Hawaii Mortgage Rates

Living in Hawaii

If any state is synonymous with paradise, it’s Hawaii, home to scenic volcanoes, lush tropical plant life and multicolored beaches. Throw in a mellow island vibe and rich cultural diversity, and it’s no surprise the Aloha State received almost 10 million visitors last year.

Home prices in Hawaii are far higher than in other states. According to the Hawaii Association of Realtors, the most recent median sales price statewide for a single-family home was $638,725. By contrast, the median price for a single-family home nationwide was $254,800, according to the National Association of REALTORS.

Since 2011, home prices have mostly been trending upward on four main islands — the island of Hawaii, Kauai, Maui and Oahu. Even so, some islands are considerably more affordable than others. In 2018, for example, the island of Hawaii had a median sale price of $364,560, while the price on Oahu was $787,657. Hawaii remains one of the most expensive places to live in the U.S., but potential buyers might appreciate a few recent market developments. The supply of homes for sale on Oahu, for example, is up compared with last year. Meanwhile, on Maui, new listings are up 7.3%, while the percentage of listing prices received by sellers is down slightly, from 97% to 96%.

The rules and costs of buying a home in Hawaii

Like many states, Hawaii has its own regulations and tax laws when it comes to purchasing a home. Here are some of the most important details buyers should know:

Home seller and buyer laws

By law, sellers in Hawaii are required to provide buyers, in writing, all information they have that might measurably affect the value of the property being considered.

The trade group Hawaii Realtors has a seller’s property disclosure form that it makes available to its members. It asks sellers to disclose a wide range of information, from general property issues with flooding, environmental hazards and volcanic activity, to defects, repairs or replacements for internal systems like those for water, sewage, power and air conditioning. Sellers are also asked to provide details on any improvements, additions or structural modifications that might have been made to the home, as well as whether it was ever treated for mold, mildew, fungus or pests.

As a potential homeowner in Hawaii, you should know that state law allows for both judicial and nonjudicial foreclosures if a mortgage borrower can’t make payments.

With judicial foreclosures, your lender has to file a lawsuit and receive permission from the court to foreclose. However, if your deed of trust or mortgage includes a “power of sale” clause, your lender can take a series of out-of-court steps that includes notifying you of a potential foreclosure and publicly posting a notice. In 2011, Hawaii passed a law that allows aggrieved borrowers to convert a nonjudicial foreclosure to a judicial foreclosure.

Hawaii is a so-called equitable distribution state. This means that in the event of a divorce, a court typically distributes all marital assets (like homes and similar property) as equitably as possible, rather than splitting everything 50/50, as would be the case in a community property state. To make a fair split, judges usually consider factors like each spouse’s age, earnings history and the number of dependent children. Each spouse is entitled to hold onto assets received before marrying, as well as any gifts and inheritances acquired during the marriage.

Unlike some states, in Hawaii, a lawyer is not required to represent you when you close on the purchase of your new home. You can opt to work with a title or escrow company instead. Still, if you anticipate any closing issues, or would like someone to represent your personal interests, follow the advice of the federal Consumer Financial Protection Bureau and consider hiring an attorney.


In Hawaii, real estate transfer taxes are known as conveyance taxes. Conveyance taxes must be paid within 90 days after any interest in a property is transferred (or conveyed) from one person to another. Conveyance tax rates range from $.10 to $1.25 for every $100 of the home’s value. They also depend on whether a seller qualifies for a county homeowner’s exemption on property tax. The lowest rate applies to properties valued at less than $600,000, and the highest rate is for properties worth $10 million or more.

Despite high home values, property taxes in Hawaii remain surprisingly affordable compared with the rest of the U.S. According to Tax-rates.org, the median property tax in Hawaii is now $1,324. On average, the state collects 0.26% of a property’s assessed fair market value — the second lowest percentage of any state.

If your home in Hawaii is your primary residence, you may be able to qualify for one of the following tax exemptions to reduce your overall property tax bill:

  • Home exemption — In Hawaii, property tax exemptions vary by county, and may also depend on criteria like a homeowner’s age. On the largest Hawaiian island — often called the Big Island — the county of Hawaii charges a basic home exemption of $40,000, but the exemption can be as high as $80,000 for higher-priced homes and $100,000 for individuals 70 and over. On Oahu, home owners can take advantage of an $80,000 basic home exemption, and $120,000 if they’ve 65 and over. Meanwhile, Maui’s home exemption program can reduce a property’s assessed value up to $200,000.
  • Disability exemption — If you are a disabled homeowner or veteran, you may also be able to qualify for a property tax exemption in the county where you live.
  • Income-based exemption and credits – Some counties in Hawaii offer property tax breaks for those with low incomes. On Maui, you may qualify for a credit if your real estate taxes add up to more than 2% of your adjusted gross income. On Kauai, meanwhile, homeowners may be able to limit their annual property taxes to 3% of their gross income, as long as their incomes fall below a certain maximum set by the county of Kauai each year.

