends:
- Strong vacation rental demand
- Limited inventory driving prices up
- Lender Requirements:
- 30% down for North Shore properties
- 12-month rental history preferred
How to Calculate DSCR for Hawaii Properties
Special Hawaii Formula:
Copy
Download
DSCR = (Gross Rental Income × 0.85) / (PITI + Maintenance Reserve)
Kona Example:
- Purchase Price: $850,000
- Down Payment: 30% ($255,000)
- Loan Amount: $595,000
- Rate: 8.25% (30-year fixed)
- Monthly Rent: $6,500 ($78,000 annual)
- Expenses: $23,400 (includes 15% vacancy)
Calculation:
- Adjusted Income = $78,000 × 0.85 = $66,300
- Annual Debt Service = $4,472 × 12 = $53,664
- DSCR = $66,300 / $53,664 = 1.24
This strong ratio would qualify with most Hawaii lenders
2025 Hawaii DSCR Loan Costs
For a typical $1M property:
| Cost | Amount | Notes |
|---|---|---|
| Down Payment (30%) | $300,000 | Varies by island |
| Origination Fee | 1-1.5% | $10,000-$15,000 |
| Appraisal | $1,200-$2,500 | Higher for neighbor islands |
| Title Insurance | $2,500-$4,000 | Varies by county |
| Attorney Fees | $1,500-$3,000 | Required for HI closings |
| Annual Insurance | $6,000-$15,000 | Depends on location |
Why Truss Financial Group Leads in Hawaii
Truss Financial Group stands out for Hawaii DSCR loans with:
✅ No minimum DSCR ratio (great for new rentals)
✅ 620+ credit scores accepted
✅ Non-recourse options available
✅ Mainland investor friendly
✅ Fast 10-day closings
✅ Portfolio loans up to $15M
👉 Get Pre-Approved for a Hawaii DSCR Loan
5 Pro Tips for Hawaii DSCR Loan Approval
- Choose the Right Island
- Oahu/Maui: Easier financing for condos
- Big Island/Kauai: Better for single-family
- Document Rental Income
- STRs: Provide 12-month booking history
- LTRs: Show executed leases
- Account for Higher Costs
- Add 20% buffer to maintenance estimates
- Use local contractors for rehab bids
- Work With Hawaii-Savvy Lenders
- They understand:
- Leasehold vs. fee simple
- Ohana unit rules
- Local zoning laws
- They understand:
- Consider ARM Loans
- 5/1 ARMs currently at 6.75-8.25%
- Ideal for 3-5 year hold periods
FAQ: Hawaii DSCR Loans
❓ Can non-residents get Hawaii DSCR loans?
Yes! Many lenders specialize in mainland investors.
❓ Are ohana units eligible for DSCR loans?
Yes, if they have separate metering and rental history.
❓ How do leasehold properties affect DSCR loans?
Shorter terms available (typically matching lease term).
❓ What’s the minimum credit score for Hawaii?
620 normally, 650+ for non-residents.
❓ Can I finance a Hawaii vacation home as a rental?
Yes, if you can show rental history/projections.
🚀 Secure Your Hawaii DSCR Loan Today
With 2025’s competitive market, Truss Financial Group offers the best Hawaii terms: