Conventional Loans

Conforming loans are conventional loans that use loan criteria set by Fannie Mae and Freddie Mac. These are government sponsored enterprises that function as holding companies to buy mortgage loans from lending institutions and in turn bundle them for  resale to the investment community. Buying  mortgage loans allows the banks to lend their money again and provide continuous flow of money to lenders that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are "conforming" to sell into the secondary (investment) market .  The GSEs set the loan limits for this area as below. 

Hawaii Conforming Loan Limits (new for 2024):

Number of Units      Maximum original principal balance

1                           $1,149,825.oo,

2                           $1,472,250.00     

3                           $1,779,525.00          

4                           $2,211,600.00

NOTE: The conforming loan limit in Alaska, Hawaii, Guam and the Virgin Islands is 50% higher than the contiguous 48 states.

Fixed Rate

With a fixed rate mortgage, the interest rate does not change for the life of the loan; the monthly payment is always the same. The shorter the term of the loan, 25,20,15,10, the more attractive the rate will be.  

On a fixed-rate fully amortizing loan the payments are calculated to insure  that the loan is paid in full by the end of the term. In the early part of the mortgage period, a larger percentage of the monthly payment is applied to the interest on the loan. Over time, ashe mortgage is paid down, an increasing amount of the payment will be applied towards the principal.  

A 30 year fixed rate mortgage is the most popular type of loan as far as the security of having a fixed payment for the entire term as well as having a lower payment than a  15 year (or other shorter term) as the amortization (payback period) is longer. 

Benefits:

Lower monthly payments 
Interest rate does not go up
Payment does not go up, it stays the same 

A 15 year fixed rate mortgage allows you to pay down your loan more quickly and also saves on interest paid over time as well as offering a lower interest rate up initially.

Benefits:

Lower monthly payments than a 15 year fixed rate mortgage
Interest rate does not go up
Payment does not go up, it stays the same for 15 years   
Loan is paid off in shorter period with less interest

Fixed to Adjustable Rate mortgages  10/1, 7/1, 5/1, 3/1 

The other categories of conventional loan types available include the Fixed to adjustable rate categories.  These loans have an interest rate fixed for the first period of the loan (ie. 5 years for the 5/1 arm) After the initial fixed period, the loan will adjust based on a margin and an index as determined by the program.  Usually these loans are based on and index using either the 1 Year Treasury Bill or the LIBOR.  The rate will then adjust once per year up to two percentage points up or down after the initial adjustment.  Many times your rate will go down on the first adjustment.  

Benefits:  

The rate can be a lower "start rate" than standard fixed 30 year products  sometimes rate will adjust down depending on your margin and the market conditions affecting the index used to calculate the adjustment.

Risks:

Your loan payment has the potential to increase. If you don't  sell your home or otherwise payoff your loan within the fixed period, your payment may increase.  Making sure that you understand this risk is very important.  If you don't plan to have your property for a long time or you can afford a potentially higher payment in the future, then you may consider this product. 

FHA

FHA mortgage loans are issued by most federally qualified lenders and insured against default by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development (HUD)

FHA loans are an attractive option, especially for first-time homeowners:

• Generally easier to qualify for than conventional loans as they are more lenient on credit and reserves.
• Lower down payment requirements, usually as low as 3.5% and borrowers may use gift or grant money toward the down payment (with certain limitations)
• Cannot exceed FHA statutory loan limits for the county.
• Loan terms 30 and 15 fixed 5-1 and Adjustable Rate mortgage

Check to see if your loan amount fits the current FHA guideline by county by pasting this link to your browser:

FHA loan amounts by area

VA Loan:

Designed to offer long-term financing to American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines the veteran's eligibility and issues a certificate to those that meet the qualification requirements. It is generally easier to qualify for a VA loan than a conventional loan and the rates are often more attractive. Here's how it works:

100% financing on purchases with no mortgage insurance

• A VA funding fee of 0.0 to 3.3% loan amount, depending on the veteran's status, paid to the VA.(this fee may be financed into the loan amount above the sales price or loan amount)
• When refinancing a home, veterans may borrow up to 90% of appraised value in order to refinance where state law allows.On streamline refinances, an appraisal may not be required if the loan meets certain criteria.
• VA REFINANCES includes financing from a "conventional" mortgage to a VA as well as VA to VA streamline refinances.

USDA Rural Development Loan Programs

The U.S. Department of Agriculture offers a variety of programs to assist  low to moderate-income individuals living in rural areas achieve homeownership(see map for eligible areas). The USDA Rural Housing Service (RHS) helps qualifying applicants in rural areas get financing for the purchase modestly priced homes as their primary residence.

USDA/RHS Loans are an attractive option because:  

Up to 102% Financing and no downpayment
Low monthly mortgage insurance
Less stringent requirements for monetary reserves RHS loans can be used toward the purchase.
Borrower must qualify to be able to pay their monthly mortgage, homeowner's insurance and property taxes as well as meet certain income limitations (for number in household) for the county in which the property is located. (see below)

Income Limits by countyand property eligibility:

USDA income and area eligibility

Construction Loans

traditional construction loans
construction to perm and conventional rehab loans available (up to 95% LTVs)
available for owner occupied, second home and investor
ask about special option commercial ( if available )
fixed and adjustable rates
owner builder possible for qualified trades

Condominium/ Specialty 

Portfolio options for

Condotels
non-warrantable projects (no conforming financing available for project)

Co-Ops

1099 and Bank Statement loans for Self Employed borrowers

Qualify without your tax returns in cases where you may have “paper losses”. Call for more information on Credit and Loan to Value requirements.