<PAGE>
                          SECOND AMENDMENT TO LOAN DOCUMENTS


       THIS SECOND AMENDMENT TO LOAN DOCUMENTS ("Amendment"), dated April 29,
1998, and effective as of April 29, 1998, is made by and among (i) SCHULER
HOMES, INC., a Delaware corporation (the "Company"); (ii) SCHULER HOMES OF
CALIFORNIA, INC., a California corporation, SCHULER HOMES OF OREGON, INC., an
Oregon corporation, SCHULER HOMES OF WASHINGTON, INC., a Washington corporation,
MELODY HOMES, INC., a Delaware corporation, SCHULER REALTY/MAUI, INC., a Hawaii
corporation, SCHULER REALTY/OAHU, INC., a Hawaii corporation, LOKELANI
CONSTRUCTION CORPORATION, a Delaware corporation, and MELODY MORTGAGE CO., a
Colorado corporation (collectively referred to as the "Guarantors", and
individually referred to as a "Guarantor"), (iii) SHLR OF WASHINGTON, INC., a
Washington corporation (the "Additional Guarantor"), (iv) the banks from time to
time party to this Agreement (collectively referred to as the "Banks", and
individually referred to as a "Bank"), (v) FIRST HAWAIIAN BANK, a Hawaii
corporation, as administrative and co-syndication agent for the Banks (the
"Administrative Agent"), and (vi) BANK OF AMERICA NT&SA, a national banking
association, as documentation and co-syndication agent for the Banks (the
"Documentation Agent", the Administrative Agent and the Documentation Agent are
collectively referred to as the "Agents").

                            W I T N E S S E T H   T H A T:

       WHEREAS, the Company, the Banks and the Administrative Agent entered into
that certain Credit Agreement dated as of March 29, 1996 (the "Original Credit
Agreement"), relating to the establishment of a revolving credit facility (the
"Credit Facility") in the principal amount of US$110,000,000.00 (the "Original
Commitment") made available to the Company by the Banks; and

       WHEREAS, in connection therewith, the Company, the Banks and the
Administrative Agent executed certain Loan Documents (as defined in the Original
Credit Agreement); and

       WHEREAS, the Company, the Banks and the Administrative Agent entered into
that certain Supplement No. 1 to Credit Agreement effective as of January 8,
1997 (the "Supplement"), relating to the use of certain proceeds of Advances (as
defined in the Original Credit Agreement) during the Waiver Period (as defined
in the Supplement); and

       WHEREAS, the Company, the Guarantors, the Banks and the Agents entered
into that certain Amended and Restated Credit Agreement dated March 27, 1997
(the "Amended Credit Agreement"), which amended the terms of the Original Credit
Agreement by, among other things, increasing the Original Commitment to US
$137,600,000.00; and 

       WHEREAS, the Company, the Guarantors and the Additional Guarantor have
requested the Banks and the Agents to further amend the terms of the Amended
Credit Agreement to (i) consent to the Company's issuance of "Senior Notes", as
defined herein, which will be PARI PASSU with the Credit Facility; (ii) to
change the status of the Guarantors from that as "co-borrowers" to "guarantors"
of the Credit Facility, and (iii) to amend other provisions contained therein;
and


<PAGE>


       WHEREAS, the Banks and the Agents are willing to comply with such
request, upon and subject to the terms and conditions hereinafter set forth; and

       NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the Company, the Guarantors, the Additional
Guarantor, the Banks and the Agents hereby agree as follows:

       1.     DEFINITIONS.  All capitalized terms used herein, unless otherwise
defined herein, shall have the same meanings as those ascribed to them in the
Amended Credit Agreement.

       2.     REPRESENTATIONS AND WARRANTIES.  As an essential inducement to the
Banks and the Agents to execute this Amendment, the Company, the Guarantors and
the Additional Guarantor hereby repeat, reaffirm and incorporate herein by
reference all of the representations and warranties contained in Section 5 of
the Amended Credit Agreement. 

       3.     AMENDMENT OF LOAN DOCUMENTS.  The Loan Documents are hereby
amended as follows:

              (a)    All references in the Loan Documents to "Borrower" or
"Borrowers" shall mean Schuler Homes, Inc., a Delaware corporation.

              (b)    The following definitions shall be included in the Amended
Credit Agreement:

              "GUARANTOR" or "GUARANTORS" means, singularly or
       collectively, SCHULER HOMES OF CALIFORNIA, INC., a California
       corporation, SCHULER HOMES OF OREGON, INC., an Oregon corporation,
       SCHULER HOMES OF WASHINGTON, INC., a Washington corporation,
       MELODY HOMES, INC., a Delaware corporation, SCHULER REALTY/MAUI,
       INC., a Hawaii corporation, SCHULER REALTY/OAHU, INC., a Hawaii
       corporation, LOKELANI CONSTRUCTION CORPORATION, a Delaware
       corporation, MELODY MORTGAGE CO., a Colorado corporation and SHLR
       OF WASHINGTON, INC., a Washington corporation.

              "GUARANTY" means an agreement in form and substance
       satisfactory to the Banks and the Agents, duly executed by the
       Guarantors, jointly and severally guaranteeing the due and
       punctual payment of the Note, and the observance and performance
       of the Borrower's obligations under the Loan Documents.

              "SENIOR NOTES" means the 9.00% Senior Notes due 2008, in
       the principal amount of US$100,000,000 issued by the Borrower
       pursuant to that certain Offering Memorandum dated April 30, 1998.


