DSCR Loan in Hawaii

DSCR Loan in Hawaii: Unlocking Opportunities

DSCR loans in Hawaii offer an alternative to conventional home loans. Unlike the traditional complex application process that requires substantial documentation, such as proof of income, employment history, cash reserves, debt-to-income ratio, and credit score, DSCR lenders in Hawaii focus primarily on a single metric to assess your eligibility for these loans.

This metric is the Debt Service Coverage Ratio, which helps determine whether you have a dependable capacity to repay the DSCR loans in Hawaii. Hawaii DSCR loans present themselves as a highly favorable option.

Interest rates of  DSCR loan in Hawaii

Interest rates for various loans in Hawaii are outlined as follows: DSCR (“Rental”) loans typically range from 7.75% to 8.75% with points ranging from 0.5 to 2. Fix & Flip (“Bridge,” “Hard Money,” “RTL”) loans have interest rates between 11% and 12%, accompanied by 1 to 2 points. Ground Up Construction loans carry a fixed interest rate of 12%, and points can range from 2 to 3. These figures provide a general overview, and actual rates may vary based on individual borrower qualifications, loan amounts, and specific lender terms.

Individuals seeking loans in Hawaii should consult with local lenders to obtain personalized and up-to-date information tailored to their financial circumstances.

How does DSCR loan work in Hawaii?

Debt-Service Coverage Ratio (DSCR) loans, often used for real estate investment, work by assessing the ability of the rental property’s income to cover the loan’s debt service. 

In rental property investing, the Debt-Service Coverage Ratio (DSCR) represents the annual rental income compared to the annual debt associated with a property. A DSCR above 1 indicates that the property’s rental income is more than sufficient to cover its debt obligations. This metric is crucial for investors and lenders, as it serves as a measure of the property’s financial progress and its ability to generate income for loan repayment. A DSCR below 1 may raise concerns about the property’s capacity to meet debt payments. 

For investors seeking financing through DSCR loans, maintaining a healthy DSCR is paramount, as it reflects a comfortable margin for covering both operating expenses and loan repayments through rental income.

Requirements for a DSCR loan in Hawaii?

  • Loan amounts are available up to $5 million.
  • There is no necessity for personal income documentation or calculations.
  • Permits ownership or financing of an unrestricted number of investment properties.
  • Accepts U.S.-based corporations, LLCs, or partnerships.
  • Requires a credit score of 640 or higher.
  • Mandates a 20% down payment.
  • A low Debt Service Coverage Ratio (DSCR) of 1.0 is acceptable; qualification can rely on the property’s cash flow.
  • Offers the option for delayed financing.
  • Provides limitless choices for cash-out.

How to calculate  DSCR loan in Hawaii?

The Debt-Service Coverage Ratio (DSCR) for a loan in Hawaii is calculated by dividing the property’s net operating income (NOI) by the total debt service, which includes principal, interest, taxes, insurance, and association dues. Lenders typically prefer a DSCR ratio of 1.25 or higher, indicating that the property’s income should be 1.25 times the amount necessary to cover all debt-related expenses. 

For instance, if a Hawaii rental property generates $100,000 in net operating income and has a total debt service of $80,000, the Debt-Service Coverage Ratio (DSCR) would be 1.25 ($100,000 / $80,000). This DSCR of 1.25 indicates the property’s income exceeds debt obligations by 1.25 times, meeting the preferred threshold and signaling financial stability to lenders.

Pros and Cons of a DSCR Loan in Hawaii:

Pros of DSCR Loans in Hawaii:

  • Faster Closing: Potentially quicker closing times
  • No Income Proof: No income or employment history is required.
  • Interest-Only Option: Availability of interest-only loans
  • Investor-Friendly: Suitable for new and seasoned real estate investors
  • Rental Properties: Applicable to both long-term and short-term rental properties
  • Generous Loan Amounts: Loans available up to $5,000,000.
  • Flexible Cashout: Potential for unlimited cashout.
  • Low Down Payment: Some loans may require as low as a 20% down payment.

Cons of DSCR Loans in Hawaii:

  • Possibly Higher Rates: Interest rates could be slightly higher.
  • Property Cash Flow: Qualification relies heavily on property cash flow.
  • Limited Personal Qualifications: Fewer opportunities to showcase personal financial strength.

