However, it would be best to consider a few things before purchasing: Buying a condo/ non warrantable or condotel in Hawaii differs from purchasing a single-family residence due to the unique characteristics associated with condominium projects.

Three types of condo classifications can impact your financing options. These classifications determine your purchase’s required down payment and interest rate.

It’s important to note that most mainland lenders need more experience to finance most Hawaii condos falling under these classifications. If you’re considering buying a condo in Hawaii, working with a local lender like Kama’aina Mortgage (KMG) is beneficial.

Kama’aina Mortgage Group (KMG) has specialized in financing solutions for Hawaii condos and condotels for many Years.

Here are the three condo classifications you should be aware of:

1, Condominium – Warrantable: This classification refers to condos that meet the guidelines set by “Agencies” such as Fannie Mae, Freddie Mac and various government loan programs like FHA, VA, and USDA. Several factors determine if a condo is eligible for an “Agency” loan. These factors include:

Vacation Rentals: Properties that allow leases shorter than six months, such as daily, weekly, or monthly rentals, are considered short-term or vacation rental condos that allow Airbnb or VRBO.  In most cases, condo complexes that permit short-term rentals are not eligible for Agency loans.

Condo Documents: To be classified as “warrantable,” the property manager must complete the bank’s Condo Questionnaire (Form RR105C in Hawaii). However, potential issues with the Condo Questionnaire may require financing the condo as a non-warrantable portfolio condo loan.

2, Condominium – Non-warrantable:

Non-warrantable condos are not eligible for the traditional financing like “Agency” loan programs available to warrantable condos. Kama’aina Mortgage (KMG) will determine the classification of your condo. We have access to portfolio loan programs with a competitive interest rate if it falls under the non-warrantable category.

The following information reported on the Condo Questionnaire will classify a condo as non-warrantable:

1. Are Vacation Rentals allowed?
2. Reflect more than one owner owns 10% of the total condos.
3. Is there Pending litigation against the HOA?
4. Is there a major delinquent on Association (HOA) fees?
5. More than 10% of the annual budget from HOA-owned condos?

3 Condotel:

Condotel is a condo-hotel that offers hotel-like amenities, including a front desk for check-ins and check-outs, an activities or concierge desk, and daily or weekly maid service. Since Hawaii is a popular destination resort community, many condos operate as condotels.

Please note that condos must have a full-sized kitchen to qualify for financing.