Hawaiʻi Housing Finance & Development Corporation

Who is HHFDC?

• State Agency: Attached directly to the Department of Business, Economic Development & Tourism.
• Primary Mission: To advance housing opportunities for the residents of Hawaii.
• Supports both rental and homeownership, with a current focus on helping families purchase homes.
• Expands access to safe, affordable homeownership throughout the State of Hawaii.

Why Lenders and Agents Matter

• Homebuyers rely completely on them for guidance!
• They educate local clients about program-specific benefits.
• Agents play an important role matching buyers with participating lenders.
• Both function as key allies expanding access to ownership for local families.

Core Benefits Matrix

• Clear pathway to affordable homeownership
• Highly competitive mortgage interest rates
• Low upfront out-of-pocket costs
• Optional integrated downpayment assistance
• Allows up to 100% CLTV funding profiles
• Full statewide program availability

Competitive Rates

As of May 7, 2026, Hale Kamaʻāina offered:

4.65% (Gov) / 4.95% (Conv)

Significantly below market averages

1. Assistance Allowance: Borrowers can receive a soft second mortgage loan equal to exactly 4% of the base first mortgage amount to balance down payment requirements.
2. Repayment Terms: Features a simple interest rate of 1% per annum. Requires no monthly servicing payments. Principle and interest balances are due upon first mortgage maturity, property sale, refinancing operations, or general title transfer.
3. Prepayment Clause: Full prepayment or partial payment can be submitted at any time without penalty constraints.
4. Minimum Borrower Contribution: Borrowers must contribute at least 5% of the property’s gross sales price out-of-pocket to qualify for the second mortgage assistance.

* Note: Borrowers do not have to meet the 5% minimum contribution requirement if they do not opt for the second mortgage.

Simple Interest Sample

• Loan Amount: $500,000
• DPA Value (4%): $20,000
• Rate: 1% Simple / Year
• Term Length: 30 Years
• Total Term Interest: $6,000
  ($20,000 × 1% × 30)

Loan Product Guidelines

Borrower Qualifications

• First-time Homebuyer Status: Must not have held an interest in a primary residence within 3 years. (Exceptions permitted for Veterans or Targeted Area purchases).
• Demographics: Minimum 18 years of age, verified Hawaii State Resident, and U.S. Citizen or Resident Alien.
• Income & Purchase Bounds: Household gross values must remain within county limits.
• Required Tax Disclosures: Must formally receive and sign the Federal Recapture Tax Notice.
• Education: Complete a verified framework via a HUD-certified counseling agency.
• Property Asset Constraints:* Does not own fee-simple or leasehold residential property inside the State.
• Prior Subsidy Rule:* Has never previously received a down payment assistance loan via HHFDC resources.

* Note: These restriction rules apply exclusively to the DPA Second Mortgage Loan option.

Eligible Properties

Applies to new or existing, 1-unit dwellings including:

• Single Family Homes
• Townhomes / Rowhouses
• Planned Unit Developments (PUD)
• Approved Condominiums

Ineligible: Multi-unit dwellings (2+ units) are strictly barred.

Property Use Mandates

• Buyers must occupy the asset as their principal home within 60 days of closing.
• Primary residency must be preserved for the entire duration of the loan mortgage lifecycle.
• Investment properties, second or vacation homes, and short/long term rentals are completely disallowed.
• Properties where more than 15% of the total square footage area supports a business or commercial trade are ineligible.

Federal Recapture Tax Rule

Properties sold within the initial nine (9) years may trigger a federal recapture tax. This tax is explicitly triggered only when all three of the following economic events occur concurrently:

1. The property is sold inside 9 years of original loan closing.
2. A clear capital gain is realized on the real estate sale.
3. Household income has expanded significantly (exceeding 5% year-over-year adjustments).

For targeted scenario analysis, direct borrowers to a certified tax advisor.

Targeted vs. Non-Targeted Status

Targeted Areas: Regions defined by Federal Census Tract data as economically underutilized. These areas feature higher income tolerances and purchase price maximum caps. Crucially, the first-time homebuyer mandate can be waived entirely inside these boundaries.

Regulatory Requirement: At least 20% of the aggregate Mortgage Revenue Bond (MRB) funds ($6 million out of the initial issuance round) must be set aside exclusively for Targeted Area loans for a minimum period of one (1) year.