How much of a down payment do I need to buy a house in Hawaii?

Hawaii currently has no down payment assistance programs available in the state. However, you can still get a zero down payment mortgage through the VA or the USDA if you and the property qualify. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.

How much are closing costs in Hawaii?

Given the cost of homes in Hawaii, it would be logical to assume they had incredibly high closing costs, but really, they're fairly reasonable compared to home prices. In Hawaii, you'll pay an average of $7,463 to purchase a new home. If you're refinancing, be prepared to pay about $4,730.

What does homeowners insurance cost in Hawaii?

Despite the hazards present in Hawaii, homeowners insurance is very affordable. For a $500,000 home, you're looking at just $918 per year for your premium. This is $2,676 below the national average. Keep in mind, however, that you may need additional coverage, like volcano insurance or flood insurance, which can offset the savings.

What is the property tax rate in Hawaii?

There's only one state with a property tax rate cheaper than Hawaii, making it a great value all around. The average property tax rate is 0.26% of the home's assessed value.

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Moving to Hawaii is a dream for many people, but it's one that can come with substantial costs. Although it's not cheap to live in the Aloha State, it can be an unmatched experience and well worth the expense. Before you hop a plane to stake your claim on any of the islands, check out our Hawaii mortgage calculator. It'll help you better understand what you can afford and where to go looking for your little piece of paradise.

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Hawaii housing market 2024

Although Hawaii has seen comparable property value gains in the last five years to other parts of the United States, the median sales price of real estate there has experienced a much more gradual increase. As of December 2023, the median sales price of a home in Hawaii was $757,800, a 9.2% increase year over year. It's a great deal higher than the national median home sales price in December 2023 of $402,045.

The prices in Hawaii are largely due to a limited number of homes for sale at any given time, with only 5,125 homes available across the entire island chain in December 2023. To give this some perspective, in December 2023, Louisiana, the 25th most populous state in the U.S., had over 13,000 listed for sale.

Homes in Hawaii are more difficult to sell due to their higher prices and higher cost of relocation, and in December 2023, homes were listed on the market for about 68 days before finding a contract. Even here, though, homes are selling much faster than in the pre-pandemic era, when homes often took about 90 days to sell.

Despite numbers that make it look like homes in Hawaii may not necessarily have the same demand as in the continental U.S., the average home gets 98.3% of its asking price and over 20% sold above list price in December 2023. Only 11% of sellers had to drop prices to get an offer.

You probably won't find a bidding war across most of Hawaii, since there's about five months' worth of listing supply, but you will almost certainly pay close to the listing price if you want to live there. Specific segments, especially lower priced homes that are ready to move into, may still be fiercely competitive, however, so go ahead and talk to a few of the best mortgage lenders to find the best rate before you get started house hunting.

Here's a quick peek at some of the most important Hawaii markets and how things are doing there.

Metropolitan Area	Median Home Value	1-Year Change
East Honolulu	$1,510,000	13.9%
Hilo	$475,000	(2.7%)
Honolulu	$615,000	15.0%
Kailua	$1,301,000	(5.7%)
Pearl City	$850,000	(6.6%)
Waipahu	$692,000	8.1%

Data source: Redfin. Figures accurate as of Feb. 7, 2024.

How do I calculate my mortgage payment?

Generally, it's a better idea to use a mortgage calculator like this one, than to try to calculate your mortgage payment by hand. It's a complicated process, since each payment is a little bit different, and several things beyond just the principal come into play. But, if you're the sort who likes to know how the sausage gets made, this is the formula:

Your base mortgage payment, made up of just your principal and interest charges (often known simply as "PI" or "P+I") is the result at the end of this calculation. Your payment is based on three simple things: how much you borrow, at what rate you borrow it, and how long you'll need to pay it back.

Although the payment is the same each month, the allocation of interest and principal is different each month, with increasingly more principal being added into the payment as your balance decreases and interest charges become less. Over time, you start to chip away more aggressively at the principal without even knowing it. However, your actual monthly mortgage payment consists of more than just P+I.

