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As the 2026 forecasts roll out, one theme stands out: gradual but meaningful improvement. While headlines warn of everything from AI bubbles to economic shocks, the housing market looks comparatively steady—and increasingly predictable.

Housing: Affordability Slowly Returns

(Un-)Affordability has been the housing story of the last few years. Housing costs recently peaked at about 42% of median household income, far above the long-standing 30% rule of thumb. The good news is that pressure is easing. With home prices forecast to be roughly flat in 2026, affordability has room to recover. The price-to-income ratio peaked above 5.5x income in 2022, has fallen to about 5.3x, and is projected to dip below 5x next year. Truly balanced markets tend to sit closer to 4x income, so there’s still work to do—but the trend is in the right direction, especially if incomes continue to rise.

Activity: The Lock-In Effect Is Fading

Market activity should pick up in 2026 as the “lock-in” effect of 3% mortgages continues to fade. There are now more mortgages above 6% than at 3% or below, meaning more homeowners are willing to move. That points to more listings, better choices, and more balanced markets—all while homeowners still hold record levels of equity.

Rates: They’ve Been Sticky. What’s Next?

The Fed has cautiously trimmed short-term rates over the past 15 months, but mortgage rates haven’t followed as neatly. The most recent two Fed cuts (50 basis points) were followed by 10-year Treasury yields—closely tied to mortgage rates—actually rising by about 20 basis points. Why? The bond market is more concerned about inflation re-accelerating than the labor market weakening. With mixed data (and recent disruptions to jobs reporting), markets are firmly in waitand-see mode.
 
Looking ahead, mortgage rates are expected to drift slowly into the low-6% range, with occasional dips below 6% driven by headlines. The Fed is likely to remain cautious and data-driven.

Bottom Line

All signs point to a much healthier environment for buyers in 2026: improving affordability, better inventory, more balanced pricing, and gradually easing rates. Momentum matters—and the trend may finally be your friend. If you’re planning a move soon or laying longer-term plans, now is a smart time to talk strategy and get positioned.

Get the latest mortgage industry news. CLICK HERE.

Copyright © 2026 Myers Capital Hawaii

Mortgage News and Updates – Winter 2026
Get the latest mortgage industry news. CLICK HERE.
 
-Economy & Mortgages: Mortgage Rate Outlook: Gradual Improvement Continues
-2026 Conforming Loan Limits Increased!
-Down Payment Strategy: Finding the Sweet Spot
-Debt-to-Income Ratios: The Quiet Lever That Can Make or Break a Loan Application
-Is the 50-year Mortgage a Good Idea?

Economy & Mortgages: Mortgage Rate Outlook: Gradual Improvement Continues

As the 2026 forecasts roll out, one theme stands out: gradual but meaningful improvement.
While headlines warn of everything from AI bubbles to economic shocks, the housing market
looks comparatively steady—and increasingly predictable.

Housing: Affordability Slowly Returns (Un-)Affordability has been the housing story
of the last few years. Housing costs recently peaked at about 42% of median household income,
far above the long-standing 30% rule of thumb. The good news is that pressure is easing.

With home prices forecast to be roughly flat in 2026, affordability has room to recover. The
price-to-income ratio peaked above 5.5x income in 2022, has fallen to about 5.3x, and is projected
to dip below 5x next year. Truly balanced markets
tend to sit closer to 4x income, so there’s
still work to do—but the trend is in the right direction,
especially if incomes continue to rise.

2026 Conforming Loan Limits Increased!

Adding another arrow in your homebuying quiver, conforming loan limits have once again increased in 2026. Reflecting rising home values and in support of its mission to expand homeownership opportunities, The Federal Housing Finance Agency (FHFA) announced in December that its new conforming loan limits would rise 3.26%, in line with the average increase in home prices in 2025. 

The baseline limit rose to $832,750. High-cost markets in urban areas may now have a limit as high as $1,249,125. This is good news for mortgage financing, as these higher limits help homeowners secure better rates and terms, and it improves your buying power! Homes that previously may have required you to take out a jumbo loan may now be acquired more affordably. 

And, if you were at the low end of the old Jumbo loan range, it may present an opportunity for you to refinance into a conforming loan with a more attractive rate. Give us a call to discuss!!

Down Payment Strategy: Finding the Sweet Spot

Down payments. When deciding how much to put down, it seems logical that bigger must be better—after all, a smaller loan, less mortgage insurance, and more equity sound appealing. But not so fast. With interest rates and home values easing, loan limits rising, and a wide range of loan programs offering different “sweet spots,” choosing the right down payment requires careful consideration and guidance from an experienced loan officer.

Why Down Payment Size Matters. Your down payment directly affects the loan terms you may qualify for and how much liquidity you have after closing. It influences your monthly payment, potential mortgage insurance costs, and even loan pricing—specifically how many points you may need to pay to secure a given interest rate. 

Look Deeper to Find the Sweet Spots. Loan-level pricing adjustments (LLPAs) are pricing brackets driven by factors such as loan-to-value (LTV), credit score, and other risk elements. In general, pricing improves as LTV drops. Many mortgage programs have clear LTV breakpoints where pricing improves meaningfully, creating true “sweet spots” for down payment strategy

What to Look For: Sweet Spots Vary by Loan Type. With conventional loans (up to 97% LTV), 20% down (80% LTV) is the biggest inflection point: mortgage insurance disappears and pricing improves. At 25% down, there is often another meaningful improvement in pricing for a relatively small increase in cash, making it one of the best risk-adjusted sweet spots for borrowers who can reach it. For buyers putting 10–20% down, the sweet spot is often around 15%, where mortgage insurance costs commonly drop noticeably. 

With FHA loans, pricing is largely flat regardless of down payment, and mortgage insurance is the primary factor. With as little as 3.5% down, borrowers pay both an upfront mortgage insurance premium and monthly insurance. FHA does not reward incremental down payment in pricing; the key sweet spot is 10% down, which causes monthly mortgage insurance to automatically end after 11 years. 

