The Kakaako neighborhood in Honolulu, Oahu has quickly become one of the most thriving residential communities that offers Hawaii residents unique housing options for those who wish to live closer to Honolulu’s business district to reduce their daily commute time. The flourishing neighborhood of Kakaako offers its residents a place to live, work, play and shop with a variety of exclusive restaurant, shopping and entertainment options all just footsteps away from their front door.
Reserved housing available in the Kakaako neighborhood is composed to provide affordable housing options for buyers who earn less than 140% of the Honolulu area median income (AMI) as established by the United States Department of Housing and Urban Development (HUD). The current AMI for 2018 is $96,000.00 and 140% of that amount is $134,400 for a family of four.
In order to purchase a reserved housing option, individuals must go through a qualifying process to ensure that they fall within the Honolulu Community Development Authority (HCDA)’s reserved housing requirements along with lender requirements.
HCDA Income Requirements for Reserved Housing Qualification
- The applicant’s “adjusted household income” cannot not go over 140% of the AMI. For a example, a single person’s income cannot go over $94,100.
- The “adjusted household income” refers to the total income, which is before personal deductions and taxes. This will include anyone who will be living in the applicant’s household and includes, and is not limited to, social security payments, retirement benefits, wages, unemployment benefits, interest and dividend payments. It does not include business deductions.
- The applicant’s assets, like bank accounts, mutual funds, etc., cannot exceed 125% of the AMI.
Qualifications for a Buyer of Reserved Housing Homes
- Applicant must be a citizen or resident alien of the United States.
- Is a bona fide resident of Hawaii.
- Must be 18 years old or older.
- Applicant cannot have a majority interest in principal residence or beneficial interest in a land trust on a principal residence within or without Hawaii for a period of three years immediately prior to the date of application for a reserved housing unit. This also applies to the spouse of an applicant if he/she is married.
- Applicant must be the owner and occupant of the reserved housing unit.
- Applicant has never purchased a reserved housing unit in the past.
How Applicants Can Be Qualified for Reserved Housing
The Approved Project Lenders will qualify applicants both for the Reserved Housing program and for a home loan. To verify the applicant’s eligibility, lenders will require the following documents:
- 2 to 3 years of tax returns (Must include 2015)
- Most recent W2
- Recent pay stubs
- Verification of assets
- Gift letter with verification of funds (if applicant is receiving assistance with the down payment for the unit)
Process for Reserved Housing Application & Unit Selection
An announcement will be made in the Star Advertiser to specify when applications will be available for pick up at the project sales office of the building. The application will detail all information on the application and unit selection process. The general process is as follows:
- Pick up application from building’s project sales office.
- Work with an Approved Project Lender (specific lenders listed in application) in order to get a prequalification letter.
- Submit the completed application
- Must have prequalification letter from lender and two required affidavits.
- Each applicant that is qualified will be placed on a property selection list in the order in which completed applications were received.
- A unit selection event will then be held for applicants to choose their unit and sign a sales contract.
- If all units are not sold during the unit selection event, applications will continue to be accepted on a first-come-first-served basis until all units are sold.
How Much is the Down Payment for A Reserved Housing Unit?
The developer can require up to a 10% down payment on the reserved housing unit that is for sale. The buyer of the unit is able to place a larger down payment if they would like to or if it is recommended or required by the lender.
What Makes A Reserved Housing Program Application Complete?
In order to have a completed Reserved Housing Program Application, applicants must provide a prequalification letter from a listed Approved Project Lender, two signed and notarized affidavits that (1) confirm eligibility for the reserved housing program and (2) the applicant’s intent to comply with the program restrictions.