The Quick Read: Usually about 20% to 25% on an investment-property purchase, because most programs in Lendmire’s wholesale network cap purchase leverage at 75% to 80% LTV, while select high-leverage programs reach 85% LTV on a purchase with roughly a 700-plus credit score. Hawaii’s high prices against local rents often push the real number higher.
- A purchase typically needs 20% to 25% down. Select high-leverage programs go to 15% down with a strong score.
- A cash-out refinance on a rental tops out around 75% LTV across most of the network.
- Hawaii’s price-to-rent gap often makes the coverage test, not the LTV cap, the binding limit.
- Down payment is only one piece of cash to close. Closing costs and reserves sit on top.
- Leasehold ownership, condo status, and short-term rental plans can change what a lender will accept.
How Is the Minimum Down Payment Actually Set?
The minimum down payment is the mirror image of the maximum LTV. If a program caps a purchase at 75% LTV, the investor puts down at least 25%. No state rule in Hawaii sets a separate figure. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
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Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
DSCR loans are business-purpose loans for non-owner-occupied investment property. They are reviewed differently from a standard owner-occupied mortgage. No single agency sets the down payment. Each lender sets an LTV ceiling for each risk tier, and the ceiling falls as risk rises.
Across the wholesale network Lendmire works with, the tiers look like this. All figures are typical ranges, subject to lender guidelines, and not a commitment to lend.
| Transaction | Typical max LTV | Approx. down / equity |
|---|---|---|
| Purchase, most files | 75%–80% | 20%–25% down |
| Purchase, select high-leverage | 85% | 15% down, ~700+ score |
| Cash-out refinance, standard rental | 75% | 25% equity retained |
| Short-term rental purchase | up to 75% | 25% down |
| Short-term rental cash-out | 70% | 30% equity retained |
Credit tiers shape where a file lands. A 620 floor exists in parts of the network. Most programs want around 660. A 700-plus score unlocks the strongest leverage tiers. Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines, so personal income documents play a smaller role than in a conventional file.
What Moves the Number Up or Down?
Credit, coverage, property type, and investor experience move the number most. Stronger credit and stronger rent coverage earn more leverage. Weaker ones cost leverage, which means more cash down.
| Factor | Pushes down payment lower | Pushes it higher |
|---|---|---|
| Credit score | 700+ | Near 620–660 |
| Rent coverage | Comfortably above 1.00x | At or below 1.00x |
| Property type | Single-family rental | Condo, multi-unit, unusual project |
| Rental strategy | Long-term lease | Short-term rental |
| Transaction | Purchase | Cash-out refinance |
Coverage deserves the closest look. DSCR compares the property’s rent to its full monthly obligation: principal, interest, taxes, insurance, and association dues (together, PITIA). The definition of the debt service coverage ratio is simple: below 1 means income does not cover debt payments, above 1 means it does.
For a purchase, the rent figure usually comes from the appraiser’s rent schedule, or from a lease where the program allows it. A coverage of 1.00 is where many select programs start. A separate select-lender path goes below 1.00 with leverage and terms adjusted. Stronger ratios open better pricing and leverage.
One caution worth repeating. Clearing 1.00 does not mean the property produces positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation.
Why Hawaii Often Needs More Than the Minimum
Hawaii prices are high relative to rent, so a high-leverage purchase often fails the coverage test before it hits the LTV cap. Putting more down shrinks the loan, lowers the monthly obligation, and lifts the ratio.
Honolulu Board of REALTORS data, as reported by the Honolulu Star-Advertiser, puts Oahu’s September median at about $1.11 million for single-family homes and about $523,000 for condos. Nine-month medians were up 3.1% for houses and 2.5% for condos. A brokerage-affiliated research page shows an even higher record single-family median for an earlier month. The difference reflects timing and methodology, but the direction is the same: prices are high.
Long-term rents on islands like these rarely scale with prices. That is the whole story behind the larger-down-payment pattern here.
A Worked Example in Ratios
Picture an investor buying a Honolulu condo with a modeled coverage of about 0.80x at 75% LTV on a purchase. That is below 1.00x. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Move the same condo to 60% LTV on the purchase. The loan balance drops by a fifth, and so does the principal-and-interest portion of the payment. Taxes, insurance, and dues do not shrink, so the ratio improves by less than the balance falls. In this modeled case it lands near 1.00x. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Three paths follow from the first result:
1. Bring more cash. A larger down payment pulls the ratio toward 1.00x.
2. Use the sub-1.00 path. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. That generally means a lower LTV ceiling than the standard tiers.
3. Change the property. A condo with lower dues or a unit with stronger documented rent can shift the ratio without extra cash.
A sub-1.00 structure is defensible if the investor has a clear reason to hold the property through thin coverage. If the investor is reaching for it because nothing pencils at any price, the submarket or property type is the problem, not the loan structure. Qualification is subject to lender guidelines, credit approval, and property review.
Lendmire’s complete DSCR loans guide walks through the coverage calculation in more detail.
What Is the Total Cash to Close?
The down payment is not the whole check. Cash to close also includes closing costs, the appraisal, and the reserves a lender requires you to hold afterward.
| Cash item | What it covers |
|---|---|
| Down payment | Purchase price minus the loan |
| Closing costs | Title, escrow, lender and third-party fees |
| Appraisal | Value plus rent schedule |
| Reserves | Liquid months of PITIA after closing |
| Prepaid items | Initial taxes and insurance deposits |
Reserves vary by lender, leverage, loan size, and transaction type. They commonly run around 6 months of PITIA. Conservative rate-and-term files at modest leverage and under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months. Treat each of those as a range, not a rule.
