What is the Hale Kamaʻāina loan program?
The Hale Kamaʻāina loan program is a first-time homebuyer mortgage for Hawaiʻi residents, offering a below-market interest rate and up to 4% down-payment assistance for a primary residence. The interest rate is typically about 0.5% lower than standard market rates, helping buyers reduce monthly payments and cover upfront costs through a 30-year fixed-rate loan.
Who the Hale Kamaʻāina Loan Program Is Designed For
The Hale Kamaʻāina loan program was created by the Hawaiʻi Housing Finance & Development Corporation (HHFDC) to support local first-time homebuyers overcoming today’s affordability challenges. It’s a perfect fit for families or individuals that are just on the cusp of affordability, and just need that extra boost.
You may be eligible if you meet all of these program requirements:
- You’re a U.S. citizen or resident alien
- You’re a resident of Hawaiʻi
- You’re 18 years or older
- You plan to live in the home as your primary residence
- You complete a HUD-approved homebuyer education course
Property Requirements
You can use the Hale Kamaʻāina loan program for:
- Single-family homes
- Condominiums
- Townhomes
- PUDs – planned unit developments (New developments like Kahuina, Koa Ridge, or Ho’opili)
The home must be owner-occupied within 60 days of closing, fall within the annual HHFDC purchase-price limits, and be in livable condition with at least 30 years of remaining useful life. Leasehold homes may qualify if the lease term has at least 35 years remaining, and lease rent is fixed for at least 10 years.
First-Time Homebuyer Rule
For this program, you’re considered a first-time buyer if you haven’t owned and occupied a primary residence in the last three years. The key point is that you cannot currently own and live in another primary residence at the time you buy, even if one of the exceptions applies.
You may still qualify if:
- The property you’re buying is in a federally designated targeted area, which waives the 3-year waiting period but still requires that you do not currently own and occupy another primary residence.
- Any home you owned previously was not your primary residence, meaning you owned investment property, a second home you didn’t occupy, or other real estate that wasn’t your main home.
- You inherited a property but never lived in it as your primary residence, so it does not count against the first-time homebuyer definition.
- You are a military veteran who does not currently own and occupy a primary residence, even if you owned one within the last three years; the veteran exception removes the 3-year lookback, but not the rule about owning another primary residence today.
The 30-Year Fixed-Rate Mortgage Explained
The Hale Kamaʻāina loan program offers a 30-year fixed-rate mortgage that is typically priced below market rates (expected to be about 0.5% lower) because it is funded through mortgage revenue bonds.
What this means for you
- Your rate is predictable for 30 years
- You may qualify for more purchasing power
- Monthly payments remain stable over time
- You get the benefits of FHA, VA, USDA, or HFA conventional loans paired with state support
Loan Types Allowed
- FHA
- VA
- USDA-RD
- Conventional HFA Preferred / HFA Advantage
How the 4% Down-Payment Assistance Works
The Hale Kamaʻāina program also offers an optional down-payment assistance (DPA) loan that helps reduce the upfront cash needed to buy a home. The assistance provides up to 4% of the purchase price (or the appraised value if it’s lower) and is structured as a second mortgage that sits alongside your primary loan.
Cost & Terms
- 1% simple interest
- No monthly payments required
If you decide to sell at any time, you must pay off the principal loan amount, plus the accrued interest.
This also applies if you:
- Refinance
- Transfer ownership
- Or when the first mortgage reaches maturity
Forgiveness Potential
The interest on the DPA may be forgiven after ten years, as long as you’ve stayed in compliance with the program. This includes maintaining the home as your primary residence, following all program rules, and remaining in good standing on both loans throughout the ten-year period. Only the interest is eligible for forgiveness—the DPA principal is never forgiven and must be repaid—and the total amount of forgiven interest typically works out to about 0.4% of the loan amount.
Income Limits & Purchase Price Limits
The Hale Kamaʻāina loan program has annual limits that differ by county.