              (c)    The following definitions in the Amended Credit Agreement
are amended as follows:

                                         -2-
<PAGE>

              "COMPLETED UNSOLD HOMES" means all condominium units and
       one-to-four family residences (including Model Homes) in the
       Authorized States owned by the Borrower or its Subsidiaries as
       part of their respective real estate development business, for
       which construction has been "completed" less than 180 days before
       such date, but for which there is in existence no written Contract
       for Sale.  Construction will be considered "completed" for a
       condominium unit when the temporary certificate of occupancy for
       such unit has been issued; construction will be considered
       "completed" for a one-to-four family residence when all electrical
       and plumbing fixtures have been installed and utility services in
       connection therewith have been connected.  Notwithstanding the
       foregoing, Model Homes will continue to be considered Completed
       Unsold Homes until the date which is 180 days after the last
       production unit in the particular real estate project (for which
       such Model Home is used as a model) has been sold.

              "CONTRACT FOR SALE" means a sale and purchase agreement
       between the Borrower or its Subsidiaries and an unrelated third
       party purchaser, who has made an earnest money deposit of not less
       than $250.00 and who has been pre-qualified by the Borrower, its
       Subsidiaries or an institutional lender; PROVIDED, that such
       agreement shall not contain any contingency clause, conditioning
       such purchaser's obligation upon the sale of such purchaser's
       property.   
  
              "CONTRACTED HOMES" means all condominium units and
       one-to-four family residences (including Model Homes) in the
       Authorized States owned by the Borrower or its Subsidiaries as
       part of their respective real estate development business, on
       which a building permit has been issued and construction has
       begun, and for which the Borrower or its Subsidiaries has entered
       into a written Contract for Sale.

              "CONTROLLED GROUP" means the Borrower, its Subsidiaries and
       all Persons (whether or not incorporated) under common control or
       treated as a single employer with the Borrower and its
       Subsidiaries pursuant to Section 414(b), (c), (m) or (o) of the
       Code.

              "ENTITLED LAND" means all land in the Authorized States
       owned by the Borrower or its Subsidiaries as part of their
       respective real estate development business, which does have
       residential zoning and the provision of potable water, sewage and
       other utilities available to the boundary of such land.

              "ISSUANCE" means the issuance of a Letter of Credit
       hereunder at the request of the Borrower and for the account of
       the Borrower or its Subsidiaries, pursuant to Section 2.05.

              "ISSUING BANK" means any Bank or any Affiliate of any Bank,
       other than the Administrative Agent, which issues a Letter of
       Credit hereunder at the request of the Borrower and for the
       account of the Borrower or its Subsidiaries, in accordance with a
       requirement by the beneficiary of such Letter of Credit, and
       pursuant to Section 2.05.

                                         -3-
<PAGE>

              "LAND UNDER DEVELOPMENT" means all land in the Authorized
       States owned by the Borrower or its Subsidiaries as part of their
       respective real estate development business, on which grading or
       construction of on-site infrastructure improvements has begun, and
       for which all necessary zoning and large-lot subdivision approvals
       have been obtained and are in full force and effect, but for which
       construction of the residential improvements thereon has not
       begun.

              "LETTERS OF CREDIT" means standby letters of credit issued
       by the Administrative Agent or the Issuing Bank, at the request of
       the Borrower and for the account of the Borrower or its
       Subsidiaries, pursuant to the terms and conditions set forth in
       Article II of this Agreement.

              "LOAN DOCUMENTS" means this Agreement, the Note, the
       Guaranty, and all documents delivered to the Administrative Agent
       in connection herewith or therewith.

              "MATERIAL ADVERSE EFFECT" means (a) a material impairment
       of the ability of the Borrower or its Subsidiaries on a
       consolidated basis to perform under any Loan Document and avoid
       any Event of Default; or (b) a material adverse effect upon the
       legality, validity, binding effect or enforceability of any Loan
       Document.

              "MODEL HOMES" means all condominium units and one-to-four
       family residences in the Authorized States owned by the Borrower
       or its Subsidiaries as part of their respective real estate
       development business, which are used as models or sales offices to
       market a particular real estate development project.

              "PERMITTED INDEBTEDNESS" means:

              (i)    the Country Club Village Loan Facility, and the
       Country Club Village Subordinate Mortgage;

              (ii)   the existing Indebtedness and obligations of the
       Company as a joint venture partner in Iao Partners (including any
       Indebtedness of Iao Partners for which there is recourse to the
       Company); PROVIDED, HOWEVER, that the Company shall be permitted,
       after March 31, 1997, (A) to incur additional Indebtedness as a
       joint venture partner of Iao Partners, (B) to make additional net
       investments in Iao Partners, and (C) to make additional net
       advances to Iao Partners, in amounts which shall not exceed
       $5,000,000.00, in the aggregate, for all such indebtedness,
       investments and advances described in (A), (B) and (C) above;

              (iii)  the existing Subordinated Debt of the Company
       (including the Company's existing subordinated convertible
       debentures) in the amount of $57,500,000.00;

                                         -4-
<PAGE>

              (iv)   Indebtedness, not to exceed $5,000,000 in the
       aggregate, created or arising under a conditional sale or other
       title retention agreement, or incurred as purchase money
       financing, with respect to property acquired by any Borrower;
       provided that the rights and remedies of the seller under such
       agreement in the event of default are limited to repossession or
       sale of such property;

              (v)    Indebtedness to the extent incurred upon the
       indorsement of an instrument in order to negotiate the same, and
       for taxes, assessments, governmental charges, or levies to the
       extent that payment thereof shall not at the time be required to
       be made;

              (vi)   Indebtedness and Guaranty Obligations (except for
       indemnification of sureties issuing bonds in connection with the
       Borrowers' real estate development businesses), not to exceed
       $5,000,000 in the aggregate, incurred in the ordinary course of
       the Borrowers' real estate development businesses; 

              (vii)  Premium Payments; 

              (viii) Guaranty Obligations (a) incurred in respect of
       indemnification of sureties for the issuance of bonds in
       connection with the Borrowers' real estate development businesses
       and (b) associated with the acquisition of Melody Homes, Inc. and
       Melody Mortgage Co. by the Company; 

              (ix)   the Senior Notes and any guaranties thereof by any
       Guarantor;

              (x)    the Guaranty; and 

              (xi)   Indebtedness in respect of the Aggregate Commitment
       hereunder. 

