Purchase a Hawaii Condo-Tel Property with as Little as 20% Down Payment

Hawaii real estate investors will delight in the fact that you can now purchase a Hawaii vacation rental and Hawaii condo-tel property with as little as 20% down payment for loan amounts up to $850,000 utilizing very competitive rates and loan programs. The vast majority of Hawaii’s short-term vacation rental properties have a special classification for mortgage lending that has typically seen these loan programs start at 30% down payment and slightly higher interest rates that you would see on a conforming purchase. It is important to note that in order to obtain 20% down financing, the property needs to be classified as a primary residence or a second home rather than an investment property. Investor rates will still start at about 25%-30% down for loan amounts of up to $1M.

Kaanapali North Beach Overview

Kaanapali North Beach featured aboveThe Mahana at Kaanapali, the Honua Kai Resort and Spa, and Maui Kaanapali Villas are all condo-tel properties.

What is a Hawaii Condo-tel Property in Hawaii Real Estate Terminology?

All Hawaii condo-tel properties allow for short term vacation rentals (30 days or less). A condo-tel also possesses some hotel-like amenities such as daily rentals, a front desk for checking in and out, an activities or concierge desk, and daily or weekly maid service. As a top vacation destination, many Hawaii condos are classified as a condo-tel. A complex that offers hotel like services or has less than a 30% owner-occupancy ratio will be considered a condo-tel. With this said, there are condo complexes that do allow vacation rentals that are not classified as condo-tels but they are far a few between so it is best to reach out to an expert to decipher this. Lenders do have lists that they update with these condos and the various classifications that they fall into. All of the properties that we operate in our short term rental portfolio in West Maui are classified as condo-tels.

Hawaii Condo-tel

The front desk lobby at The Whaler at Kaanapali is an immediate sign that this is a condo-tel. 

Other Hawaii Condo Classifications

  • Warrantable – This type of class means that the condo meets Fannie Mae and Freddie Mac guidelines. This is considered a warrantable condo and is eligible for “agency” loan programs. There are many factors that determine a condos classification such as the owner-occupancy ratio or whether or not the HOA permits vacation and short-term rentals. An owner-occupancy ratio is the percentage of owners who reside in the complex full time as their primary residence or part-time as a second home. Warrantable condos must have a 50% or higher owner-occupancy ratio. Most condo complexes in Hawaii do not meet this minimum requirement.
  • Non-Warrantable – Condos which are classified as non-warrantable are not eligible for the same Fannie Mae and Freddie Mac loan programs that warrantable condos are approved for. Many Hawaii condos fall into this category because even though the condo complex may not possess any hotel-like amenities outlined below under the condo-tel classification, it can still be non-warrantable for a variety of reasons, especially if the HOA allows vacation and short term rentals or the owner-occupancy ratio falls below 50%.

The iconic Whaler at Kaanapali in the foreground with Black Rock and Molokai island serving as the backdrop as Kaanapali North Beach sits directly on the north side of Black Rock. 

Why work with a local lender to finance a Hawaii Condo-tel Property Purchase?

When working with all of my buyer clients who are interested in properties like this, I let them know that they can choose to work with whatever lender that they chose to. However, I highly recommend working with a local lender who is familiar with all of the intricacies that these properties present and has a proven track record of getting these loans closed. Many times mainland lenders will think that they can lend on these properties up until the appraisal report and condo documentation comes in. This is when the proverbial s*#$! hits the fan and they realize that they can’t do the loan and we need to change course with the loan which in some instances, can jeopardize the transaction closing.

Almost all condo-tel loans will be originated or brokered to a Hawaii based portfolio lender (they are kept in their portfolio and are not sold on the secondary market)- the largest Hawaii banks for these in no particular order are: First Hawaiian Bank, American Savings Bank, and Bank of Hawaii. A broker would have access to most of the banks providing the same rates, no additional cost to the borrower, and in my personal experience- greatly superior service. 

There are numerous specific details that will affect the availability and terms of financing. For example, one of my favorite vacation rental complexes in Kaanapali, Maui, The Whaler at Kaanapali has a component of specific units that are time-share units in juxtaposition to the whole ownership units; this specific dynamic eliminates another layer of lenders.

What rates and terms can I expect to obtain on a Hawaii Condo-tel purchase?

Rates are always a moving target and I am not a licensed mortgage originator in Hawaii; I can tell you that the programs for these properties in comparison to what you would find for conventional purchases both in Hawaii and on the mainland, are very competitive. Yes, there is a premium on these and why you ask? It’s because these are the highest risk type loans for banks to lend on. If you as a borrower find yourself in the unfortunate situation of financial distress- what are you going to let go first? Your primary home or the property you own in Hawaii which is just the icing on the cake…

You will typically see about a 1/4 point – 1/2 point rate difference vs. conventional loans and you can obtain a variety of 30 year fixed, 15 year fixed, ARMs, and the very popular hybrid ARM programs on these types of loans.

Here are some guidelines on this specific Hawaii condo-tel loan program:

Hawaii Condo-tel

Specific loan programs here are courtesy of Elite Lending, reach out to me directly for the contact info of this particular loan originator. 

Reach out to me for highly qualified, effective, and knowledgeable Hawaii Condo-Tel Lenders and Real Estate Brokers around the State of Hawaii

I specialize in selling this type of real estate and am uniquely qualified to do so directly on the island of Maui. I have outstanding Realtors who I work with on all major Hawaiian islands whether it’s in the niche markets of Waikaloa, Waikiki, Princeville, Poipu, or somewhere else that you are looking- I will directly connect you with the right professional to best serve your needs. For financing, I have worked with all major Hawaiian Banks and many of the top mortgage brokers in the state- I know where to find you the best programs and service.

Some prior posts that I have written on similar subject matters:

I Pick Up My Cell Phone & Respond to Email in a Timely Fashion

Information about purchasing a Maui vacation rental doesn’t provide any value if you can’t get ahold of your Realtor. I make a commitment to pick up my cell phone as best as I can, return voicemails, text messages, and email in a timely fashion. I also work 7 days a week so feel free to call me anytime you need me. However, if I am busy at the time, I will get back to you shortly. I am here at your service, I look forward to sharing my passion and expertise with you.


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Carole Pettina

March 30, 2018

Great article Jeremy – very informative, mahalo!
I have been interested in purchasing a unit as a primary residence at one of the condo-tells on O’ahu ( Ala Moana) for quite awhile but put off due to the down payment I was told would be 30%+. I live on O’ahu and know the area pretty well so I would like to stay east of town, ideally in the Waikiki area where I live now.
Any suggestions would be greatly appreciated!

Jeremy Stice

March 31, 2018

Aloha Carole,

Thank you for taking the time to comment here and for your kind words! I sent you a private email yesterday with the information that you are looking for.

Chris Dennis

August 21, 2019

Great read. My wife and I will quite possibly be looking on Maui next July-August 2020 when we are there for three weeks. Will possibly reach out before than. We are thinking Honokowai/Napili area as we have always stayed in Kaanapali when vacationing

Jeremy Stice

August 21, 2019

Aloha Chris,

I am glad that you enjoyed the article, thank you. I recommend that you check out my whole series on short term vacation rentals here in Hawaii. I will publishing some new ones in the near future too. I will shoot you a private email so we can get the conversation started.

Ken Elkins

August 29, 2019

Great article Jeremy! Keep it up, very interesting.

December 4, 2019

Thank you, very informative. So is there a way to purchase with just 20% down?
Nancy M

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