Overview of Hawaii Mortgages
Hawaii is on many Americans’ bucket lists, and for good reason, as the tropical climate and beautiful beaches are not to be missed. Recently, Hawaii mortgage rates tend to be lower than the national average. All five Hawaii counties have conforming loan limits above the baseline $726,200 limit.
|30 year fixed||7.00%||6.25%||+0.75|
|15 year fixed||6.99%||6.99%||0.00|
|30 yr fixed mtg refi||7.12%||7.13%||-0.01|
|15 yr fixed mtg refi||6.88%||6.88%||0.00|
|7/1 ARM refi||6.48%||6.48%||0.00|
National Mortgage Rates
Historical Mortgage Rates in Hawaii
Hawaii Mortgage Rates Quick Facts
- Median Home Value: $722,500 (U.S. Census Bureau)
- Loan Funding Rate: 61.38% (CFPB)
- Homeownership Rate: 58.1% (St. Louis Fed)
- Median Monthly Homeownership Costs: $2,587 (U.S. Census Bureau)
Scenic Hawaii has famously high home prices. However, Hawaii mortgage rates are generally pretty close to the average U.S. mark. Hawaii also boasts some of the highest monthly homeownership costs in the country.
A financial advisor in Hawaii can help you plan for the homebuying process. Financial advisors can also help with investing and financial plans, including tax, retirement and estate planning, to make sure you are preparing for the future.
Hawaii Historic Mortgage Rates*
|Year||Hawaii Rate||U.S. Rate|
*The FHFA stopped reporting new data in 2018.
Hawaii Mortgages Overview
Getting a mortgage in Hawaii, whether for your primary residence or for a vacation home, will likely be expensive. The Aloha State frequently tops lists of the states with the highest home prices, which means any aspiring homebuyers have to scrape together a sizable sum for their down payment. It’s no wonder, then, that all five Hawaii counties have conforming loan limits that are significantly higher than the $726,200 limit that’s standard in most counties.
Remember that anything that exceeds the conforming loan limit is considered a jumbo loan and will likely come with a higher interest rate. So, the higher conforming loan limits in Hawaii’s counties is an acknowledgement that the state’s homes are expensive.
Conforming and FHA Loan Limits by County
|County||Conforming Limit||FHA Limit|
The Hawaii mortgage market has quirks. The view, the proximity to lava flows and the house’s contents (non-real property, in lender-speak) can all affect the price and desirability of a home. If you want to rent out your Hawaii home when you’re not using it you’ll want to make sure that the association rules attached to the home allows you do to do so.
In short, even if you live on the mainland and your Hawaii home won’t be your primary residence, it may be a good idea to use a Hawaii-based lender. Using local lending and underwriting will minimize the chances that something Hawaii-specific in your mortgage documents would slip through the cracks. If you use a local team when you’re buying your home the closing process will probably be faster, too.
For homeowners facing foreclosure, Hawaii’s Mortgage Foreclosure Dispute Resolution program provides mediation between borrowers and lenders who file a non-judicial foreclosure. If you qualify for the program you can sit down with your lender and work on a way to avoid foreclosure. However, because many lenders don’t want to participate in the HMFDR, many Hawaii lenders will seek judicial foreclosure, which isn’t eligible for MFDR mediation.
Hawaii is a deficiency state. That means that if your home is foreclosed and the amount you still owe on it exceeds the amount the bank can get for selling the home, the lender can sue you and go after your assets for the difference between the new sale price and the amount you still owe your lender. That’s another reason to stick to a budget when you’re buying a home in Hawaii and not borrow more than you can comfortably afford.
30-Year Fixed Mortgage Rates in Hawaii
Most Americans choose to get a 30-year fixed-rate mortgage. This loan allows you 30 years to pay back your lender. The interest rate on your loan won’t change unless you refinance. Unlike an adjustable-rate mortgage, a fixed-rate loan is predictable. There are also fixed-rate mortgages with shorter terms, such as 15-year loans, but those come with higher monthly payments because you’re paying back the same loan amount in fewer years.
Hawaii’s average 30-year fixed mortgage rate is 6.01% (Zillow, Jan. 2023).
Hawaii Jumbo Loan Rates
In most counties across the U.S., any loan that’s $726,200 or less is considered a conforming loan. In Hawaii, as we mentioned above, the conforming loan limits are much higher at $1,089,300. If you need to take out a loan that exceeds the conforming loan limit, you’ll be taking out what’s considered a jumbo loan. Jumbo loans generally come with a higher interest rate because the banks want more money in exchange for taking a risk on your oversized loan.