              "PERMITTED INVESTMENT" means (a) the creation of or
       investment in a wholly-owned Subsidiary of the Borrower which is
       used exclusively as an exchange vehicle to facilitate a like-kind
       exchange under Section 1031 of the Code; (b) the investment by the
       Borrower or its Subsidiary in any other Subsidiary of the
       Borrower; (c) loan receivables from sales incentive programs, not
       to exceed $10,000,000.00; and (d) any one of the following dollar
       denominated investments, maturing within one year from the date of
       acquisition, selected by the Company:

                     (i)     marketable direct obligations issued or
       unconditionally guaranteed by the United States government or
       issued by any agency thereof and backed by the full faith and
       credit of the United States;

                     (ii)   marketable direct obligations issued by any
       state of the United States or any political subdivision of any
       such state or any public instrumentality thereof and, at the time
       of acquisition, having the highest credit rating obtainable from
       either Standard & Poor's Ratings Group, a division of McGraw-Hill,
       Inc. ("S&P") or Moody's Investors Service, Inc. ("Moody's");

                                         -5-
<PAGE>
                     (iii)  commercial paper or corporate promissory
       notes bearing at the time of acquisition the highest credit rating
       either of S&P or Moody's issued by United States, Australian,
       Canadian, European or Japanese bank holding companies or
       industrial or financial companies (other than an Affiliate of the
       Company);

                     (iv)   certificates of deposit issued by and bankers
       acceptances of and interest bearing deposits with any Bank, or any
       commercial bank having capital and surplus of at least
       $500,000,000 or the equivalent and which issues (or the parent of
       which issues) commercial paper or other short term securities
       bearing the highest credit rating obtainable from either S&P or
       Moody's; and

                     (v)    money market funds organized under the laws
       of the United States or any state thereof that invest solely in
       any of the foregoing investments permitted under clauses (i),
       (ii), (iii) and (iv).

              "REAL ESTATE INDEBTEDNESS" means the total amount of:  (1)
       the Aggregate Commitment; (2) the existing Subordinated Debt of
       the Company (including the Company's existing subordinated
       convertible debentures) in the amount of $57,500,000.00; (3) the
       Senior Notes; and (4) other indebtedness, as may be permitted by
       the Banks, in connection with the development of any Real Estate
       Development Assets.

              "SUBORDINATED DEBT" means Indebtedness of the Borrower or
       its Subsidiaries (including subordinated debentures and
       subordinated convertible debentures) to another lender or creditor
       who has expressly agreed by virtue of documents or instruments
       acceptable to the Majority Banks, that the Indebtedness of such
       entity to such lender or creditor is subordinated to the
       Obligations of the Borrower hereunder, and that such lender or
       creditor will not demand or assert payment of any portion of such
       lender's or creditor's Indebtedness until the Obligations of the
       Borrower hereunder have been paid in full.

              "UNENCUMBERED" when used to describe real property owned by
       the Borrower or any of its Subsidiaries, means property which is
       not subject to any lien, whether the same is recorded, unrecorded,
       springing, resulting from a court judgment or arbitration award,
       or otherwise; PROVIDED, (i) that the filing of an application for
       mechanic's or materialman's lien on such real property under
       Chapter 507, Hawaii Revised Statutes, or such similar statutes
       under California, Oregon, Washington and Colorado law, shall not
       prevent such property from being Unencumbered, as long as the
       Borrower or its Subsidiaries are diligently defending or causing
       another party in interest to defend such application; (ii) that
       the attachment of any such lien to any such property shall not
       prevent such property from being Unencumbered, as long as the
       Borrower or its Subsidiaries have filed a bond, sufficient to
       discharge such lien, with the clerk of the applicable court, as
       provided in Section 507-43, Hawaii Revised Statutes, or such
       similar statutes under California, Oregon, Washington and Colorado
       law; and (iii) that the recording of any lien by the obligee of
       any Premium Payment against 

                                         -6-
<PAGE>

       property for which a Premium Payment is required and has not been paid,
       shall not prevent such property from being Unencumbered, as long as the
       Borrower or its Subsidiaries have filed a bond, in form and substance
       satisfactory to the Majority Banks, in an amount equal to no less than
       125% of the claimed amount of the lien.

              "UNENTITLED LAND" means all land in the Authorized States
       owned by the Borrower or its Subsidiaries as part of their
       respective real estate development business, that does not have
       residential zoning, or that does have residential zoning but does
       not have the provision of potable water, sewage, or other
       utilities available to the boundary of such land.

              "UNIMPROVED LAND" means all Entitled Land in the Authorized
       States owned by the Borrower or its Subsidiaries as part of their
       respective real estate development business, on which no
       construction of on-site infrastructure improvements has begun.  

              "UNSOLD HOMES UNDER CONSTRUCTION" means all condominium
       units and one-to-four family residences (including Model Homes) in
       the Authorized States owned by the Borrower or its Subsidiaries as
       part of their respective real estate development business, for
       which building permits have been issued and construction has
       commenced (and not been abandoned), but not completed, and for
       which there is no written contract of sale with an unrelated third
       party purchaser.  Construction will be considered to have
       "commenced" when the slab or foundation for the condominium
       building or one-to-four family residence has been completed.