How to Apply for a DSCR Loan in Hawaii? 

  1. Collect Information: Gather property and financial details.
  1. Choose a Lender: Pick a reputable DSCR loan provider.
  1. Initiate Application: Start the application process online or through contact.
  1. Provide Property Info: Share property specifics and potential income.
  1. Submit Finances: Give financial data highlighting repayment capability.
  1. DSCR Evaluation: The lender assesses the property’s cash flow and DSCR.
  1. Credit Check: Your creditworthiness is evaluated.
  1. Approval and Terms: Get approval with low DSCR ratios; consider terms.
  1. Legalities: Review and sign loan agreement documents.

Top 5 lenders in Hawaii for real estate investments:

KECO Capital, LLC:

  • Specializes in funding for investors by investors.
  • Loan Amounts: $250,000 – $100,000,000.
  • Loan Terms: 6 to 360 months.

RCN Capital:

  • Direct lender for various property types, including fix & flip, long-term rentals, and bridge loans.
  • Loan Amounts: $75,000 – $10,000,000.
  • Loan Terms: 12 to 360 months.
  • Interest Rates: 8.00% – 13.00%.
  • Points: 2.00% – 5.00%.

Finance of America Commercial:

  • Offers simple residential real estate investment loans.
  • Loan Amounts: $50,000 – $50,000,000.
  • Loan Terms: 12 to 360 months.

Conventus :

  • Provides fast funding with competitive pricing.
  • Loan Amounts: $150,000 – $100,000,000.
  • Loan Terms: 6 to 60 months.
  • Interest Rates: 9.00% – 12.99%.
  • Points: 0 – 2.00%.

American Heritage Lending:

  • Direct lender catering to residential real estate investors nationwide.
  • Loan Amounts: $100,000 – $5,000,000.
  • Loan Terms: 12 to 360 months.
  • Interest Rates: 8.00% – 12.00%.
  • Points: 1.00% – 3.00%.

Best places for DSCR loan in Hawaii

Identifying the “best” places for a Debt-Service Coverage Ratio (DSCR) loan in Hawaii doesn’t depend on specific geographical locations but rather on the types of properties and their income-generating potential. Here are some factors to consider:


  • Residential Rent: $2,233 per month.
  • Commercial Rent: Around $30.50 per square foot.
  • Key Features: State capital, financial center, and growing fintech presence, making it an attractive location for both residential and commercial investments.


  • Residential Rent: Averaging about $1,503 per month.
  • Commercial Rent: $65.41 per square foot for retail, $22.98 per square foot for commercial office space.
  • Attractions: Popular Maui destination with a sunny atmosphere, offering opportunities for both residential and competitive commercial real estate investments.


  • Residential Rent: Approximately $1,683 per month.
  • Commercial Rent: $28.26 per square foot.
  • Unique Blend: Diverse architectural styles and a relaxed atmosphere, providing opportunities for real estate investors in both residential and commercial properties.


  • Residential Rent: $1,650.
  • Commercial Rent: $24.23 per square foot for offices, $15.35 per square foot for retail.
  • Natural Beauty: Surrounded by lush landscapes and waterfalls, offering potential in vacation rentals and diverse opportunities in both residential and commercial real estate.

These insights into rental incomes and commercial rates in Honolulu, Kihei, Wailuku, and Hilo provide a comprehensive overview of the varied real estate investment landscapes across different Hawaiian cities.


A DSCR loan in Hawaii offers a streamlined path for real estate investors to acquire rental properties. With a focus on property cash flow and the Debt Service Coverage Ratio, these loans simplify the application process. While they may carry slightly higher interest rates and property-related risks, the benefits of quicker access to funding, investor-friendly terms, and potential cashout options make DSCR loans an appealing choice for strategic investments in Hawaii’s real estate market.


How is DSCR Calculated?

A: DSCR is calculated by dividing estimated monthly rental income by existing monthly debt.

What’s the Minimum Down Payment?

A: Investors can secure a DSCR loan with a minimum 20% down payment, subject to factors like credit score and loan amount.

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