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DSCR loans for Oahu rental property
Long-term financing approved on what the property earns. Houses, condos, condotels and legal vacation rentals, with no tax returns or employment check.
DSCR loan terms
| To buy | up to 85% LTV |
| Cash-out refinance | up to 80% LTV |
| Credit scores from | 600 |
| Fixed terms | 5 to 30 years |
| Prepayment choices | 3-year, 5-year or none |
| Typical closing | about 30 days |
At a 600 score the limit is 70% loan-to-value. Stronger credit qualifies for up to 85% on a purchase.
DSCR in plain terms
DSCR is short for debt service coverage ratio. It answers one question: does the rent pay the mortgage? If it does, the loan can be approved without looking at your personal income.
DSCR = monthly rent ÷ monthly payment. The payment counts principal, interest, property taxes, insurance and any association (AOAO) maintenance fees.
| Rent | Payment | DSCR | Reading |
|---|---|---|---|
| $5,200 | $4,000 | 1.30 | Income is 30% above the payment |
| $4,000 | $4,000 | 1.00 | Income equals the payment |
| $3,600 | $4,000 | 0.90 | Income is short; expect less leverage or a higher rate |
We prefer a ratio of 1.0 or higher. A strong borrower can qualify under 1.0 with lower leverage, and there is a no-DSCR option up to 75% loan-to-value at a higher rate.
Which rent counts on Oahu
How a property may legally be rented decides the income we use, and on Oahu that depends on zoning as much as on the property.
- Long-term rentals. Leases of six months or a year are the core of the Oahu rental market and are underwritten on the lease or on market rent from the appraisal. Military families, medical staff and local workers keep demand steady.
- Vacation rentals in resort zones. Condos and condotels in resort-zoned parts of Waikiki, Ko Olina and Turtle Bay, and units with a nonconforming use certificate, can rent by the night. We use 12 months of rental history or AirDNA projections counted at about 70 to 80%.
- Everywhere else. Outside resort-zoned areas, Honolulu does not allow residential rentals of less than 30 days, and a 2025 city ordinance raises the minimum for many properties to 90 consecutive days. Stays shorter than that are legal mainly in resort districts, such as much of Waikiki, Ko Olina and Turtle Bay, and in units with a nonconforming use certificate or a city registration. Most investor-owned homes on Oahu are therefore underwritten on long-term rent.
What makes the payment higher on Oahu
- Property tax. Honolulu taxes a home its owner does not live in at the Residential rate if it is assessed under $1 million, and in the Residential A class if it is assessed at $1 million or more, where every dollar over $1 million is taxed at more than three times the base rate. Legal vacation rentals fall in their own, higher class. Use the rental figure, not the seller’s bill if the seller lived there with a home exemption.
- Association fees. Condo maintenance fees on Oahu are high, and many older buildings have raised them or levied special assessments for insurance and repairs. The full fee counts in the payment.
- Insurance. Many homeowner policies in Hawaii exclude hurricane damage, which is then written separately. Where flood coverage is required, that premium counts too. Get a full quote, not an estimate.
- Leasehold land. Some condos sit on leased land with a monthly lease rent. Lease rent counts in the payment, and the lease must run well past the loan term.
Get real figures for each before you make an offer. They decide whether a deal clears 1.0.
Loan options
- Fixed terms from 5 to 30 years. The 10/1 interest-only and the 30-year fully amortized loan are chosen most often.
- Qualifying on the interest-only payment is available.
- A 3-year or 5-year prepayment penalty. The 5-year option usually prices about 0.25 to 0.5% lower. No penalty is available at a higher rate.
- One property or a whole portfolio.
Refinancing after a renovation or a build
If you renovate or build a property and decide to keep it, a DSCR loan replaces the short-term fix and flip or construction loan with long-term debt. A cash-out refinance at up to 80% loan-to-value can hand back much of the cash you put in.
Documents we ask for
- Loan application
- Signed purchase contract, or your original settlement statement for a refinance
- The lease for a long-term rental, or an income statement or booking history for a legal vacation rental
- Two months of bank statements
- Insurance and escrow contacts, and someone to let the appraiser in
- For a condo: the AOAO budget and any special assessment notices
- For an LLC: articles of organization, EIN letter and operating agreement
The full list is in our hard money loan document checklist.
DSCR loans: common questions
We prefer 1.0 or higher, which means the rent covers the full payment. Strong borrowers can qualify below 1.0 with lower leverage, and a no-DSCR program is available up to 75% loan-to-value at a higher rate.
Only where short stays are legal: resort-zoned areas such as much of Waikiki, Ko Olina and Turtle Bay, and units with a nonconforming use certificate or city registration. There we use 12 months of history or AirDNA projections counted at about 70 to 80%. Elsewhere we use long-term rent.
Yes. The full monthly AOAO fee is part of the payment, along with any special assessment you will be paying, so a high fee can push a deal below 1.0.
Yes, through our rental programs, including non-warrantable condos and condotels. Income is counted from rental history or projections.
The minimum is 600, at up to 70% loan-to-value. Higher scores qualify for up to 85% of the purchase price.
No. A DSCR loan is approved on the property’s rental income. There is no employment, tax return or debt-to-income review.
No. These are business-purpose loans and are not reported on your personal credit like a conventional mortgage. There is no cap on how many properties we will finance for you.
Buying or refinancing an Oahu rental?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.