              (d)    The sixth and seventh sentences of Section 2.02
("Determination of Borrowing Base; Restrictions on Advances, Swing-Line Advances
and Letters of Credit") are amended as follows:  

       "The aggregate amount of all Advances and Swing-Line Advances
       outstanding hereunder, and all Letters of Credit issued and
       outstanding hereunder, shall not exceed the Borrowing Base, as
       determined by the Administrative Agent for any succeeding month,
       less the outstanding principal amount of the Senior Notes, and
       shall in no event exceed the amount of the Aggregate Commitment. 
       In the event the Borrowing Base, for any month, as determined by
       the Administrative Agent hereunder, less the principal amount of
       the Senior Notes, is less than the aggregate amount of all
       outstanding Advances and Swing-Line Advances and all issued and
       outstanding Letters of Credit at the date of such determination,
       the Borrower shall, within fifteen (15) Business Days of the
       receipt of notification by the Administrative Agent, repay
       Advances or Swing-Line Advances and/or repay or cash collateralize
       issued and outstanding Letters of Credit, in such amounts as may
       be necessary to reduce the aggregate amount of all outstanding
       Advances and Swing-Line Advances and all issued and outstanding
       Letters of Credit, to the amount of the newly-determined Borrowing
       Base, less the principal amount of the Senior Notes."

                                         -7-
<PAGE>

              (e)    The last sentence of Section 2.05(d) is amended as 
follows: "The Letters of Credit shall be issued to support performance 
requirements and obligations of the Borrower or its Subsidiaries in 
connection with their real estate development businesses in the Authorized 
States (including any required deposits for like-kind exchanges under Section 
1031 of the Code), and to support capital and performance requirements and 
obligations of the Captive Insurance Subsidiary, and not in contravention of 
any provision of this Agreement or any Requirement of Law."

              (f)    The first sentence of Section 2.08(b) ("Mandatory
Prepayments") shall be amended as follows:  "If the Borrower or any of its
Subsidiaries sells (other than a sale to the Borrower or any other Subsidiary)
any portion of any property or assets of the Borrower or any of its Subsidiaries
for $10,000,000.00 or more, or if the Borrower or any of its Subsidiaries sells,
in a single transaction, all or substantially all of the property or assets of
the Borrower or of any of its Subsidiaries, the Borrower shall use 100% of the
proceeds of such sale (the "Sale Proceeds") to prepay any Advances, subject to
Section 3.04."

              (g)    Section 4.02(b) ("Continuation of Representations and
Warranties") shall be amended as follows:  "The representations and warranties
made by the Borrower herein, and by the Guarantors in the Guaranty, shall be
true and correct on and as of such date, with the same effect as if made on and
as of such date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date);".

              (h)    Section 6.02 ("Certificates; Other Information") shall be
amended as follows:

              6.02   CERTIFICATES; OTHER INFORMATION  The Borrower shall
       furnish to the Administrative Agent, with sufficient copies for
       each Bank:

                     (a)    not later than forty-five (45) days after the
       end of each Quarter, a certificate of a Responsible Officer of the
       Borrower, in the form of EXHIBIT F-1 stating that, to the best of
       such officer's knowledge, the Borrower and its Subsidiaries during
       such period, have observed and performed all of their covenants
       and other agreements, and satisfied every condition contained in
       this Agreement to be observed, performed or satisfied by the
       Borrower and its Subsidiaries and that such officer has obtained
       no knowledge of any Default or Event of Default except as
       specified in such certificate, which, where a Default or Event of
       Default is specified, shall set forth the details of the
       occurrence referred to therein, state what action the Borrower or
       its Subsidiaries propose to take with respect thereto and at what
       time, and describe with particularity any and all applicable
       clauses or provisions of this Agreement which have been breached
       or violated, together with a calculation of (i) the percentage of
       common stock in the Company owned by James K. Schuler as of the
       end of such Quarter, (ii) the minimum Consolidated Tangible Net
       Worth of the Borrower and its Subsidiaries as of the end of such
       Quarter, (iii) the Consolidated Net Earnings for the Borrower and
       its Subsidiaries during such Quarter, (iv) the amount of and net
       proceeds received from any Equity Offering (other than the
       exercise of an 

                                         -8-
<PAGE>

       employee stock option) or conversion of a subordinated convertible
       debenture consummated or effected during such Quarter, (v) Real Estate
       Development Assets, Real Estate Indebtedness, and the Development Ratio
       for the Borrower and its Subsidiaries as of the end of such Quarter, (vi)
       the Fixed Charges Ratio for the Borrower and its Subsidiaries as of the
       end of such Quarter, and (vii) the Capitalized Interest for the Borrower
       and its Subsidiaries as of the end of such Quarter, showing, for each
       item (i) through (vii) above, the comparison between such Quarter and
       previous Quarters (beginning with the Quarter ending December 31, 1996).

                     (b)    not later than forty-five (45) days after the
       end of each Quarter a certificate of a Responsible Officer of the
       Borrower, in the form of EXHIBIT F-2 for each project in which the
       Borrower or any of its Subsidiaries has an investment, relating to
       the status of all Unentitled Land (location, purchase price,
       number of lots and entitlement schedule), Unimproved Land
       (location, number of lots and development schedule), and Land
       Under Development (location and status of development), as of the
       end of the previous Quarter.  

