What is the Hula Mae Program?

Hula Mae is an innovative mortgage loan program created by the Hawaii State Legislature in 1979 for families of low and moderate income. Through the sale of tax-exempt revenue bonds, the Hula Mae Program provides eligible home buyers with mortgage loans at interest rates below those available on conventional loans.

How does Hula Mae work?

The Housing and Community Development Corporation of Hawaii (HCDCH) has the responsibility for the Program. HCDCH works closely with private lending institutions that have made a commitment to participate in the Hula Mae Program.

The participating lending institutions accept and review your application to determine your eligibility under the guidelines of the Program. Once your eligibility is verified, the lender processes the loan application and, upon closing, delivers the loan to HCDCH.

What are the standard terms on a Hula Mae Loan?

Under the current 2005 Program, the interest rate for a Mortgage Loan is 4.45% simple interest (4.54% APR). The APR or annual percentage rate is given only as an example. The maximum term of the loan is 30 years.

A total of two (2.00%) points are charged on a Hula Mae Loan. The seller pays one point (1.00%) of the principal amount of the mortgage loan and the buyer pays one point (1.00%). These are one time charges.

What type of home may be purchased?

Homes eligible for mortgages under the Hula Mae Program can be new or existing single family residences and townhouse/condominium units. Homes purchased under this Program must be located within the State of Hawaii.

What about leasehold residences?

When a leasehold residence is to be purchased using Hula Mae financing, the remaining term of the lease must be at least 35 years and the lease rent must be fixed for no less than 10 years from the date of the mortgage loan (see your lender for details).

Are there other restrictions?

You must be an owner-occupant throughout the term of the Hula Mae Mortgage Loan. This provision is strictly enforced and violation will cause the entire loan balance to become immediately due.

Hula Mae Mortgage Loans must be secured by the property to be purchased.

Hula Mae Mortgage Loans cannot be used to:

• Refinance existing mortgages.
• Convert agreements of sale.
• Purchase fee simple title to leasehold properties.

What are the purchase price and mortgage amount limitations?

 

Under provisions of the federal laws, purchase price ceilings have been established for the State as follows:

County	Newly Constructed Residences or Existing Residences
Honolulu	$555,802
Hawaii	$360,000
Maui	$500,565
Kauai	$540,000

 

The above limits apply only to fee simple, fully completed units. Leasehold residences and uncompleted units are subject to certain adjustments in determining their "acquisition cost" as defined by the Internal Revenue Service.

Maximum mortgage amounts are subject to Fannie Mae, FHA or Rural Housing underwriting guidelines (see your lender for details).

The Purchase Price Limitations and Maximum Mortgage Amounts may be: (1) increased by HCDCH for Mortgage Loans in targeted area residences; or (2) increased or decreased by HCDCH pursuant to the U.S. Internal Revenue Service guidelines.

Are there any restrictions on selling a home that is financed with a Hula Mae Loan?

You will be given mortgage loans financed with the proceeds of tax-exempt bonds and will receive the benefit of lower interest rates than are customarily charged on other mortgage loans. Should you sell or otherwise dispose of your home within nine years of purchase, this benefit may be "recaptured". The recapture will be accomplished by an increase in your federal income taxes for the year in which you sell your home. The recapture only applies, however, if you sell your home at a gain and if your income increases above specified levels.

Who is eligible to borrow?

Any person or family who:

• Is a resident of Hawaii.
• Is a citizen of the United States or declarant alien.
• Is 18 years or older.
• Has not been granted a loan previously under the Hula Mae Program.
• Has not (or whose spouse has not) owned or have any interest in a principal residence or a beneficial interest in a Land Trust involving a principal residence, within or without the State of Hawaii for a period of three years prior to applying for a Hula Mae Loan. This requirement does not apply to loans made in targeted areas.
• Does not have income that exceeds the following limits:

The Income Limits may be revised by the HCDCH from time to time pursuant to U.S. Internal Revenue Service guidelines.