Affordable Housing Programs in Hawaii

There’s a lot of buzz around the idea of “Affordable housing” in Hawaii. And with record-breaking Median Home price soaring to $950,000 (March 2021), it's no wonder local residents are seeking options outside of the traditional market. Navigating these state subsidized programs is not exactly straightforward, but we’ll try to clarify it as much as possible here. 

First off, there are two different state agencies that oversee the sale of affordable homes in Hawaii. The HCDA, which solely deals with properties in Kaka’ako and refers to their program as “Reserved Housing”. And the HHFDC which manages the rest of the island. As a note moving forward, most of the affordable housing in concentrated on the West side and Urban Core of Oahu. 

One of the big questions that comes up is How much can I make to qualify for affordable housing? This is measured by Area Median Income, or AMI. The AMI is a yearly assessment determined annually by the Department of Housing and Urban Development (HUD) to identify income level in specific regions. For HCDA potential buyers must be under 140% AMI ($142,000 for a family of 4), and for HHFDC 120% ($121,900 for a family of 4). Full chart illustrated below: 

Here is a list of the additional requirements from each of the two agencies: 

One of the larger hurdles of owning an affordable housing unit is the required owner occupancy time. The HCDA developments tend to be more favorable, as they are abiding by the 2015 Mauka Area rules, which only calls for 2- and 5-year occupancy before sale or rental. While the HHFDC is typically 10 years, and more recently moving to a 30 year hold*.

How does the buying process work? 

Let’s start with an example. If the market value of an affordable housing unit is $500,000, the state would subsidize a portion of this and sell you the unit for say, $400,000. This $100,00 difference is called Shared Equity. While it’s great that you get to buy a $500,000 home for $400,000, the story doesn't end there. The way shared equity works is to assist with buying the property upfront as a way to help first-time buyers get a foothold in property ownership on the island. But the “catch” is that when you go to sell, that $100,000 must be paid back.  

The idea here is that over the period of ownership, the property will increase in value and gain equity. So, in a sense the buyer never has to pay the subsidized portion, rather gets to use the appreciation of the home's value to pay it back. This works in a place like Hawaii where homes are in such high demand and prices seem to only go up over time.  

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