What is the FHA Hawaiian Home Lands Loan Program?
The Insured Mortgages on Hawaiian Home Lands, the FHA Hawaiian Home Lands loan is designed to help low- and moderate-income Native Hawaiians obtain affordable home financing. Regulations of the loan are fundamentally the same as those for FHA Section 203(b) loans, except that they are only available to Native Hawaiians on Hawaiian home lands.
This program also works to provide minimized risk to participating lenders through a 100% guarantee of the unpaid principal and interest due on an eligible loan. This makes it a low-risk product that can add diversity to your programs and help you reach a historically underserved population.
FHA Hawaiian Home Lands Loan Basics
- Designed to help Native Hawaiians purchase homes located on Hawaiian home lands through affordable financing.
- Designed to minimize risk for lenders through an FHA guarantee.
- Essentially the same as an FHA 203(b) loan, but only available to Native Hawaiians purchasing on Hawaiian home lands.
- Eligible borrowers must meet certain income qualifying criteria, among other FHA loan eligibility requirements.
- Available for one- to four-family dwellings located on Hawaiian Home Lands.
- A one-time, upfront mortgage insurance premium is required, but no further annual or periodic mortgage insurance premiums charged.
- Upfront mortgage insurance premium may be financed into the loan.
- Purchase and refinance options available.
What are the benefits?
Low Down Payment
As with other FHA loan options, the FHA Hawaiian home lands program offers a low money down feature that helps make purchasing a home easier and more affordable. As little as 3.5% down is acceptable for those who meet the minimum FICO score requirements.
Low Minimum FICO
Again, like any other FHA-backed mortgage option, the FHA Hawaiian Home Lands program does not disqualify borrowers on the sole basis of less-than-perfect credit. A minimum FICO of only 600 required for Consumer Direct, Wholesale and Correspondent. A minimum FICO of 580 is required for Delegated Correspondent.
Multiple Uses and Terms
The FHA Hawaiian Home Lands loan program can be used to purchase an existing home, rehabilitate an existing home, or construct a new home.
The loan is available in 15 or 30 year fixed rate terms and eligible properties include 1-4 unit primary residences, manufactured housing, FHA-approved condominiums, townhomes and PUDs.
Flexible Underwriting Standards
The Hawaiian Home Lands loan program is guaranteed by a government grant administered by HUD’s Office of Native American Programs (ONAP). Because of this guarantee, approved lenders can offer this loan to eligible borrowers with flexible underwriting standards and reduced risk.
Who is eligible for an FHA Hawaiian Home Lands Loan?
According to HUD, “Any Native Hawaiian wishing to live on Hawaiian home land and intending to use the mortgaged property as their primary residence are eligible to apply for mortgage insurance.”
HUD defines Native Hawaiian as “any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778.” In other words, borrowers must have a blood quantum of at least 50% Hawaiian.
Borrowers must also meet the standard criteria set forth by the FHA 203(b) program as well. Because this program is designed to reach low- and moderate-income families and individuals, it may be possible for borrowers to earn too much money to be eligible for this program.
In which scenarios is the FHA Hawaiian Home Lands Loan a good option?
The FHA Hawaiian Home Lands loan can be a great addition to any Hawaiian mortgage lender’s offerings. Even if your business is not based in Hawaii, as long as you are licensed to do business in the Aloha State, offering FHA Hawaiian Home Lands loans can help you reach potential borrowers in an often-underserved community. Not only will this distinguish you from many other competing lenders, it can provide a great sense of fulfillment for helping an underserved population achieve their dreams of owning a home.
Buying a Home with a Hawaiian Home Lands Mortgage
Because the Hawaiian Home Lands mortgage is essentially an FHA loan, the borrower should follow any and all procedures for applying for an FHA 203(b) mortgage; however, since the Hawaiian Home Lands loan does have some additional benefits, the applicant(s) may be required to show proof of eligibility based on their heritage or race (refer to eligibility section above).
FHA Hawaiian Home Lands Refinancing
Refinancing may be available for lessees of residential parcels on Hawaiian Home Lands.
Other Programs to Explore
If the FHA Hawaiian Home Lands loan doesn’t work for the scenario you have in mind, perhaps one of these programs will be a better option:
- FHA One-Time Close Loans, for financing the lot purchase, construction and permanent mortgage of a new home in a single-close loan.
- FHA $100 Down, for borrowers in need of an affordable low money down program.
- FHLMC Fully Amortizing Fixed Rate & Super Conforming, for conventional and jumbo financing needs.