Hawaii Second Home Loans and Mortgage Solutions

Frequently Asked Questions

What are the requirements for a second home loan in Hawaii?

Second home loans in Hawaii require that the property be a single-unit, livable year-round, and used for personal occupancy at least part of the year. It must be separate from your primary residence and cannot function primarily as an income-producing property. Most lenders require 10–20% down, strong credit, and verifiable income. Hawaii's zoning and HOA rules may influence how the property is used, especially for rentals. Our team at BNB Lending evaluates your goals, property type, and island-specific guidelines to determine if your purchase qualifies under second home lending terms or should be restructured as an investment loan.

How do short-term rental restrictions affect financing options?

Zoning and local ordinances directly impact your financing. If your second home is located in an area where short-term rentals are prohibited or tightly regulated, your lender may not allow rental income to be factored into your loan. Hawaii counties, like Honolulu, often enforce restrictions on residential zones. Even if permitted, rental use must remain secondary to personal occupancy. Licensing, taxation, and compliance with HOA bylaws are also key. At BNB Lending, we analyze your intended use and guide you toward a loan product that complies with both local regulations and lender criteria.

Do second homes qualify for property tax exemptions in Hawaii?

No, second homes in Hawaii are not eligible for homeowner exemptions. Each county assesses property tax based on classification and use. While Hawaii has comparatively low tax rates, non-owner-occupied homes are taxed at full market value. If the home is used for short-term rental, it may be reclassified, leading to higher rates. It's essential to understand the local taxation rules—especially in areas like Maui and Kauaʻi where STR regulations affect tax categories. BNB Lending helps borrowers evaluate projected tax liabilities early, ensuring your financing plan fits long-term ownership and use expectations.

Can I deduct mortgage interest on a second home?

Yes, mortgage interest is generally deductible if you itemize and stay within IRS limits for qualified residences. The home must be for personal use a significant portion of the year, and the total mortgage debt across all homes must be within the federal threshold. If you rent the property occasionally, the deduction may need to be prorated based on days of personal use versus rental days. Hawaii has no additional state mortgage interest deduction. BNB Lending encourages you to speak with a tax professional to align your loan with potential federal benefits.

Are there any second home loan programs in Hawaii?

Hawaii does not offer state-run second home financing. The Hawaii Housing Finance and Development Corporation focuses solely on primary residences and affordable housing. For second homes, buyers work with private lenders like BNB Lending. We provide tailored financing solutions statewide—from beachfront condos in Waikīkī to hillside retreats on the Big Island. Our team offers fast approvals, competitive rates, and strategic guidance based on Hawaii’s unique regulatory environment. We help you understand how zoning, usage, and potential rental plans affect your eligibility and structure your loan accordingly.

What kinds of properties can qualify for second home financing?

To qualify for second home financing, the property must be a one-unit dwelling that is livable year-round and not used primarily as a rental. Eligible homes include condos, townhouses, and single-family residences. Properties in resort areas often meet these standards but may be subject to HOA and zoning rules that impact rental potential. Lenders assess location, condition, and intended use when reviewing applications. At BNB Lending, we help ensure your chosen property—whether in a quiet neighborhood or a resort development—meets second home loan criteria and aligns with your personal use goals.

What makes a second home loan better than an investment loan?

If you're purchasing a property for part-time personal use with only occasional rental activity, a second home loan can offer better terms than an investment loan. You’ll typically receive lower interest rates, a smaller down payment requirement, and easier qualification. However, the home must be in your name—not owned through an LLC—and used primarily by you or your family. Hawaii properties that meet these requirements may benefit from this financing structure. BNB Lending helps clients determine whether a second home loan or investment loan better matches their long-term strategy.

Thinking beyond Hawaii? Explore STR loans and second home opportunities in nearby states like California or Washington to expand your portfolio.