VA loans are unique as well. There is no monthly mortgage insurance, and pricing is not closely tied to LTV. Instead, borrowers pay a VA funding fee, which decreases at 5% and 10% down. From a pricing perspective, there is little incentive to put money down beyond reducing the payment and funding fee. For most borrowers, the VA sweet spot is 0% down. 

Jumbo loans vary a lot by investor, but typically require at least 20% down, with notable pricing improvements often occurring at 75% and 70% LTV. 

Conclusion

Many buyers assume they should put every available dollar into their down payment. In reality, reaching the right down-payment tier can improve pricing just as much—while preserving cash for furnishings, renovations, or savings. Contact me to discuss your next move, and we’ll help you strike the right balance between affordability and liquidity.

Debt-to-Income Ratios: The Quiet Lever That Can Make or Break a Loan Application

Most buyers obsess over credit scores— and that makes sense. But here’s a little-known truth from inside underwriting: improving your debt-to-income ratio (DTI) by just a few points can matter as much as a 20–40 point credit score increase. 

Why? Because DTI is the stress test. It’s how underwriters decide whether your income comfortably supports your new mortgage—or whether the loan feels tight, risky, or more expensive. I’ve seen buyers miss approval by a single car payment. I’ve also seen buyers unlock better rates or higher loan amounts by shaving just 2–3 points off their DTI. That’s how loans are actually approved. 

Why DTI Cutoffs Matter

DTI compares your monthly debt—credit cards, auto loans, student loans, and more— to your gross income. 

Here’s what most consumers don’t realize: DTI works in bands, not on a smooth curve. Moving from 45% to 43% can turn a “refer” into an “approve,” lower mortgage insurance, improve pricing, or increase how much home you qualify for. Often, that shift comes from one targeted change. 

Small Moves, Big Impact

Once we calculate your true DTI baseline, opportunities usually appear. Paying a credit card below 30% utilization can lower the payment used in DTI and boost your credit score. Paying off one installment loan can be the difference between qualifying and not qualifying. Even eliminating $75–$100 per month can materially change the outcome.

Beware of “Harmless” New Debt

One of the most common mistakes buyers make is adding new monthly payments before applying. That zero-interest furniture deal or buy-now-pay-later plan? If it shows up as a payment, it hits your DTI. One small obligation can undo weeks of preparation.

Income and Timing Matter Too

DTI isn’t just about debt. Bonuses, overtime, and commissions can often be included with proper documentation, while job changes can affect how income is counted.

Timing matters as well: paying down revolving debt 30–45 days before applying gives credit reports time to update—and keeping balances steady through underwriting is just as important.

A strong DTI doesn’t just help you get approved. It can expand your options, improve pricing, and give you leverage as a buyer—especially when you know which small moves actually move the needle. Let’s start a conversation about yours, today!

Is the 50-year Mortgage a Good Idea? (Short answer: no)

The 50-year mortgage idea occasionally resurfaces whenever affordability gets bad. The pitch is simple: stretch the loan, lower the payment. But the math—and the market—tell a very different story.

On a $300,000 loan at 6.5%, a 30-year mortgage runs about $1,896/month*. A 50-year mortgage drops that to roughly $1,691—a savings of just $205. That modest relief comes at a steep cost. That 30-year loan costs about $383,000 in total interest. The 50-year loan? Nearly $715,000—almost double the interest cost of the 30-year loan!

Equity is where the damage shows up. After 10 years, the 30-year loan has paid down about $46,000 in principal. The 50-year loan? Just $11,000. Now add reality. On a $375,000 home, typical 6% seller costs are about $22,500. That wipes out the entire $11,000 of equity from the 50-year mortgage—and then some—just to sell.

There’s another reason these loans won’t fly. There isn’t a secondary market for debt with 50-year terms with slow paydown and higher risk. To make them work, investors would likely require a higher interest rate, erasing much of the payment benefit and worsening the already-stratospheric total cost. Similarly, other ideas being floated — portable or assumable mortgages — also have structural problems that make them highly unpalatable to investors.

Bottom line: a 50-year mortgage trades long-term wealth for minimal short-term relief—and leaves homeowners exposed when it’s time to sell.

*Example payment for illustrative purposes only. Does not include taxes, insurance, or other costs. Actual rate and terms may differ. Not a commitment to lend.

Copyright © 2026 Myers Capital Hawaii

In this episode of the Nalu Finance Podcast, Stefan Wagner interviews Reed Kawai Myers, Principal of Myers Capital Hawaii and Myers Investment Group. They discuss private mortgage and bridge loan investing, and examine why Hawaii is a uniquely attractive yet underbanked market.

They explore how private lending operates outside of traditional banks, detailing how investors can access asset-backed mortgage opportunities. The episode covers expected returns, approaches to risk management, liquidity considerations, and the process when borrowers default.

What’s Inside:

●How private mortgage lending works — how it differs from bank lending, why underwriting is asset-focused, and how first-lien real estate collateral protects investors.

●Why Hawaii is a unique private credit market — underbanked, relationship-driven, and shaped by local knowledge, culture, and conservative loan-to-value discipline.

●Risk, returns, and reality — how double-digit yields are generated, what semi-liquidity really means, and how experienced lenders manage defaults when things don’t go as planned.

Why Listen:

This episode is a practical deep dive into private mortgage investing, grounded in real-world experience rather than theory. Reed brings a disciplined, relationship-driven approach to lending that highlights both the opportunities and the responsibilities that come with offering alternative credit solutions.

🎧 Listen Now On: Apple Podcasts | Spotify | Youtube | Podomatic

Transcript:

Intro: 00:01 Nalu FM Finance Podcast. Insight into the financial markets.

Reed Myers: 00:10 To me, my clients, both my borrowers and my capital investors are everything that determines the health of your company, your credibility, everything. But we want to be aligned as far as our culture and what we can actually provide and what we can’t.

Sponsor: 00:22 This podcast is powered by Vestr, the engine behind Active Management. Vesta is a Switzerland-based fintech startup that provides software for issuers of actively managed certificates to automate their value chain fully. Visit Vestr, V-E-S-T-R dot com to schedule a meeting with an expert and to learn more about Vestr.