Mortgage payments typically include principal, interest, real estate taxes, and homeowners insurance, commonly called PITI. In many cases, fees like HOA dues and extra insurance for related natural disasters are included in the payment as well. Also, if you have a smaller than 20% down payment like many Americans, you will likely also have to pay for mortgage insurance, like private mortgage insurance (PMI) on a conventional loan. If you get an FHA loan, this is called mortgage insurance premium (MIP).

To calculate your new mortgage with these additional expenses included, just click "show additional inputs" on the mortgage calculator above and add your estimated figures. It will get you a very close estimate of what to expect.

Things to know before buying a house in Hawaii

Hawaii's real estate prices aren't anything to sneeze at, but at least the property tax rate in the state is very low. Hawaii counties only collect an average of 0.26% of a property's assessed value, meaning that if your home is assessed at $517,600, you'll pay just $1,324 per year in taxes. It's 49th in the country, in fact, when it comes to the percentage of assessment that's taxed.

Climate change is having major impacts on Hawaii, threatening coral reefs and ecosystems, but the problem goes beyond sea turtles. Rainfall in Hawaii has been decreasing, and the sea level is rising, neither of which is great for homeowners. Although hurricanes are rare, with only five serious hurricanes or tropical storms hitting the islands since 1950, volcanic eruptions are still a risk. The island of Hawaii is host to four active volcanoes, and Maui is home to two more.

Flood insurance is definitely warranted if you live in a low-lying area near the coast, as storm surges could create expensive problems for your home. In addition, volcano eruption coverage should be considered along with your basic homeowners insurance policy, since this kind of damage will not be covered otherwise.

Ask your insurance agent what's appropriate, even if it's not required. You can also plug that number into the Hawaii mortgage calculator to help give you a better estimate of your overall payment.

Additional concerns for first-time Hawaiians

If you've spent your life in Hawaii, you already know how difficult it can be to get things from the mainland, but if you're moving there for the first time, this can come as quite a shock. Before you plan your Hawaiian move, keep in mind that you won't be able to move your belongings in a truck like you would to any other state in the country, including Alaska.

Instead, everything will need to be shipped on a boat or carried in a plane, so plan accordingly. It can take weeks to transport a car, for example, to Hawaii, and often at great cost. Many new Hawaiians find it's cheaper to rebuy furniture and other large items once they've reached their new home, rather than move their existing belongings.

Tips for first-time home buyers in Hawaii

The Hawaii Housing Finance & Development Corporation has permanently closed its Homeowner Assistance Fund, but you can still apply for loans with no down payment requirements through the VA if you're a veteran or USDA in some parts of Hawaii.

Advice for all first-time borrowers

In addition to VA or USDA loans, you can also apply for other loans with appealing terms for first timers, like FHA loans or conventional mortgages. Both have low down payment requirements, making them easier to secure, and can be used on a vast array of homes.

In order to qualify for any mortgage, you'll want to work hard to make yourself into the best candidate. Here are a few tips:

Boost your credit score with on-time payments and low credit card utilization
Pay off debt to improve your debt-to-income ratio
Secure a steady job (or don't leave your current job)
Save for both closing costs and your down payment

In addition, guard your credit carefully by not opening any new accounts or applying for credit too soon before your loan application. Each time you apply or open a new credit account, your credit will take a little hit. Inquiries take two years to fall off your credit report, so plan accordingly.

FAQs

Hawaii currently has no down payment assistance programs available in the state. However, you can still get a zero down payment mortgage through the VA or the USDA if you and the property qualify. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.
Given the cost of homes in Hawaii, it would be logical to assume they had incredibly high closing costs, but really, they're fairly reasonable compared to home prices. In Hawaii, you'll pay an average of $7,463 to purchase a new home. If you're refinancing, be prepared to pay about $4,730.
Despite the hazards present in Hawaii, homeowners insurance is very affordable. For a $500,000 home, you're looking at just $918 per year for your premium. This is $2,676 below the national average. Keep in mind, however, that you may need additional coverage, like volcano insurance or flood insurance, which can offset the savings.
There's only one state with a property tax rate cheaper than Hawaii, making it a great value all around. The average property tax rate is 0.26% of the home's assessed value.

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