Fee simple or leasehold: the first question
Hawaii is the one state where the form of ownership has to be settled before anything else. Most single-family homes and many condominiums are fee simple, and those are the straightforward case. A meaningful share of Honolulu condominiums and some older subdivisions are leasehold — you own the improvements and lease the land. Leasehold is a property-review question with its own answer depending on the lease, so say which you have on day one rather than after the bank connection.
What is specific to a Hawaii file
- Values run into the program cap. Lines are sized on equity up to the program maximum of $750,000; a home worth several million does not produce a larger line than that.
- Condominiums and the AOAO. On a condo, expect the property review to ask about the association's finances, reserves and insurance, which after recent years of building-insurance turmoil is worth having in hand early.
- Lava zones and hurricane coverage. On Hawaii Island, property in the higher-risk lava zones faces a harder insurance market; the review confirms coverage is in force. Hurricane coverage is confirmed statewide.
- Vacation rentals are investment property. A legal transient vacation unit on Maui or Kauai qualifies on 12 months of rental deposits with lower maximums. County permitting is between you and the county.
- No state tax on recording the lien. Hawaii's conveyance tax applies to transfers, not mortgages; recording at the Bureau of Conveyances or Land Court involves fees only.
Visitor-driven income, read over 12 months
A snorkel operator, a wedding photographer, a charter captain or a vacation-rental owner earns on the visitor calendar — heavy in winter and summer, thin in the shoulder seasons, and occasionally interrupted by a fire, a storm or a slow year in the source markets. A two-year tax-return average, after the write-offs, produces a number that a bank cannot lend much against. Twelve consecutive months of deposits show the pattern in context and use the actual cash. Agricultural operators — coffee, macadamia, flowers, cattle — get the same treatment: the crop checks are the income, not the Schedule F.
Common questions
My Honolulu condo is leasehold. Can I get this line?
It depends on the lease, and it is a property-review question with its own answer. Tell us up front; fee-simple property is the straightforward case.
My home is worth far more than $750,000. Do I get a bigger line?
No. $750,000 is the program maximum regardless of value. Equity above what the line needs simply stays yours.
I run a tour company that earns mostly in winter and summer. Is that a problem?
No. Twelve consecutive months of deposits show the seasonal pattern in context rather than averaging it away.
Do you work Hawaii hours?
Calls are scheduled around the time difference, and the application, bank connection and closing are electronic, so nothing waits on an office.