Stefan Wagner: 00:44 Welcome to the Nalu Finance Podcast. In this episode, we dive into the world of private mortgage and bridge loan investing, a space that blends real estate, lending, and income generations. Our guest is Reed Myers, principal and owner of Myers Capital Hawaii and Myers Investment Group, who has built a reputation for offering investors access to income-generating mortgage opportunities. Reed shares how private lending works, what makes Hawaii real estate market unique, and how investors can participate in these asset-backed strategies.

We’ll discuss everything from risk management and default recovery to expected returns, liquidity, and who these opportunities are best suited for. Whether you’re an experienced investor or just curious about alternative income streams, this episode will give you a practical insight into how private mortgage investing really works. Reed, you have built Myers Capital into a specialist in private mortgage and real estate lending and Myers Investment Group as an investment management company offering passive mortgage investments. How did you first become involved in this space and what market gap did you identify? 

Reed Myers: 01:53 Great question and thanks for having us on the podcast. I first got started in real estate and finance out of college actually. So I got recruited to work for a small real estate investment trust in the Carolinas. And so that was kind of my first foray into real estate, finance, some development. And then shortly after that, we came on board with my family company, Myers Capital. My father started in 1998. At the time, we were just a very small, still small today for many respects, but commercial mortgage banker, primarily doing commercial lending for small apartment buildings, mixed use, things like that throughout the Carolinas and the Southeast. So I actually started off loan processing, doing some underwriting, the basics.

Stefan Wagner: 02:46 Yeah, but that way you learn what to look for. When it comes your way, you can probably very quickly spot certain patterns that you would have never known if you would have not done that.

Reed Myers: 02:56 Yeah, exactly.

Stefan Wagner: 02:58 So for the listeners less familiar, what exactly is actually private mortgage lending and how does it differ from traditional bank lending?

Two years ago, real estate was a sprint—record-low rates, surging demand, and bidding wars. Homes closed in days, often with inspections waived; buyers rushed or risked being priced out.

Now the script has flipped. With higher rates, demand has cooled and the market has found balance. Joel Berner, Senior Economist at Realtor.com, calls today a “buyer-friendly balanced market.”

“[We see] a lot of sellers with some unrealistic expectations who list their homes maybe at prices they would have gotten in 2022, but it’s not 2022 anymore. So they have to do price reductions and negotiate with buyers.”

It’s not a classic buyer’s market, but buyers have time for due diligence and leverage for repairs, credits, or closing costs. Instead of racing, we can align budget and long-term goals to structure the right path to ownership.

For sellers, homes no longer “fly off the shelf.” Overpriced or fixer-upper listings sit. Homes need realistic pricing, curb appeal, and seller flexibility.

What about rates ahead? Over the next 6-12 months, mortgage rates are expected to slide modestly lower — but with significant caveats. The key drivers are the Fed’s handling of short-term rates and how inflation and economic growth evolve. Although the Fed has begun trimming its policy rate, future cuts are expected to be measured and data-dependent, rather than aggressive. Bottom line, the Fed is in no hurry to get on the wrong side of either inflation or economic growth.

Long-term rates, like mortgage rates, are not mechanically tied to the Fed rate. They reflect market expectations for inflation and growth, and they incorporate a term premium (extra yield for bearing interest rate risk over the long term).

Even as the Fed cuts short term rates, the term premium could remain elevated if investors worry about the impact of inflation or economic growth. Many forecasters expect average 30-year fixed rates to end 2025 in the low 6’s, and gradually drift down as we go into 2026.

While the slow slide in rates might tend to test one’s patience, there’s a silver lining: a large drop in rates would usher a flood of sidelined buyers into the market (and guess where home prices would then go). So the good news: for well-qualified buyers is that reduced competition, improving selection, and steady values have created one of the most favorable windows in years.

If you’ve been waiting, now is the time to take the wheel. Let’s review your numbers, explore purchase or refinance options, and chart the course toward your long-term real estate goals.

Get the latest mortgage industry news. CLICK HERE.

Copyright © 2025 Myers Capital Hawaii

 
 

Mortgage News and Updates – Fall 2025
Get the latest mortgage industry news. CLICK HERE.

-Economy & Mortgages: Mortgage Rate Outlook: A More Buyer-Friendly Market
-Is VantageScore Your Credit Comeback Story?
-CRYPTO Meets Mortgages
-10 Mortgage Moves to Tame Today’s Rates
-Rates are Down! Is it Time to Refinance?

Economy & Mortgages: Mortgage Rate Outlook: A More Buyer-Friendly Market

Two years ago, real estate was a sprint—record-low rates, surging demand, and bidding wars. Homes closed in days, often with inspections waived; buyers rushed or risked being priced out.

Now the script has flipped. With higher rates, demand has cooled and the market has found balance. Joel Berner, Senior Economist at Realtor.com, calls today a “buyer-friendly balanced market.”

Is VantageScore Your Credit Comeback Story?

Credit scoring often feels like a locked vault. A mysterious process that most consumers don’t understand, and no alternative way to measure your creditworthiness.

If your FICO score is nonexistent or less than ideal, it can keep you from homeownership, or from getting a better interest rate on your next loan.

Enter VantageScore Solutions, an independent company formed in 2006 by Equifax, Experian, and TransUnion to give lenders—and consumers—an alternative to FICO.

The latest version—VantageScore 5.0, rolled out in 2025—introduces new “GAIN Attributes,” analyzing recent credit behavior over 24 months to boost predictive power. Compared to older versions, it can score millions more Americans with limited history and reduce the frustrating score swings we sometimes see across the three bureaus.

Here is the good news:

• More people get scored. Traditional FICO models won’t even generate a score unless you’ve had a credit account open and active for at least six months. By contrast, VantageScore can create a score if you’ve had just one account reported at any point in the past two years. That means millions more people—especially those with new or “quiet” credit files—can finally be scored.

• Alternative data counts. Rent, utility, and telecom payments can be included when reported—recognizing financial habits often invisible to other scoring systems. It can mean higher approval chances and potentially better rates—especially if you’ve been paying your bills but haven’t built up years of traditional credit history.