                     (c)    not later than fifteen (15) days after the
       end of each month, provided, however, that if the end of such
       month is also the end of a Quarter, then not later than
       twenty-five (25) days after the end of such month, a certificate
       of a Responsible Officer of the Borrower, in the form of EXHIBIT
       F-3 for each project in which the Borrower or any of its
       Subsidiaries has an investment, relating to the status of all
       Unsold Homes Under Construction (location and number of homes),
       Completed Unsold Homes (location and number of homes), Completed
       Unsold Homes Over 180 Days (location and number of homes), and
       Contracted Homes (location, number of homes and status of sales),
       as of the end of the previous month.  

                     (d)    not later than fifteen (15) days after the
       end of each month, provided, however, that if the end of such
       month is also the end of a Quarter, then not later than
       twenty-five (25) days after the end of such month, a Borrowing
       Base Certificate of a Responsible Officer of the Borrower, in the
       form of EXHIBIT F-4, containing a detailed listing and a summary
       of all Real Estate Development Assets, as of the end of the
       previous month. 

                     (e)    not later than forty-five (45) days after the
       end of each Quarter, a Leverage Ratio Certificate of a Responsible
       Office of the Borrower, in the form of EXHIBIT F-5, containing a
       calculation of the total Indebtedness of the Borrower and its
       Subsidiaries, and the Consolidated Tangible Net Worth of the
       Borrower and its Subsidiaries, as of the end of the previous
       Quarter, based on balance sheet information prepared in accordance
       with GAAP.

                     (f)    as soon as available, but not later than
       ninety (90) days after the end of each fiscal year, a projected
       consolidated balance sheet of the Borrower and its Subsidiaries
       for the next two (2) fiscal years, prepared on a Quarterly basis,
       and the related projected consolidated statements of income, 

                                         -9-
<PAGE>

       shareholders' equity and cash flows for such fiscal years, setting forth
       in each case in comparative form the figures for the previous fiscal year
       (whether such figures for such previous fiscal year were actual or
       projected).

                     (g)    promptly, such additional business,
       financial, corporate affairs and other information as the
       Administrative Agent, at the request of any Bank, may from time to
       time reasonably request.

              (i)    Section 6.12 shall be amended and entitled as follows:  

              6.12  SUBSIDIARIES.  Each Subsidiary of the Borrower shall
       unconditionally and jointly and severally guarantee the
       obligations of the Borrower under the Loan Documents pursuant to
       the Guaranty.  The guarantee obligations of each Guarantor will be
       a Permitted Indebtedness and senior to all Subordinated Debt, but
       PARI PASSU with any guaranties of such Subsidiary provided in
       support of the Senior Notes.  To the extent that the Borrower or
       its Subsidiaries are permitted under this Agreement to incorporate
       or otherwise form new Subsidiaries, the Borrower agrees that such
       new Subsidiary shall be added as a Guarantor under this Agreement
       and the Guaranty, and shall execute such Guaranty; provided,
       however, that the Captive Insurance Subsidiary shall not be
       subject to this section.

              (j)    Section 7.02 ("Leverage Ratio) shall be amended as follows:

              7.02   LEVERAGE RATIO.  

                     (a) The Borrower shall not, and shall not permit its
       Subsidiaries to, allow the Leverage Ratio, measured as of the end
       of each Quarter ending March 31, 1997, June 30, 1997, September
       30, 1997, December 31, 1997 and March 31, 1998, to exceed 1.50 to
       1.

                     (b) The Borrower shall not, and shall not permit its
       Subsidiaries to, allow the Leverage Ratio, measured as of the end
       of each Quarter ending June 30, 1998, September 30, 1998, December
       31, 1998, March 31, 1999, and June 30, 1999, to exceed 1.35 to 1.

              (k)    Section 7.03 ("Development Ratio") shall be amended as
follows:
              
              7.03   DEVELOPMENT RATIO.  The Borrower shall not, and
       shall not permit its Subsidiaries to, allow the Development Ratio,
       measured as of the end of each Quarter, to be less than 1.50 to 1.

              (l)    Section 7.04 ("Fixed Charges Ratio") shall be amended as
follows:

              7.04   FIXED CHARGES RATIO.  The Borrower shall not, and
       shall not permit its Subsidiaries to, allow the Fixed Charges
       Ratio, measured as of the end of each Quarter on a rolling four
       (4) Quarters basis, to be less than 1.00 to 1 in each 

                                         -10-
<PAGE>

       Quarter of 1997, 1.25 to 1 in the first two Quarters of 1998, 1.50 to 1
       in the last two Quarters of 1998 and 1.75 to 1 in the first two Quarters
       of 1999.  In addition, the Borrower shall not, and shall not permit its
       Subsidiaries to, allow the Fixed Charges Ratio, measured as of the end of
       each Quarter on a quarter only basis, to be less than 1.50 to 1 for the
       last two Quarters of 1997.

              (m)    Section 7.07 ("Additional Investments and Acquisitions")
shall be amended as follows:

