FHA Loans in Hawaii

What an FHA loan is and who it fits in Hawaii

FHA does not lend money. The Federal Housing Administration, part of HUD, insures loans made by approved lenders, and that insurance is why a lender will accept 3.5 percent down and a credit score in the 500s or low 600s. You pay for it through a mortgage insurance premium (MIP), described below. The loan itself is a normal 30-year or 15-year fixed-rate mortgage from a wholesale lender I place it with.

In Hawaii, FHA fits the buyer with limited savings and decent but not perfect credit who is buying a primary residence: a first condo in Honolulu, a single-family home in Hilo or Kapolei, or a two- to four-unit property where you live in one unit. It fits less well above the county limit, on condotels, and for buyers with strong credit and 10 percent or more down, who often do better on a conventional loan.

FHA loan requirements in Hawaii

FHA sets the floor; each lender adds its own overlays. The federal rules are:

• Down payment: 3.5 percent with a credit score of 580 or higher; 10 percent with a score from 500 to 579. Many lenders set their own minimum around 620, which is one of the things I shop.
• Debt-to-income ratio (DTI), your monthly debts divided by gross monthly income: automated underwriting often approves ratios in the mid 40s to around 50 percent with compensating factors. Lease rent on a leasehold home counts as a housing cost.
• Funds: the entire down payment and closing costs can come from a family gift, and a seller can pay up to 6 percent of the price toward closing costs.
• Occupancy: the home must be your primary residence, and you move in within 60 days of closing. No second homes or investment properties.
• Property: one to four units, an FHA appraisal that checks safety and soundness as well as value, hurricane and hazard insurance, flood insurance in a FEMA flood zone, and a lease that meets FHA’s term rule if the home is leasehold.

Non-occupant co-borrowers are allowed, which in Hawaii often means a parent on the loan for a child buying a first condo.

FHA loan limits in Hawaii for 2026

HUD sets each county’s limit at 115 percent of the county median sale price, between a national floor and a ceiling, and Hawaii’s ceiling is higher than the mainland’s because the state is a special exception area under federal law. The limits below apply to FHA case numbers assigned on or after January 1, 2026. Kalawao County on Molokai shares Maui County’s limits.

One Hawaii quirk: in Honolulu, Hawaii and Kauai counties the 2026 conforming loan limit is higher than the FHA limit, the reverse of most of the mainland. A buyer on Oahu with good credit who needs more than the FHA limit may fit a conventional loan with 3 or 5 percent down before needing a jumbo. The Hawaii mortgage broker page has the conforming figures.

Leasehold, condos and condotels under FHA

FHA will insure a loan on a leasehold home, which matters in Hawaii more than anywhere else in the country. The rule is about time: the lease must either be a renewable lease of at least 99 years or run at least ten years beyond the maturity date of the mortgage, so a 30-year loan needs at least 40 years left on the lease. A sublease is not eligible. Lenders layer on their own minimums, and some will not do leasehold at all, so the remaining term is the first thing I check on a leasehold listing.

Condos must be in an FHA-approved project, or qualify for FHA’s single-unit approval, which lets a lender approve one unit in an unapproved building when the project meets tests on owner occupancy, reserves, commercial space and delinquencies. You can look up any Honolulu, Kihei or Lihue building on HUD’s condo approval list. Many older Oahu buildings have lapsed approvals; that does not put the unit out of reach, but the approval work has to start the day you go under contract.

Condotels, units in buildings run as hotels, are not eligible for FHA, and neither are projects with too much short-term rental or commercial use. Homes on land leased from the Department of Hawaiian Home Lands use a separate FHA program, Section 247, with its own rules and lender list; the Hawaii first-time buyer page covers it alongside DHHL’s down payment assistance.

FHA mortgage insurance, in words

Every FHA loan carries two premiums. The upfront mortgage insurance premium is a percentage of the loan amount charged at closing and almost always financed into the loan, so you do not write a check for it but you do pay interest on it. The annual premium is a percentage of the balance, divided by twelve and added to each monthly payment; its rate depends on the loan term, the loan amount and the down payment.

How long you pay it is the part people miss. With less than 10 percent down, which is almost every FHA purchase, the monthly premium stays for the life of the loan. With 10 percent or more down it drops after eleven years. The way out is a refinance into a conventional loan once you have 20 percent equity, which island appreciation has made common. I show every FHA borrower the conventional alternative on the same day.

How an FHA loan works in Hawaii, step by step

FHA versus conventional in Hawaii

With a score in the mid 600s or below, or a DTI near the top of the range, FHA usually wins on approval and on payment, because conventional mortgage insurance prices credit risk sharply and FHA does not. With a score in the 700s and at least 5 percent down, conventional usually wins, because its mortgage insurance is cheaper for strong credit and goes away at 20 percent equity, and in Honolulu, Hawaii and Kauai counties it reaches a higher loan amount before jumbo. On leasehold, both work; on condotels, neither does.

Veterans should look at VA before either: no down payment, no monthly mortgage insurance and no VA loan limit with full entitlement. If you are a first-time buyer, read the Hawaii first-time buyer page for the HHFDC and county programs that can sit alongside an FHA first mortgage, then get pre-approved.