• Medical debt treated differently. Newer models give medical collections less weight, reducing unfair penalties for temporary hardships.

• Smarter on inquiries. Multiple credit checks for rate shopping (like mortgages) are treated as one, protecting your score while you compare.

The industry is steadily adopting it. In July 2025, the Federal Housing Finance Agency (FHFA) formally allowed lenders to use VantageScore 4.0 (in addition to “Classic” FICO) for loans sold to Fannie Mae and Freddie Mac.

This means many conforming mortgages (the bulk of the U.S. mortgage market) can now legally rely on VantageScore 4.0 in underwriting. Other programs still require FICO, and some require both. But, the door to better financing is gradually opening. Find out how this new model can potentially open some doors for you!

Crypto Meets Mortgages

Did you know your Bitcoin or Ethereum might one day help you qualify for a mortgage?

In June, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to begin preparing to recognize cryptocurrency investments as assets when assessing mortgage applicants. That’s a big shift: until now, crypto had to be converted into U.S. dollars before it could count toward your financial picture.

While the details are still being worked out—and there are plenty of questions about volatility, liquidity, and how lenders will verify balances—this move signals that digital assets are stepping into the mainstream of housing finance.

Imagine a world where your digital wallet carries weight alongside your checking and savings accounts!

In the meantime, if you want to explore how today’s rules let you leverage your assets and put you in the strongest position to buy or refinance, let’s talk. That next home may be closer than you think!

10 Mortgage Moves to Tame Today’s Rates

With home prices still elevated and mortgage rates higher than we’d like, affordability is the elephant in every open house. But here’s the good news: buyers have more tools than ever to make the numbers work. These are some of the many strategies we are using with clients, in order to open doors—often literally:

1) Polish That Credit Score. A score north of 740 is like VIP access to better rates and thousands saved over the loan’s life. Pay down debt, keep balances low, and hit pause on new credit cards until after closing. Check your score regularly; it’s never too early to start taking the right steps.

2) Consider an ARM (Yes, Really). Adjustable-rate mortgages, which are fixed for 3, 5, 7, or 10 years, often start with lower rates than 30-year fixed loans. If you don’t plan to be in the house for a full 30 years, considering an ARM may be a really smart move.

3) Go Bigger on the Down Payment. While not for everyone, 20% down not only avoids PMI, it shrinks your loan balance and can usually earn you a better rate and a smaller payment.

4) Buy Points Like a Pro. Pay points upfront. Each point (1% of the loan amount) shaves about 0.25% off your rate. Stay put long enough for the monthly savings to pay back the upfront cost, and after that, the long-term savings can be really attractive. Let us run the numbers and show you.

5) Marry the House, Date the Rate. Find the right home now, refinance later. While future rates are not guaranteed, you may not want to miss an opportunity because rates aren’t picture perfect.

6) Negotiate Like You Mean It. Today’s sellers are more flexible. Closing costs, repairs, even temporary rate buydowns are back on the table. Ask—nicely, but firmly. Worry less about other bidders.

7) Snag a Builder’s Buydown. Builders hate unsold homes. Many are offering flex cash that you can use in different ways. Skip the appliance upgrade and instead use it to fund a 2-1 buydown that chops your payment for the first couple years. We’ll run the math with you.

8) Think Beyond Conventional. FHA, VA, USDA loans can deliver lower rates or looser requirements. For some buyers, these programs are the ticket to more-affordable financing.

9) A Quick DTI Diet. Your Debt-to-Income ratio can directly affect your rate. Paying down credit cards or car loans before applying can free up room in the budget and unlock more attractive terms.

10) Make Extra Payments (Say What?). If rates are higher than you’d like, the last thing you might think of is to make extra payments each month! But remember, extra principal payments – especially early in the life of a loan — can save huge amounts of interest over time. It’s akin to giving yourself a rate cut.

A rough example: from a total interest cost standpoint, on a $300,000 loan at 6.5%, making just a 1% extra payment each month is akin to getting a 6.3% mortgage. And you pay off about 10 months earlier. Give that one some thought. Talk to us and we’ll show you.

Bottom line: today’s market rewards creativity. There’s no single “right way” to finance a home, but there is a right way for you. With a little strategy, you can boost buying power, tame interest costs, and step confidently into that next home (or your first one!). Let’s talk about which of these moves fits your journey best!

Rates are Down! Is it Time to Refinance?

If you bought a home in the past few years, chances are your rate is close to 7%. Since then, rates have dropped enough that it may be worth exploring a refinance. The math isn’t one-size-fits-all, but that’s where we come in.

We’ll look at closing costs, how long you expect to stay in your home, and whether resetting your loan term makes sense. Sometimes refinancing unlocks real monthly savings, even as it resets the clock.

Or, it may allow you an opportunity to shorten the loan term (think 15-year loans), where you could be mortgage-free years sooner with thousands in mortgage interest saved. Credit scores matter too, and if yours could use a boost, we can create a plan together before you apply.

Here’s a simple example*: on a 30-year fixed loan of $300,000, dropping the rate from 7% to 6% lowers the monthly principal-and-interest payment by nearly $200. That kind of savings could free up room in your budget every single month, and over the long run, it can add up to huge savings.

A quick conversation can reveal whether refinancing makes sense for you today or whether it’s something for a bit later. There’s no cost to talk it through. Reach out to us when you have a few minutes, and let’s see what’s possible.

*This is for illustrative purposes only and not a commitment to lend. Example does not include taxes, insurance, or other costs. Actual rates, payments, and savings will vary depending on your credit profile, loan terms, and market conditions.

Copyright © 2025 Myers Capital Hawaii

A Guide for Real Estate Investors

Real estate investors have a broad range of opportunities in the current market. 

Existing properties offer plenty of advantages in the right situations – no savvy real estate investor would deny that.

New construction, designed with the preferences and demands of the local market in mind, can offer everything from more control and oversight to increased ROI from selling the property or renting it.

Also, there are times when a new project that’s already broken ground or in the middle of construction that needs additional funding to reach its end. Completing the project and making sure it can create revenue is vital.

