Hawaii first-time homebuyer assistance programs
Living in an island paradise comes with a steep price tag. As of November 2023, the median list price of a home in Hawaii was a whopping $714,700, according to real estate brokerage Redfin. Those housing costs, coupled with expensive groceries and utilities, can add up to a less-than-sunny reality for prospective first-time homebuyers in Hawaii.
The good news is that there are some options that can ease the financial burden of finding a place to call your own in Hawaii. If you’re a first-time homebuyer, consider starting with the Hawaii Housing Finance & Development Corporation, the state’s housing and development agency.
Hawaii first-time homebuyer programs
HHFDC Affordable Resale Program
The Hawaii Housing Finance & Development Corporation (HHFDC) does not currently offer a low-interest rate mortgage program specifically for first-time homebuyers, but there is at least one other option to consider: the agency’s Affordable Resale Program, which could help you find an affordable home.
Unfortunately, applications for the Affordable Resale Program are currently closed, according to the HHFDC website. To inquire about future updates, contact the HHFDC directly.
Hawaii down payment assistance
While the HHFDC isn’t currently offering programs targeting first-time homebuyers in Hawaii, there are additional ways to make buying a home more affordable, particularly when it comes to making a down payment and covering closing costs.
In Maui, for example, the Department of Housing and Human Concerns Housing Division has a down payment assistance program that can help you receive up to $30,000 or 5 percent of the home’s purchase price (whichever is less), to be repaid only when you sell your home or do a cash-out refinance. Your eligibility hinges on a few requirements:
- Be a Maui resident when you apply
- Have a household income that is 140 percent or less of the area median income
- Have no more than $75,000 in liquid assets (e.g., cash, stocks, bonds, CDs and securities)
If you’re approved for the assistance, you must complete a homebuyer education course as part of the program’s requirements.
Hawaii HomeOwnership Center
The Hawaii HomeOwnership Center can also be an option. This organization offers assistance to homebuyers throughout the entire state through their affiliate, HHOC Mortgage, a non-profit mortgage broker. This includes:
- Down Payment Assistance Loan (DPAL) – This second-mortgage assistance program, for up to $125,000, is paired with a 3-percent down first mortgage. The interest rate is capped at 4.5 percent and is available to buyers whose income does not exceed 120 percent of the area median income.
- Deferred Closing Cost Loan – This program is a 15-year deferred matching loan with a 6:1 matching basis for up to $15,000. So, for example, if you can contribute $2,500 to your closing costs, you might be able to score $15,000 in assistance. The loan will not accrue interest or require monthly payments.
Other Hawaii homebuyer assistance programs
Mortgage credit certificate (MCC)
If you’re a first-time homebuyer in Hawaii, you can obtain a mortgage credit certificate (MCC) that allows you to take 20 percent of your mortgage interest as a dollar-for-dollar tax credit, which can add up to significant savings over the course of a 30-year mortgage. You can qualify for the MCC program if you meet the following conditions:
- You have not owned a home in the last three years.
- Your income does not exceed a certain limit, which varies based on household size and county ($107,200 to $163,782).
- The property you’re purchasing does not exceed a certain limit ($527,526 to $996,440 depending on location).
To get the MCC, you’ll need to get in touch with one of the participating lenders in the program and pay $425 in fees.
Other Hawaii first-time homebuyer loans
Be sure to take advantage of Bankrate’s guide to first-time homebuyer loans and programs to see if you qualify for other nationally available options. Some of these options include:
- FHA loans: These loans, which are insured by the Federal Housing Administration (FHA), have less stringent financial requirements than other loans. You can get an FHA loan with a 3.5 percent down payment and a 580 minimum credit score.
- VA loans: Active-duty military, veterans and surviving spouses can get a mortgage guaranteed by the U.S. Department of Veterans Affairs (VA). These loans typically feature lower interest rates and don’t require a down payment.
- USDA loans: The United States Department of Agriculture (USDA) guarantees these loans. Like VA loans, they also require no down payment, but you’ll need to buy in a designated rural area and meet area-specific income requirements.
- HomeReady and Home Possible loans: Fannie Mae and Freddie Mac created the HomeReady and Home Possible loan programs, respectively. They’re specifically for first-time homebuyers, and along with having more flexible income requirements, they only require 3 percent down.
Get started
Ready to embark on the homebuying process? Start by comparing mortgage rates in Hawaii to get a sense of what different mortgage lenders can offer for your 30-year term. Be sure to dig deeper into the terms, though, to get a full understanding of what you’ll pay with each bank or credit union. Some might offer savings on mortgage points, reduced closing costs or extra incentives if you complete a homebuyer education course, for instance.
Shopping around is essential: With the high cost of living in Hawaii, every dollar you can save counts.
For more information on other national loan and assistance programs, read our first-time homebuyer loans and programs guide.
You may also like
How much does it cost to build a deck?
How to prepare your home for hurricane season