Conforming loan limits

Because housing costs in Hawaii are more expensive than in other states, the maximum limit for conforming loans for all five Hawaii counties is also higher, at $726,525.

As a homebuyer, it’s important to keep this number in mind; a mortgage that meets federally-set conforming limits is more likely to allow you to enjoy lower down payment requirements, lower interest rates and lower fees. With a non-conforming “jumbo” loan, you may be able to buy more house in Hawaii, but it will probably come at a higher overall cost.

Programs for homebuyers in Hawaii

Buying a home can be a big investment — especially in a state with such high median sales prices. Luckily, Hawaii offers programs that can make a home more affordable.

HHFDC Affordable Resale Program

The Hawaii Housing Finance and Development Corporation offers a program to help qualified residents buy condominiums owned by the HHFDC. Qualified residents are placed into a lottery, and those who are randomly selected are given an opportunity to purchase a unit in one of six government-sponsored developments. Unit prices range from $250,000 (studio unit) to $500,000 (three-bedroom unit). To qualify, your income needs to be large enough to qualify for a mortgage to buy the unit.

To be eligible, you must also be:

  • U.S. citizen or resident alien
  • A Hawaii state resident
  • Planning to live in the unit being purchased.

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HHFDC Mortgage Credit Certificate

The Hawaii Housing Finance and Development Corporation (HHFDC) also offers a mortgage credit certificate (MCC) to qualified buyers. An MCC is designed to reduce the amount of mortgage interest you pay by offering a dollar-for-dollar federal tax credit up to $2,000; in this way, it can help low- to moderate-income families free up more money to qualify for a mortgage and make the monthly payments on the loan. HHFC only offers MCCs through participating lenders.

To be eligible for an MCC, you must meet:

  • Income limits of $88,300 to $163,240, based on household size and the county where purchasing.
  • Purchase price limits of $338,823 to $663,882, based on the county where purchasing

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Down Payment Assistance Loan (DPAL)

The Hawaii HomeOwnership Center, a Honolulu-based nonprofit, offers a down payment assistance loan program through its affiliation with HHOC Mortgage, a local nonprofit mortgage broker. The program allows qualified buyers to buy a home with just a 5% down payment and no mortgage insurance requirement by providing a second mortgage up to $75,000 to help pay for the down payment.

To be eligible for the DPAL Program, you must:

  • Be a first-time homebuyer or not have owned a home in 3 years
  • Have a mid-FICO Score of at least 700 (a mid-Fico Score is the middle score lenders typically receive from the three major credit bureaus)
  • Complete a homebuyer education class and counseling session with the Hawaii HomeOwnership Center
  • Be buying a home a single-family home, condominium or townhouse that is $500,000 or less

Learn More

Rate shopping tips

If you’re ready to buy a home, you’re probably prepared to shop around until you find the perfect fit, but it’s just as important to compare options when looking for the right mortgage. Even a small, quarter-point difference in interest rates can help you avoid having to pay extra over the lifetime of your loan.

Here are some key things to keep in mind when shopping for a loan:

Contact at least 3 lenders on the same day

It’s important to get quotes from multiple lenders when you’re researching mortgage options. But mortgage rates change daily (and sometimes more often), so to make the fairest comparison, reach out to every lender on the same day. This will also lessen the chances of your credit score getting dinged because too much time has passed between credit checks. Most credit scores aren’t affected by multiple inquiries from lenders within a short period of time, usually 14 or 45 days, depending on the FICO scoring version your lender is using.

Give each lender the same information

To boost your chances of accurately comparing mortgages quotes, give each lender you speak with the exact same information. You should be ready in advance to answer questions about your loan amount, preferred loan type, FICO scores, income, employment, assets, as well as how much you owe on credit cards, student loans and other debts.

Add up all lender fees to confirm the costs

To get a full take on what a mortgage may ultimately cost you, ask for the annual percentage rate (APR), not just the simple interest rate. APRs typically include at least some lender fees, like loan application fees and your lender’s legal fees for hiring an attorney. Ask your lender for the types of fees included in the APR you’re given, and also look at the fees included on your loan estimate. Lender fees often include the following:

  • Underwriting fees to determine if you qualify for the loan
  • Application fees
  • Discount points, in exchange for providing you a lower interest rate
  • Credit report fees
  • Appraisal fees

Know when to lock in the rate

A mortgage rate lock is like an insurance policy to protect you in case market interest rates increase before you close on your loan. You might consider a rate lock if rates have been consistently rising, or you’re worried you may no longer qualify for your loan if the rate goes up because your debt-to-income ratio will be higher. Rate locks usually last for only a specified time, usually 30 to 60 days. Confirm your rate lock in writing, and also ask about possibly taking advantage of a “float down” if rates go south.

The information in this article is accurate as of the date of publishing.