Hawaii Mortgage Calculator

Factors in Your Hawaii Mortgage Payment

While your mortgage payment may be high due to Hawaii’s hefty real estate prices, you won’t be burdened with high property taxes on top of it. Hawaii has the lowest property tax rates in the nation, with an average effective rate of 0.27%. One of the reasons is exemptions for owner-occupied residences. So if you plan on calling the Aloha State your year-round home, you’ll save some money on property taxes.

Each county in Hawaii administers and collects property tax. Your home will be appraised once a year, and after you’ll receive your property’s assessed value in the mail. If you have an issue with your home’s assessment, you can appeal with your local tax board. Your taxes will be based on the assessed value, which is equal to market value. However, applicable exemptions are applied to this number prior to tax rates.

Another cost to consider is homeowners insurance. In Hawaii, the average annual premium is $440, according to Insurance.com data. Obviously, being an archipelago, there comes inherent homeowner risks.

However, contrary to what you might assume, hurricanes aren’t as high a risk in this state than other areas in the U.S. In fact, Hawaii doesn’t even make it on any of the Insurance Information Institute’s hurricane damage or at-risk states. The last hurricane to cause significant damage to the Aloha State was 1992’s Hurricane Iniki which caused an estimated $1.8 billion in damage mostly to the island of Kauai, according to AccuWeather. The last major hurricane to hit the islands prior to Iniki was Hurricane Dot back in 1959.

Normal homeowners insurance doesn’t cover flood or earthquake damage, so if you want to insure your home against that type of damage, you can purchase it separately. Hawaii’s Insurance Division has a Consumer’s Guide to Homeowners Insurance that explains the different types of homeowner policies.

A financial advisor can help you understand how homeownership fits into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, taxes, insurance and more, to make sure you are preparing for the future.

Costs to Expect When Buying a Home in Hawaii

Prior to starting your monthly mortgage payments, property tax payments and homeowners insurance, you’ll need to pay a number of costs during the home-buying process. One of the first is a home inspection for the property you plan to purchase. While not a mandatory step, it’s what smart homebuyers do to ensure that the house doesn’t have any major issues. Most home inspections in Hawaii average between $227 to $400, while the cost may be less for a condo or smaller home. A typical home inspection includes an assessment of the roof, attic, plumbing, electric, appliances, heating and cooling, foundations, walls and ceilings. If you want mold, radon or a pest inspection, you can usually add those testing services for an additional fee.

After you move on to the finalizing the contract and loan paperwork, you’ll set a closing date with your lender. Part of closing is paying a number of fees to various service providers (including your lender). These are known collectively as closing costs. Hawaii averages 1.06% to 1.44% of a home's value in closing costs, which is relatively low compared to the rest of the U.S.

Our Closing Costs Study assumed a 30-year fixed-rate mortgage with a 20% down payment on each county’s median home value. We considered all applicable closing costs, including the mortgage tax, transfer tax and both fixed and variable fees. Once we calculated the typical closing costs in each county we divided that figure by the county’s median home value to find the closing costs as a percentage of home value figure. Sources include the U.S. Census Bureau, Bankrate and government websites.

Your lender will charge you what’s called origination fees, as part of your closing cost burden. This can include fees for underwriting, commitment, document preparation, tax service, origin points and loan processing. You won’t find a standard charge across lenders: some will charge more or less, which is one of the reasons to shop around for lenders in the early stages of home buying. Other services you’ll pay for as part of closing costs include attorney fees, flood certification, survey, appraisal and credit reports.

Your lender will often require title insurance, which helps insure that the rights to the property are clear. The insurance helps pay for any future court costs for title claims. There is the option to buy an owner’s policy as well, to cover the entire home value, rather than just the loan amount, which is what the lender’s policy will insure up to.

One last fee, though usually the responsibility of the seller, is Hawaii’s state conveyance tax. The tax is progressive and based on the purchase price, starting with $0.10 per $100 for homes worth less than $600,000. Homes valued over $10 million pay $1 per $100.

Details of Hawaii Housing Market

The most recent state to join the U.S., Hawaii is an archipelago of eight main islands. The state has an estimated population of just 1.43 million. To put it in perspective, the entire population of Hawaii is roughly one-sixth of New York City’s population. The Aloha State has 6,423 square miles of land area and 1,052 shoreline miles, according to the National Oceanic and Atmospheric Administration.

Hawaii is made up of the Island of Hawaii – known as the Big Island – Maui, Oahu, Kauai, Molokai, Lanai, Niihau and Kahoolawe. About 70% of the population is located on Oahu, home of the capital Honolulu. The next biggest city after the capital is Pearl City, located about 12 miles northwest from Honolulu. Hilo, Kailua and Waipahu are the next most-populous cities, according to the U.S. Census Bureau. Hilo is the only top-five city located on Hawaii Island – the rest are on Oahu.

