Hawaii’s housing market presents unique affordability challenges, especially for residents seeking to purchase their first home. The Hale Kamaʻāina Mortgage Program, administered through the Hawaii Housing Finance and Development Corporation (HHFDC), is designed to help first-time homebuyers access competitive fixed-rate financing and optional down payment assistance to make homeownership more attainable across the State of Hawaii.
Key Features:
Primary Benefit:
- Competitive 30-year fixed-rate mortgage financing
- Optional 4% Down Payment Assistance (DPA) second mortgage
Interest Rates (Subject to Change):
- Government Loans (FHA/VA/USDA):
- Without DPA: 5.40%
- With DPA: 5.65%
- Conventional Loans (Fannie Mae/Freddie Mac):
- Without DPA: 5.70%
- With DPA: 5.95%
Down Payment Assistance Structure:
- 4% second mortgage
- 1% simple interest annually
- No monthly payments required
- Due upon sale, refinance, maturity, or other qualifying event
- Interest may be forgiven after 10 years at HHFDC’s discretion (principal is not forgivable)
Designed to Address:
- Affordability barriers for first-time buyers
- High upfront cost challenges in Hawaii’s housing market
Eligibility:
To qualify, borrowers must:
- Be a first-time homebuyer (no ownership interest in a primary residence within the past 3 years)
- Meet household income limits (vary by county and targeted vs. non-targeted areas)
- Be a U.S. citizen or resident alien
- Be a bona fide Hawaii resident
- Be at least 18 years old
- Complete HUD-approved homeownership counseling
- Occupy the property as their primary residence
- Receive the required Recapture Tax Notice
DPA Additional Requirements:
- Must not own any other residential property in Hawaii
- Must not have previously received a DPA loan under HHFDC’s prior DPA program
Note: Exceptions to the first-time buyer requirement may apply for Veterans and targeted area purchases.
Buyer Requirements:
- Property must be in Hawaii
- Eligible property types: single-family homes, townhomes, PUDs, condominiums
- Must meet county purchase price limits
- Borrower must occupy within 60 days of closing
- Owner-occupancy required for duration of mortgage (hardship waivers possible)
- Leasehold properties must have at least 35 years remaining on lease
Loan / Assistance Structure:
- First mortgage secured in first lien position
- Optional DPA secured in second lien position
- DPA accrues 1% simple interest
- DPA due upon sale, refinance, payoff, or non-occupancy
- Possible recapture tax if the property is sold within 9 years under certain income and gain conditions
Application Timeline:
- Applications are accepted through participating lenders
- Borrowers must apply directly to a lender
- Loan approval and closing are handled by the lender
Agent Action Steps:
- Identify first-time buyers in Hawaii who meet income limits
- Screen for potential Veteran or targeted area exceptions
- Connect clients with participating lenders early
- Ensure completion of HUD-approved counseling
- Review DPA structure carefully with buyers
Actions for Buyers to Take Now:
- Confirm first-time homebuyer status
- Verify household income eligibility by county
- Complete HUD-approved homeownership counseling
- Obtain a mortgage prequalification with a participating lender
- Gather documentation in advance to streamline approval
This program provides competitive fixed-rate financing backed by tax-exempt bond funding, helping qualified buyers secure below-market interest rates. Because of this structure, homeowners who sell within nine years may be subject to federal recapture tax under certain conditions.
For buyers who do not qualify, or if program limits are reached, additional Community Home Investment Programs (CHIPs) may be available. Visit Homebuyerwallet.com to explore other options tailored to your needs.