              7.07   ADDITIONAL INVESTMENTS AND ACQUISITIONS.  The
       Borrower shall not, and shall not permit any of its Subsidiaries
       to, except as provided below, directly or indirectly, invest in,
       purchase or acquire any interest in real property (fee or
       leasehold) or any stocks, bonds, notes, debentures or other
       securities of or acquire by purchase or otherwise all or
       substantially all of the business or assets, or stock, partnership
       interests or other evidence of ownership (beneficial or otherwise)
       or make any other investment in, any corporation, association,
       partnership, organization or individual; or directly or
       indirectly, make or commit to make any loan, advance, guaranty or
       extension of credit to any corporation, association, partnership,
       organization or individual; or directly or indirectly, assume,
       endorse, be or become liable for, or guarantee directly or
       indirectly any debt or obligation of any corporation, association,
       partnership, organization or individual; PROVIDED HOWEVER, that
       notwithstanding the foregoing, the Borrower and its Subsidiaries
       may (a) make other real estate investments or acquisitions, the
       total capital commitment for which shall not exceed the following
       designated amounts for a single project (multiple phases of a
       project are considered in the aggregate and not as separate
       projects), and not in contravention of any provision of this
       Agreement or any Requirement of Law: (i) $25,000,000 for projects
       in Washington, Oregon and Northern California, and (ii)
       $75,000,000 for projects in Colorado and Hawaii (provided further,
       that all existing agreements for real estate acquisitions shall be
       excluded from this provision); (b) make other investments in an
       amount which shall not exceed $2,000,000 in a Captive Insurance
       Subsidiary; (c) make any other Permitted Investment, without the
       necessity of obtaining the consent of the Majority Banks; and (d)
       make such guaranties as may be necessary in support of the Senior
       Notes.  If the Borrower wishes to obtain the consent of the
       Majority Banks for any proposed deviation from the above, the
       Borrower shall furnish to the Administrative Agent, and the
       Administrative Agent shall forward to the Banks: (i) a copy of all
       contracts to be entered into by the Borrower or its Subsidiaries
       with respect to the proposed transaction, (ii) a pro forma budget
       and cash flow projection for the proposed transaction, (iii)
       supporting market studies and projections as deemed necessary by
       the Majority Banks, and (iv) supporting appraisals and/or market
       evaluations, if required by the Majority Banks.  The
       Administrative Agent shall advise the Borrower of the decision by
       the Majority Banks within thirty (30) days after the receipt by
       the Administrative Agent of all of the required items described
       above.

                                         -11-
<PAGE>

              (n)    Section 7.08 ("Inventory Restrictions") shall be amended as
follows:

              7.08   INVENTORY RESTRICTIONS.

                     (a)    The Borrower shall not, and shall not permit
       any of its Subsidiaries to, acquire or obtain any interest in, or
       contract to acquire or obtain any interest in, any Unentitled
       Land.

                     (b)    The Borrower shall not, and shall any permit
       any of its Subsidiaries to, allow their inventory of Completed
       Unsold Homes to exceed the applicable levels set forth in SCHEDULE
       2 attached hereto.  

                     (c)    The Borrower shall not, and shall not permit
       any of its Subsidiaries to, allow its inventory of Unimproved Land
       to exceed 35% of the GAAP consolidated net book value of "Real
       Estate Inventories" in the consolidated financial statements of
       the Company and its Subsidiaries, the balance of which is included
       in the Borrowing Base calculation, as of the end of each month.

              (o)    Section 7.09 ("Negative Pledge") shall be amended as
follows:

              7.09   NEGATIVE PLEDGE.  The Borrower and/or any of its
       Subsidiaries shall not create, incur, assume, or suffer to exist
       any lien, encumbrance, mortgage, security interest, pledge, or
       charge of any kind (including. without limitation, any negative
       pledge, or any "secret", "springing", or other unrecorded lien)
       upon any of their property or assets of any character, whether now
       owned or hereafter acquired, or transfer any of such property or
       assets for the purpose of subjecting the same to the payment of
       any indebtedness or performance of any other obligation, or
       acquire or have an option to acquire any property or assets upon
       conditional sale or other title retention agreement, device or
       arrangement; provided, however, that the Borrower and its
       Subsidiaries may create or incur or suffer to be created or
       incurred or to exist: (i) liens for taxes or assessments for
       governmental charges or levies if payment thereof shall not at the
       time be required to be made; (ii) liens in respect of pledges and
       deposits under workers' compensation laws or similar legislation,
       and in respect of pledges or deposits in connection with appeal or
       similar bonds incidental to the conduct of litigation; (iii) liens
       incidental to the conduct of the business of the Borrower and its
       Subsidiaries not incurred in connection with the borrowing of
       money or the obtaining of advances or credit and which do not in
       the aggregate materially detract from the value of their assets or
       property; (iv) mechanics' and materialmen's liens which have
       attached pursuant to Chapter 507, Hawaii Revised Statutes, as long
       as the Borrower or its Subsidiaries have filed a bond, sufficient
       to discharge such lien, with the clerk of the applicable circuit
       court, as provided in Section 507-43, Hawaii Revised Statutes; and
       (v) liens specifically allowed with respect to "Permitted
       Indebtedness".  This negative pledge shall not apply to any
       portion of the Borrower's or any of its Subsidiaries' property or
       assets transferred, assigned or conveyed upon due consideration to
       a "Third Party 

                                         -12-
<PAGE>

       Purchaser".  As used herein, the term "Third Party Purchaser" shall mean
       any individual, partnership, corporation, business trust, joint stock
       company, trust, unincorporated association, joint venture or governmental
       authority, other than the Borrower or any of its Subsidiaries, Waiakoa
       Estates Subdivision Joint Venture, Iao Partners, James K. Schuler, Pamela
       S. Jones, Harvey L. Goth, Michael T. Jones, Peter M. Aiello, Douglas M.
       Tonokawa, Mary K. Flood, David Oyler or Jim Henry.

              (p)    Section 7.10 ("No High-Rise Construction") shall be amended
as follows:

              7.10   NO HIGH-RISE CONSTRUCTION.  None of the Borrower or
       any of its Subsidiaries shall engage in any development of a
       residential or commercial building having more than four (4)
       stories, other than Country Club Village. 

              (q)    Section 7.11 ("Capitalized Interest") shall be amended as
follows:

              7.11   CAPITALIZED INTEREST.  The Borrower shall not, and
       shall not permit its Subsidiaries to, allow the Capitalized
       Interest, measured as of the end of each Quarter, to exceed 8% of
       the value of Real Estate Development Assets.