In our Healthiest Housing Markets study, Hawaii ranked near the bottom of national rankings. This was due to it having some of the most unaffordable housing in the nation, as well as very low stability markers. The other factors considered in the study were risk and ease of sale, which Hawaii fared a little better in, but not enough so to counterbalance the first two factors.

Recently, Hawaii has seen increases in its statewide home values. Currently, the median home value is $722,500. Honolulu County’s median home value is a high $702,300 Maui County has a median home value of $657,400. As for the most populated island, Oahu, a shortage of affordable homes is a persistent problem. The housing supply is constrained with new construction lagging behind, according to the Honolulu Board of Realtors.

Local Economic Factors in Hawaii

While it’s pretty fair to assume that you’ve seen images of Hawaii in regards to a top vacation destination, tourism isn’t the only source of industry in Hawaii, though it plays a large role. Defense, raw sugar and molasses and pineapple are some of the top export industries. In regards to defense, Hawaii is home to military bases for all five services: Army, Navy, Marine Corps, Air Force and Coast Guard. As for tourism, the state has numerous resorts, beaches, natural wonders like volcanoes and canyons and waterfalls.

According to Hawaii’s Workforce Infonet, the largest employers are Altres Industrial, Kapiolani Medical Center, Queen’s Medical Center, Hawaii Health System Corp and Hawaii State Police Department.

Hawaii currently has higher unemployment rates than the national average. The state’s unemployment rate in December 2022 was 3.2% compared to the national rate of 3.5%, according to the Bureau of Labor Statistics. If you take a look at income numbers from the Bureau of Economic Analysis, Hawaii fares better. Its 2021 per capita personal income (PCPI) is $60,947, which is slightly below the national average of $65,148.

While Hawaii has the lowest effective property tax rate in the nation, the same can’t be said for income taxes. The state has a progressive income tax with 12 tax brackets. The lowest tax rate in Hawaii starts at 1.40% and progresses with each income tier, which ultimately culminates in an 11% rate for those earning $200,000 or more. The good news is that there are tax credits and deductions that can help you lower your taxable income amount.

Sales tax technically doesn’t exist in Hawaii, but the state has a general excise tax that businesses are required to pay. This tax is usually passed on to customers with higher prices for services and goods.

Itching to move to this beach-filled group of islands? Island living isn’t exactly cheap. See what your budget will look like by comparing your cost of living. Let’s say you earn $80,000 a year and are a single filer, if you moved from San Diego, California to Honolulu, your cost of living would be 13% higher on average due to taxes, housing and food cost increases. Boston, Massachusetts to the same city would see an 9% average increase. However, Boston to Hilo is a 15% decrease.

Mortgage Legal Issues in Hawaii

Hawaii homebuyers have some protection under Hawaiian real estate statutes. Sellers are required to complete and deliver a signed disclosure statement that reports all material facts relating to the property. This is any fact, defect or condition that could measurably affect the value of the home, according to Honolulu’s Natori Law Office. This is more protection than many mainland states that don’t have laws covering disclosures. While it’s some protection, a seller’s disclosure doesn’t replace the need for a home inspection prior to purchase.

Another consideration is Hawaii’s foreclosure process, which has changed throughout the years. At the moment, the state allows both non-judicial and judicial foreclosures. In 2011, the Associated Press reported that a law requiring lenders to show mediators evidence of legal authority to foreclose lengthened the foreclosure process for months. The law also prohibited lenders from seeking deficiency judgments, which is when the lender pursues the homeowner for any difference between the home sale and the remaining loan. As of 2012, the law allows certain homeowners to file for a conversion from a non-judicial foreclosure to a judicial foreclosure. The benefit is that usually judicial foreclosures take longer since it involves a lawsuit and the court. Non-judicial foreclosures are allowed when the mortgage has a power of sale clause included in the document.

If you want to learn more about Hawaii’s mortgage foreclosure laws, Hawaii’s State Judiciary website has more information.

Hawaii Mortgage Resources

Housing is not cheap on Hawaii. If your household has low or moderate income, you might qualify for a program through the Hawaii Housing Finance & Development Corporation. There are mortgage credit certificates that reduces the amount of federal income tax you pay which can help you qualify for a loan and helps free income for payments.

Another resource is the Hawaii HomeOwnership Center, a nonprofit that provides education, information and support for first-time homebuyers. Find down payment assistance loans, homeownership coaching and post-purchase workshops, among other offerings.

Hawaii also has property eligible for USDA-backed loans. If you have low or moderate income, you may qualify for this government-endorsed loan. First, you’ll want to check if the property you’re interested in is located in an eligible area on the USDA website.

Before you move to the Aloha state, you may want get familiar with 15 things to know about moving to Hawaii. Considering the islands as your retirement destination? You can run some numbers to see if Hawaii is retirement-friendly. Lastly, if you’re ready to start loan shopping, check out current Hawaii mortgage rates to get an idea of what your monthly mortgage payment will look like.