According to the Honolulu Board of Realtors, condominium prices have risen over the past year and now average at a median sales price of $420,000 with an average sales price of $508,805, so it is easy to see why many of Oahu’s residents still find themselves renting versus choosing to buy their own home.

This is where reserved housing and affordable housing units fill in the gaps for Hawaii’s residents to afford a home in the newly planned high-rises that will soon fill Kakaako and Ala Moana. But what is reserved housing and affordable housing and how can individuals apply or even qualify for these lower-cost homes? Let’s find out in this quick post.

Oahu Living: Affordable Housing vs. Reserved Housing

Affordable housing and reserved housing are two peas in the same pod, the difference lies in the state organization that it is managed by. Reserved housing is under the control of the Hawaii Community Development Authority (HCDA), whereas affordable housing is run by the Hawaii Housing Finance and Development Corporation (HHFDC).

Another difference between the two lies in the amount of time individuals can stay in the unit. Reserved housing has 2, 5 or 10 year periods, while affordable housing units have a 10 year period--this can also vary greatly between each development.

Please note: All of the requirements and eligibility restrictions outlined below are subject to change. Approved sales projects will also have their own specific income and asset requirements, use, sale and transfer restrictions.

How to Qualify for the HCDA’s Reserved Housing

Before any individual can apply for the HCDA’s reserved housing, eligibility must be determined via the major requirements below:

  1. Must be a Hawaii resident that is 18 years or older and will be an owner and occupant of the home that is purchased.
  2. Individual must not have any majority interest in a primary residence within the last 3 years.
  3. Individual must fall within the HCDA’s Income & Net Asset Limits. View the HCDA’s Income Limits for 2018*
  4. Individual has not purchased a reserved housing unit before.

*HCDA units cap off at 120% to 140% of the Area Median Income (AMI), this is decided by the HCDA when a project is approved of and terms set for that specific project.

HCDA Asset Verification

125% Assets Limits for 2018

  • 1 Person: $117,625
  • 2 People: $134,375
  • 3 People: $151,188

What is Included Under Assets

  • Securities
  • Cash
  • Real & personal property at fair market value, such as stocks, CDs and mutual funds

*Gifts & retirement accounts (401K, IRA & Life Insurance) are not included

HCDA Income Verification

140% AMI for 2018

  • 1 Person: $94,100
  • 2 People: $107,500
  • 3 People: $120,950

Assistance to Qualify for HCDA Requirements

  1. Co-Signer Can Be Used
    1. Can be anyone, does not have to be a relative.
    2. Loan application and income verification will be needed from co-signer.
    3. Co-signer can’t be on the title.
  2. Gift Letter (As a Downpayment)
    1. Must come from a relative.
    2. No limit on amount.
    3. Relative can’t be on the title.
    4. Can’t be a cash transfer to the applicant.

How to Qualify for the HHFDC’s Affordable Housing

Before any individual can apply for the HHFDC’s affordabe housing, eligibility must be determined through the requirements below:

  1. Must be a Hawaii resident that is 18 years or older and will be an owner and occupant of the home that is purchased.
  2. Applicant must not own any majority interest in a home at the time of application.
  3. Individual must fall within the HHFDC’s Income & Net Asset Limits. View the HHFDC's Income Limits for 2018*
  4. HHFDC has no asset limits and allows the buyer to pay cash instead of having to get a loan. The buyer can also put down more cash in order to get a smaller loan and allows buyers to qualify with a lower income if they have more assets.

*HHFDC units usually cap off between 80% to 140% of the AMI. This is decided by the HHFDC on approval of a project and when terms are set for the specific project.

How to Apply for the HCDA or HHFDC’s Reserved & Affordable Housing

If an individual meets the above requirements for either the HCDA or the HHFDC’s reserved and affordable housing, the next step is to speak to a project lender, whose approval is needed in order to obtain a pre-qualification letter. Project lenders can differ from project to project.

In order to receive the pre-qualification letter, the applicant must provide the chosen lender with the following:

  1. Three years of tax returns (Using 2018 as an example, tax returns from 2017, 2016 and 2015 would be needed).
  2. Most recent W2 document.
  3. Most recent pay stubs.
  4. A document that verifies the applicants assets.
  5. If receiving assistance with a down payment, a gift letter from a relative with verification of funds.

After receiving a pre-qualification letter form a chosen project lender, the applicant would then be able to send in their application to the specific condominium that they are interested in purchasing a home from. Each approved project will have their own set of qualifications and paperwork, but if an individual meets the requirements listed above, they are on the right track to be able to purchase a reserved or affordable housing unit in Honolulu.