For both new construction and in-progress projects that need some extra funding, construction loans are a key tool for real estate investors. These loans can maximize the ROI of the project through custom construction, which tailors the property to align with the wants and needs of the local housing market.

So, how do construction loans work, and how can they support your goals as an investor? Let’s take a closer look.

How Do Ground-Up Construction Loans Work? The Basics

Even though the specifics can become complicated, as is often the case with many types of real estate loans, the basic idea behind construction loans is pretty simple.

They are short-term loans used to cover the cost of the construction process. Construction loans can be used for new construction projects, rehabs of existing properties, and to provide the funding needed to complete in-progress work for either of these projects.

The key benefit for real estate investors is the ability to change and improve one or many buildings in a way that aligns with the needs and desires of the local market, tapping into the specifics sought by that renters or buyers.

The properties are often multi-family residences, but single-family homes developed as investment properties can use construction loans as well.

These loans are short-term loans, intended to pay for the costs of construction. They are not permanent mortgages, but rather temporary financing designed specifically for the building phase.

What Are Reimbursable Draws for Construction Loans?

The money provided by a ground-up construction loan is generally disbursed as a series of draws as construction progresses, and not as a lump sum. The borrower pays for and completes the work, then the lender provides reimbursement.

This process normally follows a draw schedule. In this structure, specific construction milestones are set. Once a milestone is reached, the contractor requests a draw, and the investor passes that request onto the lender.

The lender then conducts a review to verify that the requested funds align with the completed work. Once approved, the lender disburses the funds and makes the related payments.

Payments can generally start during the first 6-24 months after the loan is issued.

GUC loans can have either monthly payments or interest reserves, where the lender funds the interest payments and adds it onto the loan.

What are the Loan-to-Cost Ratio and Loan to After Repair Value for Construction Loans?

The loan-to-cost (LTC) ratio is a relatively simple calculation that compares the project’s total cost to the amount financed through a construction loan. While a simple calculation, this ratio plays a crucial role in securing financing for the project.

The LTC ratio is calculated by dividing the loan amount by the construction cost. The formula looks like this:

– Loan Amount / Construction Cost = Loan-to-Cost Ratio

Lenders generally look to finance projects where the LTC ratio is between 60-80% of the total project cost. Encouraging the investor to have a personal financial stake in the project – the remaining 20-40% of the total cost – is thought to encourage project completion and loan repayment.

The desired 60-80% LTC ratio range is common but not always set in stone. Lenders may make exceptions for specific investors depending on their history in real estate investments, current financial position, and existing relationship with the lender.

Loan-to-After-Repair-Value (LTARV) is a similar metric used as part of the lending process for renovations and repairs to existing properties. This calculation divides the expected and increased value of a project after repairs are completed by the value of the loan.

A maximum LTARV of about 75% is common, although not set in stone. Loan providers want to ensure the investor has a financial commitment to encourage project completion and the repayment of the loan.

What Do Construction Loans Cover?

Construction loans can be used to pay for labor costs, materials, permitting, and the land itself (yes, a construction loan does include the land – or can, at least).

The approval process is detailed and requires in-depth documentation from the investor. However, an approved construction loan will cover a wide range of costs related to the project.

What are the Benefits of Construction Loans?

The foundational benefit of a construction loan is to build a new property that taps into the wants and needs of the local housing market. Or, to renovate and repair an existing property so that it can better align with those wants and needs. A more desirable property can lead to a higher sale price or higher rents, improving ROI for the investor.

Other key benefits of construction loans include their ability to cover all phases of the project with a single loan, making financing simpler for the investor. Crucially, these loans normally feature interest-only payments during active construction, providing financial flexibility over the course of the project.

Some lenders also offer flexible loan term options and payment schedules to better support the changing timelines common in construction project.

Managing the Costs of Construction Loans

To address the cost of the loan, borrowers can:

– Take out a construction loan that automatically converts to a mortgage at the end of its term.

– Investor sells the property and pays off the construction loan.

– Refinance into a long-term loan.

– Pay off the balance in full with their own cash, which can be accomplished by selling the property.

– On larger development projects with multiple phases, the construction loan could be modified to provide additional construction funds. In addition, on larger projects, some of the already built structures could be sold and used to pay down the loan.  

– If the borrower can’t pay the full loan balance directly, they can secure long-term financing. This also helps to address the higher interest rates that often come with short-term loans like construction loans.

What Happens After Construction is Completed?

To address the cost of the loan after construction is completed, borrowers can:

– Take out a construction loan that automatically converts to a mortgage at the end of its term.

– Sell the property and pay off the construction loan with the proceeds.

– Refinance into a long-term loan.

– On larger development projects with multiple phases, the construction loan could be modified to provide additional construction funds. In addition, on larger projects, some of the already built structures could be sold and used to pay down the loan.  

– If the borrower can’t pay the full loan balance directly, they can secure long-term financing. This also helps to address the higher interest rates that often come with short-term loans like construction loans.

How to Qualify for a Construction Loan

How hard is it to get a construction loan? The standards are higher than those of a conventional mortgage, for example, but are by no means impossible to meet for stable and established real estate investors.

There are normally three major phases in the construction loan application process:

1.    A pre-qualification phase that includes a builder assessment, where the lender determines if the builder attached to the project meets the lender’s standards.

2.    Documentation submission and review, where the borrower submits detailed project information (such as budgets, project plans, and contracts with the builder) and the lender makes sure these documents align with their standards.

3.    Approval, followed by the release of funds based on the project reaching defined construction milestones.

What are the requirements for a construction loan? Exact details vary between lenders, but financial requirements relative to the loan amount are foundational. Lenders are less likely to offer loans to prospective investors who have inconsistent credit histories, significant outstanding debt, and other large financial obligations.

Lenders also tend to require large down payments (often 20-25%) as well. Construction loans don’t have collateral to put on the line. So, the qualifications are stricter overall, and interest rates are higher than those seen with conventional mortgages.

More unique requirements include the need for a qualified, licensed, and experienced builder to be part of the project.

Borrowers will have to show they have a contract with the builder to complete the project. Additionally, deep details about the project itself are needed. That includes an in-depth breakdown of construction costs and pricing, the construction plans, the timeline, and more.

