What to know about buying a house in Hawaii

Home prices in Hawaii are far above average compared to most of the continental United States. Fortunately, there’s at least one statewide home buyer assistance program and a number of local ones that can help first-time home buyers in Hawaii get into a new house more affordably. Here’s how to get started.


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Hawaii home buyer overview

According to Redfin, the median listing price in Hawaii in May 2022 was $790,000. That was an increase of 16.4% year-over-year.

That’s a steep climb. However, nationwide home prices rose by 20.9% over the same period according to CoreLogic. So Hawaii home buyers can at least be glad their home prices aren’t skyrocketing as quickly as some other places in the U.S.

Hawaii home buyer stats

Average Home Sale Price in HI $790,000
Minimum Down Payment in HI (3%) $23,700
20% Down Payment in HI $158,000
Average Credit Score in HI1 732
Maximum HI Home Buyer Loan2 Up to $40,000 as interest-free,
partly forgivable loan
in Honolulu county

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

First-time home buyer loans in Hawaii

If you’re a first-time buyer in Hawaii with a 20% down payment, you can get a conventional loan with a low interest rate and no private mortgage insurance (PMI).

Putting 20% down will keep your monthly mortgage payments low. It might also give you an edge in competitive housing markets like East Honolulu. However, few first-time borrowers have saved that much.

The good news is that there’s a wide range of mortgage loans that may get you into a new house with low or even no down payment:

  • Conventional 97: Backed by Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
  • FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. You’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
  • VA loan: Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so check your eligibility if you have a military service history
  • USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates

Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.

Mortgage loan limits in Hawaii

Because home prices and building costs in Hawaii are traditionally higher than in the continental U.S., the state also allows for higher loan limits on conforming and FHA loans.

In Hawaii, single-family home buyers can take a conforming loan up to $ in most areas. By contrast, the standard single-family conforming limit in most of the U.S. is $.

Similarly, the baseline FHA loan limit for single-family homes in Hawaii is $. In most other states, single-family FHA loans max out at $.

Loan limits are higher for properties with two to four units and can vary by ZIP code. See our complete guides to conforming loan limits and FHA loan limits for more information.

Hawaii first-time home buyer programs

The Hawaii Homeownership Center (HHOC) is a nonprofit mortgage broker in Hawaii that can assist “low to moderate income home buyers with [its] unique first-time home buyer products.” These include down payment assistance loans and deferred closing cost assistance loans that can defray your upfront housing costs. In addition, its loans require only 3% down payment.

You can learn more about the HHOC mortgage program here.

In addition, looking at historical information, the State of Hawaii’s housing finance and development agency used to offer the Hula Mae mortgage program. And that provided some really worthwhile assistance, including down payment assistance and mortgage credit certificates (MCCs).

But when we visited the relevant website in May 2022, it said: “Hula Mae program is not currently active.” It doesn’t make clear whether the program has been temporarily suspended or permanently abandoned. So click that last link to see whether it’s back in business by the time you read this. If it isn’t, check for programs managed by your city, county, or island. There’s a partial list in a later section.

Hawaii first-time home buyer grants

Homeowners working with the Hawaii Homeownership Center may be eligible for both down payment and closing cost assistance:

  • The Down Payment Assistance Loan Program requires only 3% down with no mortgage insurance and “low monthly payments
  • The Deferred Closing Cost Loan is a 15-year deferred loan with no interest and no monthly payment that can be used toward your down payment and closing costs. It can offer up to $10,000, matching your own contribution on a 4:1 basis

To qualify for these HHOC programs, you’ll need to be a first-time home buyer purchasing a home to use as your primary residence. And you must complete a homeownership education course. All HHOC loans are offered through the brokerage itself.

In addition, the Hula Mae mortgage program used to offer statewide down payment assistance. But, as you just read, that’s currently unavailable. Check the website to see if it’s restored by the time you read this.

Also, check out Hawaii State Federal Credit Union’s ideas for a “combo” loan that might help you buy a home in the state with zero down payment.

Other than that, you may be in line for down payment assistance from a local organization, including the ones listed below. But also run your own web search for “[city, county or island where you want to buy] down payment assistance.”

Buying a home in Hawaii’s major cities

With a median listing price of $1.5 million and home price inflation recently running at 30%, East Honolulu can be a real challenge for most first-time buyers.

But Hawaii’s other two biggest cities are much more affordable. In Urban Honolulu, home prices are just a bit over one-third of those in its neighboring city. And Hilo is positively inexpensive, though only by Hawaiian standards.

If you’re eligible, you may be able to get help with your down payment in all three cities.

Urban Honolulu first-time home buyers

The median listing price for homes in Urban Honolulu was $585,000 in May 2022. That was up 11.4% year-over-year, according to Realtor.com.

At those home prices, making a down payment in Urban Honolulu might cost:

  • $17,550 for 3% down payment
  • $117,000 for 20% down payment

Areas in both Urban Honolulu and East Honolulu appear to share a down payment assistance (DPA) program. Find details through that link, but note that some of the information seems out of date.

You still have to provide 5% of the purchase price yourself. But the program offers additional funds of up to $40,000 to eligible borrowers. This is a loan with a 0% interest rate. And monthly payments are $167 for that sum based on a 20-year repayment term at 0% interest.

Some of your loan may be forgiven, and the website says: “At either the end of 10 years, or when the loan is paid-in-full, borrowers will receive an occupancy credit equal to 5% of the $40,000 loan (or $2,000) for each full 12-month period they reside in the home. For example, borrowers will be credited $10,000 if they pay off their loan after living in the home for five full years (60 continuous months).”

To qualify, your income must be at or below certain caps. Those are shown on the website, but they look as if they may be out of date. You must also undertake a home buyer education course to be eligible.

East Honolulu first-time home buyers

The median listing price for homes in East Honolulu was $1.5 million in May 2022. That was up by 30% year-over-year, according to Realtor.com.

At those home prices, making a down payment in East Honolulu might cost:

  • $45,000 for 3% down payment
  • $300,000 for 20% down payment

Areas in both Urban Honolulu and East Honolulu appear to share a down payment assistance (DPA) program. Find details through that link, but note that some of the information seems out of date.

Read the Urban Honolulu section (immediately above) for more information.

Hilo first-time home buyers

The median listing price for homes in Hilo was $482,500 in May 2022. That was up 24% year-over-year, according to Realtor.com.

At those home prices, making a down payment in Hilo might cost:

  • $9,870 for 3% down payment
  • $65,800 for 20% down payment

We couldn’t find a down payment assistance program just for Hilo. But there does seem to be one that covers the whole Island and County of Hawaii.

Unfortunately, we couldn’t find that on the web either. But you can request details by emailing [email protected] or calling (808) 323-4300.

Where to find home buying help in Hawaii

All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Hawaii.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a list of city- and county-specific programs across Hawaii. The list is as follows:

What are today’s mortgage rates in Hawaii?

You can check current mortgage interest rates in Hawaii here.

When you’re ready to buy, apply with at least three to five lenders to make sure you’re getting the lowest mortgage rate available.

Rate quotes can sometimes vary substantially between lenders, so shopping around for rates could save you thousands on your new home.

1Source: Experian.com 2022 study of 2021 data

2Based on a review of the state’s available DPA grants at the time this was written

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.



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