Newcomer’s Guide: Buying a Home in Hawaiʻi

Get expert tips on how to purchase your place in paradise.
Pom Luxton, Vice President/Manager of American Savings Bank’s Private Lending group. 

A home purchase is usually the biggest investment a person will ever make. This is especially true in urban Honolulu, where the average listing price for a four-bedroom home can be more than $1 million. But even though home prices in the Aloha State may be much higher than in other parts of the U.S., the most important thing to consider is still location, location, location.


“Each island offers a unique experience,” says Pom Luxton, the vice president/manager of American Savings Bank’s Private Lending Group. “Some Islands offer larger homes, land and wide-open spaces. Other Islands offer easier access to an urban lifestyle. Take the time to study the uniqueness of each of the Hawaiian Islands and the real estate opportunities available.”


When choosing to buy a home on one of six Hawaiian Islands, potential buyers should also consider that some of the Islands don't have the luxury of available housing and land. “For this reason,” says Luxton, “new homeowners should understand the types of land ownership in Hawaiʻi.”


There are two types of property ownership in Hawai‘i: fee simple and leasehold.  Fee-simple property ownership gives the buyers complete ownership of the property, which includes the land and any improvements to the land in perpetuity. The second type of property ownership is leasehold. In this case, the buyer does not own the land; instead, they have a right to use the land for a predetermined amount of time. At the end of that predetermined period, the land reverts back to the Lessor. Basically, in fee simple ownership, you own the land. In leasehold ownership, you rent the land.


In Hawai‘i, the financing of these types of properties is different. For example, on leasehold properties, lenders will review the overall lease expiration as well as renegotiation dates to determine the term of a loan. Leases with short terms may not be eligible for a traditional 30-year mortgage. Shorter-term loans will have a higher monthly payment that could affect loan qualification and purchasing power.


If your homeownership dreams focus on condo living, understanding the financing requirements for Hawai‘i condos will make your search much easier. For buyers that are looking for condominiums in Hawai‘i, there are owner-occupancy requirements that must be satisfied in order to obtain government backed, Fannie Mae or Freddie Mac loan programs. Most lenders generally look for an owner-occupancy requirement for the condominium to be about 51 percent. Simply stated, lenders prefer a higher percentage of owners to live in the building than renters. If the owner occupancy rate is weighted toward more renters living in the building, local lenders may be able to provide financing options under other programs, but at slightly higher interest rates.


Ready to find your new home? Follow Luxton's six-step process to get you on your way. Before you know it, you'll be living the dream in Hawaiʻi!


1. Purchase a home you can afford.

Before you start looking, know what you can afford now and for the next five years.


2. Work with a local lender that knows Hawai‘i real estate.

A local lender knows the Hawai‘i market and will work with you to find the financing options and loan programs that best meet your needs. Once you find the right local lender, get pre-approval for your financing.


3. Consider more than just price.

You aren’t just buying a home—you're buying a neighborhood. The neighborhood you live in is just as important as the home you purchase. Look for aesthetics, affordability, safety, access to shopping and neighborhood walkability. Take the time to drive through the neighborhood during different times, on different days. Research when traffic is heaviest. Depending on the Island and the neighborhood, your commute to work or school could be anywhere from a few minutes to a few hours.


4. Know your priorities.

Each situation comes with different priorities and needs. Living close to the ocean may provide you with spectacular sunsets, but a long commute time to work. Living close to shopping and restaurants might reduce your commute, but remove your beachside oasis. Think about what works best for you and weigh the pros and cons. Chances are, you'll find something that satisfies your needs.


5. Think about the style and type of home you want to live in.

Hawai‘i’s diversity is matched by a mosaic of architectural styles. You will find homes that match contemporary architecture common on the Mainland U.S., as well as home designs that are unique to the Islands. Many Hawai‘i homes are built with the warm climate in mind and are different from Mainland homes and condominiums that require protection from the seasons. Depending on where you are traveling from, you may be able to say "goodbye" to that large heating bill, only to welcome a large air conditioning bill because of Hawai‘i’s year-round summer. Some home designs and neighborhoods will help alleviate the sometimes too-hot Hawai‘i days and nights, while also helping you acclimate to your new home in paradise.


6. Work with a Realtor.

Hawai‘i is a competitive, low-inventory housing market. Working with a reputable Realtor with professional knowledge and resources will help you chart a course to your dream home.


To learn more about home loan financing with American Savings Bank, or to connect with one of our loan officers, visit