Securing Your Construction Loan as a Real Estate Investor

Construction loans require careful planning, assets that align with lender expectations, an established relationship with a qualified builder, and a detailed plan for the project.

With those pieces in place, a construction loan can certainly pay off in the long run. Real estate investors can use the funds the loan provides to build attractive, durable, and dependable investment properties. That can mean long-term revenue from renters as well as a valuable asset within the investor’s portfolio.

Looking for a construction loan lender? Myers Capital offers both ground-up and mid-construction lending options to get projects across the finish line and turn them into revenue-generating properties. Our approach includes no personal income verification, loan amounts up to $5 million, and the ability to transition to long-term financing.

Myers Capital believes in forming true partnerships with our clients, providing guidance and advice to help them achieve their goals. Why? Because your success is our success.

Learn more about our loans for commercial property investors.

Copyright © 2025 Myers Capital Hawaii 

Regarding the direction of U.S. economic policies, and the impact those policies will have on our economy, it’s still anybody’s guess. Meanwhile, the U.S. housing market seems to be navigating its own path, shaped by elevated mortgage rates, tight supply, and evolving buyer preferences.

Home price increases have slowed, and we’re starting to see longer days-on-market coupled with price cuts on homes that were priced too high by overly optimistic sellers. While it may yet be a bit early to declare a buyer’s market, it’s certainly becoming more balanced!

Mortgage Rates – More Like This
Rates are likely to stay elevated for the rest of the year. The jobs picture is slowing, but the overall labor market is still tight, and the Fed has emphasized that they need more clarity on the impact of inflation, government policy, and global trade before bringing the Fed Funds Rate down. Most economists are now projecting two rate cuts later in the year, if the job market weakens further this summer.

Keep an eye on the 10-year bond rate, which mortgage rates generally move in tandem with. While the Fed may have control over the short end of the rate curve, the global bond market’s appetite for U.S. debt will control mortgage rates.

And we’ve seen some reason for concern here. “Mortgage borrowing costs could decline in 2025 but not by much. Rates in the 6% to 7% range are likely to be the new normal for mortgage costs for the foreseeable future,” wrote Russell Price, Chief Economist at Ameriprise Financial.

Home Prices Should Continue Up — Slowly
According to the National Association of Realtors Chief Economist Lawrence Yun, U.S. home prices should rise by 3% in 2025. While not the meteoric rise we’ve seen recently, if you’re waiting for a crash, you might be disappointed. Despite this year’s slow start, existing-home sales volume is still expected to grow by 6%.

Buyer Preferences – Shifting
Buyers today seem to be prioritizing features such as remodeled areas, updated flooring, updated appliances, outdoor cooking, climate resiliency, and solar panels with whole-home batteries.

Virtual reality tours have transformed home shopping; 95% of buyers search for homes online and 77% ask for virtual tours.

If your home feels like it needs a refresh, let’s talk about tapping built-up equity to get your home up to date! And, if a move is in your future, let’s get ahead of the curve and get the right financing plans in place. It’s never too early to start the process, so that you’re ready to pounce when the time is right!

Get the latest mortgage industry news. Click here. 

Copyright © 2025 Myers Capital Hawaii 

Mortgage News and Updates – Summer 2025
Get the latest mortgage industry news. Click here.


-Economy & Mortgages: Mortgage Rate Outlook—Is it a Buyer’s Market Yet?
-What is SOFR?
-Elevated Fixed Loan Rates Revive Interest in ARMs – Discover the Reasons
-Down Payment Assistance Programs Expanding
-Helping the Family Build Wealth, with a Gift of Equity

Economy & Mortgages: Mortgage Rate Outlook—Is it a Buyer’s Market Yet?

What is SOFR?

Nope. It’s not what you sit on to watch TV. SOFR (Secured Overnight Financing Rate) is the benchmark interest rate that many U.S. adjustable-rate mortgages (ARMs) track with. SOFR represents banks’ cost of borrowing cash overnight, and it is published daily by the New York Federal Reserve.

SOFR is a more robust, transparent alternative to the London Interbank Rate (LIBOR) which had been the primary ARM benchmark for decades before a crisis in its formulation process caused the marketplace to lose confidence in it.

The interest rate on an ARM is computed by adding a fixed margin (set by the terms of the mortgage) to the SOFR interest rate that changes over time. After an initial fixed period, ARMs based on SOFR can adjust anywhere from monthly to annually, based on the exact type of ARM (1-month, 6-month, or 1-year adjustments).

See our article below for the full story!

Elevated Fixed Loan Rates Revive Interest in ARMs – Discover the Reasons

Adjustable-rate mortgages (ARMs) are more popular now due to persistently high mortgage rates. ARMs get more attention when rates are elevated, since they offer lower initial interest rates than traditional fixed-rate mortgages. Why is this?

Because with a fixed-rate mortgage, the lender carries all the risk of rates moving unfavorably. So the rates on fixed rate mortgages are always a bit higher. With an adjustable-rate loan, the borrower carries some of the risk after the initial fixed-rate period is up, so the loan is priced more attractively.

According to a survey by U.S. News, about 26% of ARM borrowers chose the 5/1 ARM, which offers a fixed interest rate for the first five years, followed by annual adjustments based on prevailing market rates. The next most popular was the 5/6 ARM, 22% of borrowers, which features a fixed rate for five years and adjusts every six months thereafter. ARMs can start with a fixed rate for 3, 5, 7, or 10 years.

There are a number of great reasons to consider ARMs as we develop your home financing strategy.

-Lower upfront payments: As above, the lower initial rate can be advantageous. Smaller initial monthly payments can help you to qualify for larger loans (or qualify for the loan at all.)

-Your time horizon: A key thing to consider is whether you really need a loan that is fixed for 30 years, especially if your time horizon is less. ARMs are a great option for buyers who don’t plan to keep the loan or the home long-term, and you can match the fixed period to your needs.