              (r)    Section 7.12 ("Transfer of Assets to Captive Insurance
Subsidiary") shall be amended as follows:

              7.12   TRANSFER OF ASSETS TO CAPTIVE INSURANCE SUBSIDIARY. 
       Except as may be permitted in Section 7.07, the Borrower or any of
       its Subsidiaries shall not transfer any assets or property to the
       Captive Insurance Subsidiary.

              (s)    Section 8.01(e) ("Event of Default - Cross-Default") shall
be amended by adding a new subsection (iv) as follows:  "or (iv)  fails to make
any payment in respect of or perform or observe in any material respect any
other condition or covenant of the Senior Notes, if the effect is an event of
default under the Senior Notes;".

              (t)    Section 8.01(f) ("Event of Default - Insolvency; Voluntary
Proceedings") shall be amended as follows:

                     (f) INSOLVENCY; VOLUNTARY PROCEEDINGS.  The Borrower
       or any of its Subsidiaries (i) ceases or fails to be Solvent, or
       generally fails to pay, or admits in writing its inability to pay,
       its debts as they become due, subject to applicable grace periods,
       if any, whether at stated maturity or otherwise; (ii) voluntarily
       ceases to conduct its business in the ordinary course, except, in
       connection with a merger or acquisition of substantially all of
       the assets of such Subsidiary by the Company or another Subsidiary
       of the Company; (iii) commences any Insolvency Proceeding with
       respect to itself; or (iv) takes any action to effectuate or
       authorize any of the foregoing; or

              (u)    Section 8.01(g) ("Event of Default - Involuntary
Proceedings") shall be amended as follows:

                                         -13-
<PAGE>

                     (g) INVOLUNTARY PROCEEDINGS.  (i) Any involuntary
       Insolvency Proceeding is commenced or filed against the Borrower
       or any of its Subsidiaries, or any writ, judgment, warrant of
       attachment, execution or similar process, is issued or levied
       against a substantial part of such party's properties, and any
       such proceeding or petition shall not be dismissed, or such writ,
       judgment, warrant of attachment, execution or similar process
       shall not be released, vacated or fully bonded within 60 days
       after commencement, filing or levy; (ii) the Borrower or any of
       its Subsidiaries admits the material allegations of a petition
       against it in any Insolvency Proceeding, or an order for relief
       (or similar order under non-U.S. law) is ordered in any Insolvency
       Proceeding; or (iii) the Borrower or any of its Subsidiaries
       acquiesces in the appointment of a receiver, trustee, custodian,
       conservator, liquidator, mortgagee in possession (or agent
       therefor), or other similar Person for itself or a substantial
       portion of its property or business; or

              (v)    Section 8.01(i) ("Event of Default - Monetary Judgments")
shall be amended as follows:

                     (i) MONETARY JUDGMENTS.  One or more
       non-interlocutory judgments, orders or decrees shall be entered
       against the Borrower or any of its Subsidiaries involving in the
       aggregate (existing at any one time for such entity) a liability
       (not fully covered by independent third-party insurance) as to any
       single or related series of transactions, incidents or conditions,
       of $5,000,000 or more, and the same shall remain unsatisfied,
       unvacated, unbonded or unstayed pending appeal for a period of 60
       days after the entry thereof; or

              (w)    Section 8.01(j) ("Event of Default - Non-Monetary
Judgments") shall be amended as follows:

                     (j) NON-MONETARY JUDGMENTS.  Any non-monetary
       judgment, order or decree shall be rendered against the Borrower
       or any of its Subsidiaries which does or would reasonably be
       expected to have a Material Adverse Effect, and there shall be any
       period of 10 consecutive days during which a stay of enforcement
       of such judgment or order, by reason of a pending appeal or
       otherwise, shall not be in effect; or

       4.     DELIVERY OF RELATED DOCUMENTS.  The Company, the Guarantors and
the Additional Guarantor shall deliver to the Administrative Agent on or before
April 29, 1998 the following documents, all of which shall be in form and
substance satisfactory to the Banks and the Agents:

              (a)    The Guaranty executed by the Guarantors and the Additional
Guarantor;

              (b)    Properly certified resolutions of the respective Boards of
Directors of the Borrower, the Guarantors and the Additional Guarantor duly
authorizing the execution and delivery of this Second Amendment by such party.

                                         -14-
<PAGE>

              (c)    An opinion from counsel to the Borrower stating that after
the execution and delivery of this Amendment by the Borrower, the Loan Documents
will continue to be enforceable in accordance with their terms and will continue
to constitute the valid and legally binding obligations of the Borrower.

              (d)    An opinion from counsel to the Guarantors and the
Additional Guarantor stating that after the execution and delivery of this
Amendment and the Guaranty by the Guarantors and the Additional Guarantor, the
Loan Documents, including the Guaranty, will continue to be enforceable in
accordance with their terms and the Guaranty will constitute the valid and
legally binding obligations of the Guarantors and the Additional Guarantor.

       5.     CONFORMANCE.  The Loan Documents are hereby amended to conform
with this Amendment, but in all other respects such provisions are to be and
continue in full force and effect.

       6.     CONTINUANCE OF SECURITY.  The performance of the obligations of
the Company under the Loan Documents, as herein amended, shall be fully secured
by and entitled to the benefits of the Guaranty and the other Loan Documents,
and any modifications, extensions, renewals or replacements thereof.

