Canadian Couple Buys a Hawaiian Rental Property with a DSCR Loan
At HomeAbroad, we believe every dream deserves to shine, especially for those navigating the complexities of US real estate from abroad. One inspiring story is that of Liam and Emma, a Canadian couple determined to own an investment property in Hawaii.
Despite facing challenges like limited US credit history, their dream became a reality with our support and the innovative DSCR loan program, turning their vision of paradise into a tangible home.
Background
Client: Liam and Emma Thompson (names changed for privacy)
Property Type: Short-Term Rental (Airbnb) in Hawaii
Location: Lahaina, Hawaii
The Dream
For Liam and Emma Thompson, owning a vacation home in the beautiful islands of Hawaii was a lifelong dream. They envisioned spending family vacations in paradise, soaking up the sun and enjoying the ocean breeze.
But they also saw it as a savvy investment opportunity—renting the property out as a short-term rental (Airbnb) when they weren’t using it.
Like many Canadians, they believed securing a mortgage in the US would be next to impossible without a US credit history. Despite having the financial means, the challenge of financing seemed like a significant barrier.
The couple had explored Canadian mortgage options, but they presented their own set of limitations, making the process even more complex.
Challenges They Faced
Initially, Liam and Emma thought their lack of US credit history would make getting a mortgage in the US impossible. They weren’t aware of how specialized financing options could work around this.
Exploring Canadian mortgage options didn’t offer a solution either. While some Canadian banks provide mortgages for US properties, the terms were restrictive, especially given the property’s high value of $1.5 million.
Canadian mortgages typically have shorter loan terms, which result in higher monthly payments. This increase in payments affects the Debt-to-Income (DTI) ratio, making it difficult to qualify for traditional income-based loans, especially with a property of this scale.
Faced with these obstacles, the dream of owning a vacation home in Hawaii seemed to be slipping away.
Discovering HomeAbroad
Just when the Thompsons were running out of options, they discovered HomeAbroad. While researching US mortgage options for Canadians, they stumbled upon our services designed specifically for foreign nationals looking to invest in US real estate. They decided to reach out and share their story.
From the moment they connected with us, their perspective shifted. We listened to their goals and challenges, and with our deep expertise in foreign national financing, we knew there was a path forward.
HomeAbroad is a one-stop shop for international buyers, offering tailored mortgage programs with no US credit history, specialized real estate agents, and even LLC setup services to simplify the purchase process for global investors.
The Solution: HomeAbroad DSCR Loan
After analyzing the Thompsons’ case, we identified the perfect solution: the HomeAbroad DSCR (Debt Service Coverage Ratio) Loan.
This loan is a powerful option for international investors, as it doesn’t rely on personal income or credit history. Instead, it qualifies buyers based on the property’s ability to generate rental income. This was a game-changer for Liam and Emma.
Their dream property, a stunning single-family home in Lahaina, HI, had excellent rental potential.
By conducting a detailed DSCR analysis, we confirmed that the property’s income would not only cover the mortgage but also provide a strong return on investment.
In fact, the projected ROI over two years was a remarkable 52%, making this not just a vacation home, but a highly profitable asset.
The high rental income potential of this Hawaiian property made it an ideal candidate for the DSCR loan.
However, the couple faced another challenge: they didn’t have enough funds in their US bank account for the closing costs. To overcome this, we adjusted the loan amount to ensure they had sufficient funds available.
Property Details
- Property Details:
- Property Value: $1,550,000
- Address: 500 Kapalua Drive 21 P3-4, Lahaina, HI
- Type: Single Family Rental
Mortgage Details
- Loan Amount: $1,085, 000
- Downpayment: $465,000
- Interest Rate: 7.375% Fixed
- Loan Term: 30 Years
- Mortgage Payment: $9,282
- Duration: Closed in 30 days
DSCR Calculation:
DSCR = Gross Rental Income/PITIA
Monthly Gross Rental Income = $15,750
Principal and Interest: $7,494
Taxes and Insurance: $1,788
Total Monthly Mortgage Payment: $9,282
DSCR = $15,750/$9,282 = 1.6
This meant the property would generate $6,468 in positive monthly cash flow after covering the mortgage payments, making it a financially sound investment.
Steven Glick (Director of Mortgage Sales), who worked hand-in-hand with Liam and Emma, remarked:
“It’s incredibly rewarding to help my clients unlock their investment potential, turning their money into long-term income while enjoying the added benefit of owning a vacation home.”
And here’s what the couple had to say about their experience with us:
Despite having no US credit history, they guided us to the perfect DSCR loan, allowing us to invest in a stunning property in Lahaina. The process was smooth, and the rental income is covering our mortgage. We couldn’t be happier with their expert support and highly recommend them to any foreign national looking to invest in the US.
HomeAbroad: Democratizing US Real Estate for International Buyers
For the Thompsons, what seemed like an impossible dream became a life-changing reality. Their vision of a Hawaiian getaway, once filled with doubts and obstacles, turned into both a cherished vacation home and a thriving investment.
At HomeAbroad, we believe that every international buyer deserves the chance to build their dreams, just like the Thompsons did.
Are you ready to turn your dream into reality? Let HomeAbroad guide you every step of the way—reach out to us today!