Where rates may be headed: Interest rates may fall in the future, and you may be able to ride rates down without refinancing and resetting the amortization curve back to 30 years. If they don’t fall by the end of the fixed period, you can reassess whether to refinance, or (if rates seem stable) stay put. ARMs typically come with rate caps to limit how much the interest rate can increase each year.

Why ARMs Are Particularly Popular for Jumbo Loans

Lenders do more ARM business on jumbo loans, especially when rates are elevated. According to various industry reports (e.g., the Mortgage Bankers Association or Freddie Mac), in some months over 40% of jumbo loan originations were ARMs, versus less than 10% in the conventional (smaller loan) market.

Jumbo borrowers often select ARMs to better manage cash flow in the early years of the loan and refinance or move before the rate resets. On larger loans, even a quarter percent difference in rate can offer a big monthly payment difference.

Here’s a comparison for a $1 million Jumbo loan:

— 30-Year Fixed at 6.5%: $6,321/month (Principal & Interest)

— 7/6 ARM at 6.125% (fixed for 7 years, adjusts every 6 months thereafter): $6,076 /month

— The 7/6 ARM saves you about $245/month—or $20,580 over the first 7 years.

We always explore every option with each client for purchases and refinances. Sometimes the best choice is not always the most obvious one. We look forward to having a robust discussion with you soon!

Down Payment Assistance Programs Expanding

Owning a home remains a bedrock part of the American Dream, but the hurdles remain high for home buyers, given current interest rates and tight supply.

The #1 hurdle? Amassing the needed downpayment to reduce the size of the loan needed to purchase the property.

With the cost of many starter homes rising to as much as $1 million (in over 230 U.S. municipalities), the traditional 20% downpayment can be a whopping $200,000. Thankfully, many low down payment programs now exist, and the average first time buyer’s down payment is now about 9% nationally. That’s still a lot of cash.

Recognizing the size of this challenge, local governments and non-profits have made it their mission to lower the height of that hurdle to get more people into their first home. One tool that has exploded in popularity over the last few years is the downpayment assistance program (DPA).

As of the end of 2024, there were over 2,400 DPA programs available nationwide, with an average benefit of approximately $17,000 per recipient. And 172 new programs were added in 2024, a 7% year-over-year increase.

These programs are offered by a mix of municipalities, non-profits, and state housing finance agencies (HFA’s). Among these, the Mortgage Bankers Association reports that in Q4 2024, 39% of funding sources came from municipalities, followed by non-profits at 21% and state HFAs at 19%.  

The types of assistance provided are diverse, encompassing grants, forgivable loans, and deferred payment second mortgages. There has also been a notable increase in programs supporting the purchase of manufactured and multi-family homes to broaden access to affordable housing options.

Assistance programs often have income maximums, and are sometimes targeted to certain types of buyers or properties, with the goal of allocating funds to those in the community who need it most. Programs often have limits to the number of buyers they can assist, since the source of money is not infinite.

Don’t be surprised to find that a given program is not taking new applicants until the next funding year. It pays to start early and assess multiple programs. We can help with that.

It’s sometimes possible to use “stacked assistance,” combining multiple assistance programs to maximize support.

We stay on top of the programs available in our local market. If you or someone you know is hoping to overcome the down payment challenge, contact us for details.

Helping the Family Build Wealth, with a Gift of Equity

It goes without saying today that coming up with a huge down payment is a barrier for young people seeking their first home. At the same time, if an aging family member has a home that they need to move out of, it presents an opportunity for the next generation.

Instead of selling that home to just anyone, they can keep it in the family by selling it to a young family member using a “gift of equity”. A gift of equity is when a home seller sells a home at a price below its appraised value, and the difference (the “gift”) counts as equity for the buyer. Here’s an example:

• Appraised value: $700,000

• Sale price: $560,000

• Gift of equity: $140,000 (20%)

The gift serves as all or part of the down payment. If the gift ($140,000 in this example) is at or above 20%, it eliminates the need for private mortgage insurance. The lower borrowed amount also helps reduce closing costs. The tactic is typically only allowed from family members and close relatives. The seller must provide a gift letter stating no repayment is expected, and the property usually must be a primary residence.

This is just one of the many ways we craft financing programs to help the younger generation take that first step into homeownership, starting them on the path to building long-term wealth.

Copyright © 2025 Myers Capital Hawaii 

Blog Summary: Bridge loans are short-term financing tools typically 6 to 24 months long that help real estate investors act quickly on real estate opportunities. They offer fast capital, flexibility, and access to equity, making them ideal for competitive markets. Investors can secure deals, fund improvements, and scale portfolios without traditional financing delays.

• Key benefits: speed, equity access, asset repositioning
• No personal income verification 
• Fast approval and funding timelines
• Close in as little as 10 days 
• Terms: 6 to 24 months. Extensions possible on a case-by-case-basis. 
• Provide cash out when property is already owned and has substantial equity
• Acquire or finance properties that are in disrepair 

Investors often face situations in which they need to move fast on a real estate opportunity. Sometimes, they need to act before selling an existing asset or securing long-term financing.

When timing is everything, bridge loans become one of the most powerful tools real estate investors can use. They’re key to avoiding the delays of traditional funding.

What is a bridge loan, and how can it help savvy investors scale their portfolios, especially when time is of the essence? In this blog, we’ll discuss how bridge loans work. We’ll explore their benefits and discuss what real estate investors should consider when choosing this type of financing.

Continue reading to learn how short-term funding keeps deals moving.

What Is a Bridge Loan?

A bridge loan is a short-term financing solution. These unique loans are designed to “bridge the gap” between the purchase of a new property and the sale or refinancing of another.

Essentially, they allow real estate investors to access capital quickly without the long approval times of traditional mortgages.

Bridge loans for investors differ from bridge loans for consumers. For example, consumer borrowers might use a bridge loan to buy a new home before selling their current one. In contrast, real estate investors use bridge loans more strategically.

Reasons an investor might use a bridge loan include:

•    Property acquisition

•    Renovations

•    Repositioning assets

•    Tapping equity from existing holdings

A bridge loan delivers capital so investors can secure properties, make improvements, and refinance into a long-term mortgage.

How Does a Bridge Loan Work?