Standard programs lend up to $3,000,000. Above $2,500,000, the network generally holds to 30-year fixed structures. Single-family prices on Oahu can approach those limits, so size matters here more than in lower-cost markets. Smaller balances route through select lenders in the network.
Where Can the Down Payment Come From?
On most files, the funds must be the investor’s own and documented. Lenders want to see the money sitting in an account and seasoned, meaning it has been there long enough to show it is not a recent loan.
A second-lien loan against the subject property to fund the down payment is generally not allowed. Gift rules vary by program, and some programs do not accept gifts at all. Proceeds from a refinance of another property you own can work, once those funds are in your account and documented. The investor’s equity elsewhere is a real funding source. The loan on the subject property still needs the investor’s capital in the deal.
Reserves are a separate test. The same dollars generally cannot count twice, once as the down payment and again as reserves.
Can You Buy With Zero or Very Little Down?
Not on a standard DSCR purchase. The highest leverage in the network is 85% LTV on a purchase, which means 15% down, and it requires a strong profile, roughly a 700-plus score. Those files also tend to require stronger coverage.
A cash-out refinance on a different property, for example, creates equity but does not remove the 25% retained-equity requirement on that loan.
First-time investors who own a primary residence should expect to land near the lower-leverage end of the range. Experienced investors with strong coverage and credit see the best tiers.
Hawaii-Specific Property Wrinkles
Ownership type and property type can change eligibility before the down payment is even discussed. These checks belong ahead of the offer, not after it.
Fee simple vs. leasehold. Fee simple means you own the land and building. Leasehold means you own the building and lease the land. Leasehold ownership can limit eligibility depending on the program, so confirm tenure on the preliminary title report before going under contract. A file can fail on this regardless of the down payment.
Condos and condotels. Condo project eligibility, association dues, and condotel status all matter. Dues count in PITIA, which lowers coverage. Condotels and non-warrantable projects are handled by fewer lenders, and those that accept them often want more down. Terms vary by program.
Short-term rentals. Short-term rental purchases go to 75% LTV. Refinances sit around 70%, and cash-outs on short-term-rental collateral cap at 70%. Expect a 640-plus score and about 12 months of hosting history. The coverage floor is 1.00 on purchases and refinances. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Ineligible property types. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in these programs.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
What If Your Coverage Comes Up Short?
Adding cash is one fix, but not the only one. Four options come up most often:
- Lower the price or the loan. A smaller balance lifts the ratio.
- Document stronger rent. Rent supported by the appraisal’s rent schedule or a qualifying lease helps.
- Pick a different property. Lower dues or a different unit type can change the number.
- Use an adjusted structure. Select lenders offer extended terms (40-year) and interest-only periods, and ARM structures exist for investors who want them. These can improve the monthly ratio, but they come with trade-offs the investor should weigh.
There is also a no-ratio structure. It is available only through select lenders, generally for borrowers who already own a primary residence. Expect tighter leverage and different terms than a standard file.
How Does This Compare With Conventional Investor Financing?
Conventional investor loans typically carry lower pricing, but they require full income documentation and cap the number of financed properties. DSCR files trade that documentation for higher leverage requirements and different pricing. The comparison is detailed in Lendmire’s complete DSCR loans guide.
The choice flips on investor profile. A W-2 borrower with one rental and clean traditional personal-income documentation may do better conventionally. A self-employed investor, an entity-owned portfolio, or someone who has reached a financed-property cap will usually find DSCR the more workable path. LLC-titled purchases are common, subject to program terms.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the property’s value or purchase price, whichever the program uses.
DSCR (debt service coverage ratio): Monthly rent divided by the full monthly housing obligation on the property.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly cost used in the coverage calculation.
Reserves: Liquid funds you hold after closing, counted in months of PITIA.
Seasoning: The time funds have sat in an account, or the time you have owned a property before a cash-out refinance. About 6 months is the common expectation on cash-out.
Fee simple: Full ownership of both the land and the building.
Frequently Asked Questions
Can I buy a Hawaii rental with 5% down using a DSCR loan?
No. Standard purchase programs in the network sit at 75% to 80% LTV, and select high-leverage programs reach 85% LTV with roughly a 700-plus score. That makes 15% down the practical floor, and only for strong files. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Does a bigger down payment help me qualify?
Yes, though only within limits. A larger down payment shrinks the loan and lifts coverage, which matters in Hawaii where rents trail prices. It does not erase credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
What is the down payment on a cash-out refinance?
There is no down payment on a refinance. Equity is set by the maximum LTV. Cash-out tops out around 75% LTV across most of the network, so the investor keeps at least 25% equity. Short-term-rental collateral is capped at 70%. About 6 months of seasoning is the common expectation. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Can I use a gift or a second loan for the down payment?
Usually not a second lien on the subject property. Gift rules vary by program. Most lenders want the investor’s own seasoned funds in the deal.
Does being out of state change the down payment?
Not by itself. Leverage tiers follow credit, coverage, property type, and transaction, not where the investor lives. Hawaii’s property factors, such as tenure and condo status, matter more than your home address.
Next Steps
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Call 828-256-2183 or request a quote. Hawaii’s high prices make the coverage ratio the number to run first, before the offer goes in.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
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References
1. Wikipedia: Debt service coverage ratio
2. Honolulu Star-Advertiser (Honolulu Board of REALTORS data)
3. Locations Hawaii, Oahu market research
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Down Payment Does a DSCR Loan in Kansas Require? · How Much Down Payment Does a DSCR Loan in Washington Require? · How Much Down Payment Does a DSCR Loan in Washington, DC Require?
Guides: DSCR Loans in Hawaii
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.