       7.     NO OFFSETS.  As of the date hereof, the Company has no claims,
defenses or offsets against the Banks or the Agents, or against the Company's
obligations under the "Loan Documents", as herein amended, whether in connection
with the negotiations for or closing of the Loan, of this Amendment, or
otherwise, and if any such claims, defenses or offsets exist, they are hereby
irrevocably waived and released.  As of the date hereof, the Guarantors and the
Additional Guarantor have no claims, defenses or offsets against the Banks or
the Agents, or against the Guarantors' and the Additional Guarantor's
obligations under the Guaranty, whether in connection with the negotiations for
or closing of the Credit Facility, of this Amendment, or otherwise, and if any
such claims, defenses or offsets exist, they are hereby irrevocably waived and
released.

       8.     NO WAIVER.  This Amendment is made on the express condition that
nothing herein contained shall in any way be construed as affecting, impairing
or waiving any rights of the Banks or the Agents under any of the Loan
Documents, as herein amended.

       9.     ENTIRE AGREEMENT.  This Amendment incorporates all of the
agreements between the parties relating to the amendment of the Loan Documents
and supersedes all other prior or concurrent oral or written letters, agreements
or understandings relating to such amendment.

       10.    HEADINGS.  The headings of paragraphs and subparagraphs herein are
inserted only for convenience and reference, and shall in no way define, limit
or describe the scope or intent of any provisions of this Amendment.

       11.    GOVERNING LAW; SEVERABILITY.  This Amendment is executed and
delivered, and shall be construed and enforced, in accordance with and governed
by the laws of the State of Hawaii.  If any provision of this Amendment is held
to be invalid or unenforceable, the validity or enforceability of the other
provisions of this Amendment shall remain unaffected.

                                         -15-
<PAGE>

       12.    SUBMISSION TO JURISDICTION.  The Company, the Guarantors and the
Additional Guarantor hereby irrevocably and unconditionally submit, but only for
the purposes of any action or proceeding which the Banks and/or the Agents may
bring to enforce any of the Loan Documents, as amended herein, to the
jurisdiction of the courts of the State of Hawaii and the United States District
Court for the District of Hawaii.  Such submission to such jurisdiction shall
not prevent the Banks and the Agents from commencing any such action or
proceeding in any other court having jurisdiction.

       13.    COUNTERPARTS.  This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument, and in making proof of this
Amendment, it shall not be necessary to produce or account for more than one
such counterpart.

       14.    EXPENSES.  The Company shall pay all expenses incurred by the
Administrative Agent in negotiations for and documentation of this Amendment and
the satisfaction of the conditions thereof, including, but not limited to, fees
and expenses of legal counsel for the Administrative Agent, and any other costs
incurred by the Administrative Agent in connection with any of the matters
described in this Amendment.

       15.    BINDING EFFECT.  This Amendment shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that the Company shall not assign this Amendment or any of
the rights, duties or obligations of the Company hereunder without the prior
written consent of the Banks and the Agents.

       IN WITNESS WHEREOF, the parties hereto have executed this Amendment the
day and year first above written.

                                          SCHULER HOMES, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer
                                                                      "Borrower"

                                          SCHULER HOMES OF CALIFORNIA, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer

                                          SCHULER HOMES OF OREGON, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer


                                         -16-
<PAGE>

                                          SCHULER HOMES OF WASHINGTON, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer

                                          MELODY HOMES, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer

                                          SCHULER REALTY/MAUI, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer

                                          SCHULER REALTY/OAHU, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer

                                          LOKELANI CONSTRUCTION CORPORATION

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer

                                          MELODY MORTGAGE CO.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer
                                                                    "Guarantors"

                                          SHLR OF WASHINGTON, INC.

                                          By /s/ Douglas M. Tonokawa
                                             ----------------------------------
                                             Name:  Douglas M. Tonokawa
                                             Title: Vice President of Finance 
                                                    and Chief Accounting Officer
                                                          "Additional Guarantor"

                                         -17-
<PAGE>

                                          FIRST HAWAIIAN BANK

                                          By /s/ Alvin Takahashi
                                             ----------------------------------
                                             Name:  Alvin Takahashi
                                             Title: REAL ESTATE LOAN OFFICER
                                                          "Administrative Agent"

                                          BANK OF AMERICA NT&SA

                                          By /s/ Cynthia K. Hamilton
                                             ----------------------------------
                                             Name:  Cynthia K. Hamilton
                                             Title: Vice President
                                                           "Documentation Agent"



                                          FIRST HAWAIIAN BANK

                                          By /s/ Alvin Takahashi
                                             ----------------------------------
                                             Name:  Alvin Takahashi
                                             Title: REAL ESTATE LOAN OFFICER

                                          BANK OF AMERICA NT&SA

                                          By /s/ Cynthia K. Hamilton
                                             ----------------------------------
                                             Name:  Cynthia K. Hamilton
                                             Title: Vice President

                                          THE FIRST NATIONAL BANK OF CHICAGO

                                          By /s/ Michael A. Parisi
                                             ----------------------------------
                                             Name:  Michael A. Parisi
                                             Title: CORPORATE BANKING OFFICER

                                          BANK BOSTON, N.A.                  
                                   
                                          By /s/ Nicholas Whiting
                                             ----------------------------------
                                             Name:  Nicholas Whiting
                                             Title: VICE PRESIDENT

                                          BANK OF HAWAII                     
                                   
                                          By /s/ Joyce Y. Sakai
                                             ----------------------------------
                                             Name:  Joyce Y. Sakai
                                             Title: Vice President


                                         -18-
<PAGE>

                                          BANK ONE, ARIZONA, NA              

                                          By /s/ Louis W. Morano, Jr.
                                             ----------------------------------
                                             Name:  Louis W. Morano, Jr.
                                             Title: ASSISTANT VICE PRESIDENT
                                                                         "Banks"







                                         -19-