Bridge loans provide fast capital backed by real estate collateral. They’re commonly interest-only, with repayment due at the end of the term. In most cases, the term ends once the investor sells, refinances, or stabilizes the asset.

Benefits of Bridge Loans for Real Estate Investors

Real estate investors use bridge loans for several key reasons:

• Speed and flexibility that help investors close in days rather than weeks.
• Opportunity-driven financing, allowing investors to capitalize on distressed or undervalued properties.
• Asset repositioning to fund property upgrades or repositioning strategies.
• Access to equity without needing to sell a property.
• Portfolio growth without waiting on sales or approvals.

Bridge lenders like Myers Capital offer streamlined underwriting, expedited approvals, and flexible terms when traditional financing won’t apply.

Who Offers Bridge Loans?

Private lenders, specialty mortgage brokers, and direct lenders may offer bridge loans. Myers Capital is a trusted source for real estate investors in Hawaii and beyond. We offer tailored bridge loan solutions that support fast acquisitions on deals with a strong profitability margin.

How Do You Qualify for a Bridge Loan?

Bridge loan requirements vary by lender, but most investors will need: 

• Sufficient equity in existing or target properties.
• A strong investment or exit strategy.

Myers Capital’s mortgage professionals work closely with investors to streamline the approval process. Our team will work with you to create creative financing strategies to help our investors execute on deals that make sense.

How Long Does It Take to Get a Bridge Loan?

How long it takes to get a bridge loan depends on deal complexity and documentation readiness.

With that said, one of the biggest advantages of bridge loans is speed. Strong, prepared candidates can often receive bridge financing efficiently. With Myers Capital, many bridge loans can be approved and funded in as little as 10 days.

The Bottom Line: Are Bridge Loans a Good Idea?

For investors with a strong investment and exit strategy, bridge loans can make a tremendous amount of sense. They provide access to opportunities that traditional financing would miss. If you are an aspiring or experienced real estate investor, bridge loans can help you capitalize on competitive opportunities.

Ready to act fast on your next investment opportunity? Contact us to learn more about Myers Capital’s flexible bridge loan options to get started.

Copyright © 2025 Myers Capital Hawaii 

Blog Summary: Securing a mortgage when you’re self-employed takes planning, but it’s possible with the right approach. Organize finances, explore alternative income documentation, and work with a lender who understands self-employed needs.

-Gather clear financial documentation

-Use bank statements, 1099s, or (Profit & Loss) P&Ls

-Understand how lenders calculate income

-Strengthen your credit profile

-Separate business/personal finances

-Choose a lender experienced with self-employed borrowers

Mortgage loans for self-employed individuals can be more complex than traditional financing. After all, self-employed borrowers must go the extra mile to prove their income and financial stability. However, with the right strategy and lender, you can overcome common hurdles and successfully finance a primary residence, second home or investment property.

At Myers Capital, we know it can be challenging to get a mortgage loan if you’re self-employed. That’s why we specialize in helping self-employed borrowers qualify through alternative income documentation methods and flexible underwriting. In this blog, we’re sharing our top tips for securing mortgage loans for self-employed individuals.

Keep reading to learn how we help freelancers, sole proprietors, and business owners find a place to call home.

Organize Your Financial Documentation

Before you begin, ensure you know the answer to the question “What paperwork do you need for a mortgage?” Documentation plays a critical role in qualifying for a home loan.

Typically, traditional mortgage lenders asked for the following:

-Two years of personal and business tax returns

-Year-to-date profit and loss statements

-Business bank statements

-1099s (if applicable)

-CPA letters verifying business ownership

At Myers Capital, we offer flexible options beyond traditional documentation.

Here are a few other options for self-employed individuals:

-Bank Statement Loans: Use 12 to 24 months of business or personal bank statements to verify income. Tax returns are not required.

-1099 Mortgage Loans: Ideal for independent contractors who receive 1099 income.

-Profit and Loss Statement Loans: Qualify using verified P&L statements instead of tax filings

These options are great for the self-employed because they reflect your real income more accurately.

Understand How Income is Calculated

How do you calculate self-employed income for mortgage loans? Do mortgage lenders use gross or net income for self-employed borrowers?

The answer to both questions is that it depends on your documentation.

Traditional lenders typically use net income from your tax returns. With bank statement or P&L-based loans, you can use gross deposits or operating income offset by a predetermined expense ratio. This alternate documentation can present an accurate picture of your earnings. This can significantly improve your loan eligibility and buying power.

Build a Strong Credit Profile

A high credit score can boost your chances of approval and help you lock in better rates.

To prepare:

-Check your credit report and correct any errors

-Pay down high credit card balances

-Avoid taking on new debt before applying

Will a Business Loan Affect Getting a Mortgage?

A business loan can affect qualifying for a mortgage, but don’t assume it will affect it negatively. Lenders will generally assess your full debt-to-income ratio. Be prepared to explain any business loans and how they impact your monthly cash flow.

Separate Business and Personal Finances

Keeping your personal and business finances in separate accounts shows lenders that you are organized. It also makes it much easier to document your income and expenses.

Separation and organization are especially important if you’re using bank statement loans or P&L statements. In such cases, cash flow must be clearly defined. Having clean financial records helps underwriters trust the numbers you provide. Ultimately, that can speed up the approval process.

Consider a Larger Down Payment

Making a larger down payment can sometimes help offset risk in the eyes of the lender. As a bonus, it might reduce your monthly mortgage payments and increase your loan approval odds. A great mortgage company will help you determine the optimal loan-to-value ratio.

If you can’t afford a larger down payment, that doesn’t mean you don’t have a chance. Always prioritize a down payment strategy that aligns with your financial goals.

Work with a Lender Who Specializes in Self-Employed Borrowers

Traditional banks may reject borrowers who don’t meet rigid documentation standards. But at Myers Capital, we offer flexible loan programs specifically designed for business owners, entrepreneurs, and freelancers. We’re proud to provide the tools self-employed borrowers need to succeed.

Ready to take the next step? Learn more about our mortgage loan options as a self-employed borrower. Contact us for details.

Copyright © 2025 Myers Capital Hawaii