Income Limits
Income limits vary based on your county, your household size, and whether the home is located in a targeted area.
For Honolulu County on Oʻahu, that means you can qualify with a household income of up to $152,000 if you’re a 1–2 person household or $174,800 if you have three or more people. If you’re buying in a targeted area, those limits rise to $182,400 and $212,800, depending on household size.
Purchase Price Limits
Each county has maximum purchase prices for homes in both targeted and non-targeted areas. These limits are updated annually by HHFDC to match IRS guidelines. For Honolulu County, that means the maximum purchase price is $809,458 in non-targeted areas and $989,337 in targeted areas.
To qualify for the Hale Kamaʻāina loan program, your household income and the property’s purchase price must both fall within the program’s established limits.
What Are “Targeted Areas”?
In the Hale Kamaʻāina mortgage program, “Targeted Areas” are specific census tracts that the federal government, through the IRS and HUD, has designated as economically underserved. HHFDC adopts these federally defined tracts for the program, and homes located in these areas receive more flexible qualification guidelines to expand homeownership opportunities for local residents.
Targeted areas offer meaningful advantages for buyers:
- Higher income limits and higher purchase-price caps, making it easier to qualify.
- A waiver of the first-time homebuyer requirement, even if you’ve owned a home in the last three years.
Because these designations are federally determined, targeted areas may be updated over time as new census and economic data are released. If the home you’re purchasing falls within one of these tracts, you’ll benefit from the program’s expanded limits and more flexible qualification pathways.
Targeted Area List here
Recapture Tax: What You Should Know
Because the Hale Kamaʻāina loan program is funded through federal mortgage revenue bonds, it includes a potential recapture tax if you sell the home within 9 years.
You may only owe recapture tax if all three conditions apply:
- You sell within 9 years
- You make a capital gain on the sale (sell for a profit), and
- Your income at the time of sale exceeds the IRS limit.
Recapture ends up applying to only a small portion of Hawaiʻi buyers, because it requires all three factors to line up. Understanding how these pieces work helps you plan ahead, especially if you expect your income to grow and think you may need to sell earlier than 9 years. After 9 years, you can sell without penalty regardless of income.
Hale Kamaʻāina Buyer Roadmap
Step 1 — Confirm Eligibility
Make sure you meet the program basics: first-time buyer status (or targeted-area exception), income limits, eligible property type, Hawaiʻi residency, and ability to occupy within 60 days.
Step 2 — Connect With a Trusted Real Estate Professional
Talk with an agent experienced in the Hale Kamaʻāina program and Oʻahu’s micro-markets to help you identify qualifying homes and guide you through the process smoothly.
Step 3 — Complete Your Homebuyer Education
Finish a HUD-approved homebuyer course (required for anyone on title) before reserving your loan.
Step 4 — Work With a Participating Lender
Choose an approved lender who can reserve your loan in eHousingPlus, verify your eligibility, and explain your mortgage options under the program.
Step 5 — Decide on the 4% Down-Payment Assistance
Consider whether the optional DPA fits your financial plan, savings, and how long you expect to remain in the home.
Step 6 — Review Your Long-Term Plans
Make sure the home aligns with your timeline and goals, especially given owner-occupancy requirements, DPA repayment rules, and potential recapture tax if selling before 9 years.
Questions About Qualification?
If you’d like help understanding whether you qualify for the Hale Kamaʻāina loan program or how it compares to your other options, you can contact Team Wong Hawai‘i, a local real estate team experienced in guiding buyers through Hawai‘i mortgage programs.
Ask your question anytime or reach out directly — we’re here to help you navigate your next steps with confidence.
Attribution
Program information sourced from:
- HHFDC Hale Kamaʻāina Mortgage Program FAQs
- HHFDC Income & Purchase Price Limits
- HHFDC Targeted Area Census Tracts
- HHFDC lender memos and program summaries
- eHousingPlus guidelines for participating lenders