In Hawaii, the average 30-year fixed jumbo loan rate is 5.94% (Zillow, Jan. 2023).
Hawaii ARM Loan Rates
Unlike a fixed-rate mortgage, an adjustable-rate mortgage (ARM) has an interest rate that can change while you’re still paying back the home loan. If the interest rate increases after the introductory period of the ARM ends, your monthly payments will increase, too. The introductory period on an ARM can last between one and 10 years. If you’re sure you’ll be able to sell the home before the introductory period ends you may be tempted by an ARM, since they tend to have lower interest rates during the introductory period than fixed-rate mortgages.
The average rate for a 5/1 ARM in Hawaii is 5.03% (Zillow, Jan. 2023).
Hawaii Mortgage Resources
If you need help with buying or keeping a home in Hawaii you can consult the Hawaii page of the Housing and Urban Development (HUD) website. You’ll find information about where to find HUD-approved housing counseling agencies in Hawaii and about Hawaii affiliates of Habitat for Humanity. You’ll also find information on local groups that help Hawaiians buy homes. In the past, a program called Hula Mae has provided Hawaiians with homebuying assistance, but the program is not active at the moment.
Hawaii also participates in the federal government’s Making Home Affordable Program® (MHA). A HUD-approved counselor in Hawaii can talk to you about your situation (you’ve fallen behind on payments because of unemployment, you’re underwater on your mortgage, etc.) and review the options available to you. You may be able to get on a repayment plan that will spread out your delinquent payments. Or, you may qualify for a loan modification.
|Resource||Problem or Issue||Who Qualifies|
|U.S. Department of Housing and Urban Development - Hawaii||Offers free or low-cost housing counseling, homeownership vouchers, legal assistance for homeowners wanting to avoid foreclosure and information about groups that provide down payment assistance.||Varies depending on specific program requirements.|
|Making Home Affordable Program||Offers help for homebuyers whose mortgage payments are too expensive, homeowners who want to refinance, assistance for the unemployed and assistance for homeowners trying to avoid foreclosure.||Homeowners who have experienced a financial hardship such as the loss of a job.|
|Hawaii Housing Finance and Development Corporation||Provides housing assistance to families of low and moderate income via Mortgage Credit Certificate.||The home must serve as a primary residence and homeowners cannot exceed income and purchase price limits.|
The Hawaii Housing Finance & Development Corporation (HHFDC) can help you obtain a Mortgage Credit Certificate (MCC) if you qualify. An MCC is a tax credit that you can apply to your federal income taxes. If you get an MCC, 20% of your annual mortgage interest will be a direct federal tax credit. Remember that a tax credit is a dollar-for-dollar reduction of your tax liability. You can still deduct the other 80% of the mortgage interest you pay in a given tax year from your taxable income if you itemize your deductions.
MCCs are only available through the participating lenders listed on the HHFDC website, so if you’re planning on seeking an MCC you’ll need to get your mortgage from one of those lenders. To qualify for an MCC, the home you buy must be your primary residence and you must be a first-time homebuyer (defined as not having owned a principal residence at any time in the last three years). Income limits and purchase price limits vary by Hawaii county. If you have been approved for an MCC and want access to that money right away (rather than waiting to get your tax refund) you can file a new W-4 Form and decrease the amount your employer withholds from each of your paychecks.
Hawaii Mortgage Taxes
Hawaii is one of the states that allow a double deduction of mortgage interest. You probably know that if you itemize your deductions on your federal income tax return you can deduct the mortgage interest you paid during the year from your taxable income. Some states, Hawaii among them, let you deduct that mortgage interest a second time on your state income taxes. Hawaii has a progressive tax regimen with a high top marginal rate, which makes deductions especially valuable.
There are income caps on Hawaii’s double deduction, however. The state of Hawaii limits the amount that high-income filers can deduct on state tax returns via itemized deductions. If you’re considering buying a home in Hawaii and your income is on the high side it may be worth consulting a tax accountant or financial advisor who can walk you through the potential tax implications of your purchase.
If you sell your home in Hawaii you’ll pay real estate transfer taxes, which are called conveyance taxes in the Aloha State. The tax rate depends on the value of the home and on whether the home is owner-occupied. Rates range from 0.1% to 1.25%.
Hawaii Mortgage Refinance
When it’s time to refinance your Hawaii mortgage there are a few things to keep in mind. You don’t have to go with the same lender who did the underwriting on your original mortgage – you can shop around for a better deal. But it may be worth looking for local underwriting if possible rather than going back and forth with a mainland lender that doesn’t have a presence in Hawaii.