5 Best Construction Loans in Hawaii


Construction loans in Hawaii are available in a wide array of options depending on the lender you choose and your personal financial situation.

Hawaii is often considered an idyllic place to live, with its stunning natural scenery and balmy weather. And given the desire to love there it’s no wonder that average home prices can reach more than $1 million in some areas.

According to recent data from the U.S. Census Bureau, the median price for a home in Hawaii is a little lower at $563,000. But, it’s high enough that many people choose to skip the process of applying for home loans and negotiating with a seller and move straight to building their home.

If building your own home in Hawaii is something you’ve considered, construction loans are a great way to finance the building project from start to finish. These loans are different from mortgage loans in that they are designed specifically for people who are building or remodeling their homes. And best of all, they have low annual percentage rates and flexible terms to help you complete the project.

Finding the right lender can be a challenge, especially when you are comparing loan terms across various banks. This article lists many of the premier lenders in Hawaii offering competitive rates and gives you a way to quickly compare terms across companies. You’ll also want to make sure you’re working with a loan officer that specializes in construction loans so that you have a guide who can help you with the entire process from getting you pre-qualified to getting you a competitive down payment.

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Advantages of a construction loan when building a home in Hawaii

A new construction loan in Hawaii can offer several benefits for those looking to build a new home. The most obvious benefit is that it can help you avoid paying the entire home construction cost upfront. Unless you have the money to self-finance the transaction, you will likely be working with a lender that specializes in helping borrowers like you build homes.

The process of building a home can be daunting but a construction loan will help make the building process easier. With a loan in place, you won’t have to worry about waiting for funds to come in before you can start construction. Instead, construction loans are typically distributed via a series of draws and inspections that can help you stay on schedule and avoid delays. 

Most importantly, building your new home (or renovating an existing home) allows you to customize the project to your specific family’s needs. Working with an architect and a builder will give you the flexibility to design your dream home.

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5 Best construction loan lenders in Hawaii

1. First Hawaiian Bank

First Hawaiian Bank is Hawaii’s oldest and largest financial institution and headquartered in Honolulu.

We spoke to First Hawaiian Bank to learn more about their construction loan program and here’s what we found:

  • Interest-only payments during construction
  • Flexible pricing to adapt to the terms of your construction contract
  • Lock in an initial rate when you’re approved
  • Buy your land and build and/or renovate, all with one permanent financing plan
  • Large dollar home improvement projects
  • Good for those who want to buy a “fixer-upper” or invest in real estate

If you’re interested in connecting directly with a loan officer at First Hawaiian Bank that specializes in construction loans, we can put you in touch with them directly.

2. American Savings Bank

American Savings Bank is Hawaii’s third-largest financial institution with assets over $6 billion. It’s actually a subsidiary of Hawaiian Electric Industries and dates back to 1925. Not surprisingly, they offer a construction and land/lot loan for people in Hawaii looking to acquire land and build homes.

We wanted to learn more about American Saving Bank and its construction loan, so we reached out to get details and this is what we found:

  • Construction financing and a permanent loan can be combined into one loan.
  • Vacant land loans for vacant land purchases with construction plans within three years.
  • Credit of up to one point paid on the land loan upon construction refinance.
  • Available for new homes as well as property additions and renovations in Hawaii
  • Monthly interest-only payments during the construction period
  • Up to 12 to 18 months for the construction phase
  • Fixed rate term after construction
  • One-time option to take advantage of lower rates for the permanent loan if fixed interest rates are lower when construction is completed

If you’re interested in connecting directly with a loan officer at American Savings Bank that specializes in construction loans, we can put you in touch with them directly.

3. Wintrust Mortgage

Wintrust Mortgage is one of the top 20 bank-owned retail mortgage originators in the country that originates in excess of $4 billion in loans annually in all 50 states. 

Recently we asked Wintrust Mortgage to provide us with details on their construction loan and this is what they said:

  • One-Time Closing. Only pay the closing cost once
  • Lock in your rate upfront and avoid interest rate risk
  • FHA, VA, and Conventional options
  • 0% Down up to $822,375 (VA ONLY)
  • 3.5% Down up to FHA County Limits ($356,362-822,375) 
  • 10% Down on Second homes
  • FICO 680+
  • Loans must include building no Lot/Land Loans 
  • Maximum of 10-acres per build site
  • Stick Built and Modular Homes ONLY
  • NO log homes or metal homes (barndominium)
  • Tear Down and Rebuilds do qualify
  • No self-build or owner builders. The builder must be approved. 
  • Does Not allow ADUs (Accessory Dwelling Unit – Granny Flat/Garage Conversions/Basement)
  • Now lending in all 50 States

If you’re interested in connecting directly with a loan officer at Wintrust Mortgage that specializes in construction loans, we can put you in touch with them directly.

4. Bank of Hawaii

Bank of Hawaii is the second oldest bank in Hawaii and the largest locally owned bank in the state. Headquartered in Honolulu, Bank of Hawaii has extensive experience helping individual borrowers build homes on the various islands that make up Hawaii.

We contacted Bank of Hawaii to learn more about building a custom home and the terms of the financing they could provide for a construction loan. Here are some of the details:

  • Low interest-only monthly payments during construction that convert to a permanent mortgage after construction.
  • One-time closing
  • Fixed rates available
  • For owner-occupant loans up to $2,000,000
  • No prepayment penalty
  • Available for owner-occupants, second home buyers, and State of Hawaii resident investors
  • Interest reserve payment option available

If you’re interested in connecting directly with a loan officer at Bank of Hawaii that specializes in construction loans, we can put you in touch with them directly.

5. Hawaii National Bank

Hawaii National Bank is a privately held community bank with offices across the Hawaiian islands. Established in 1960, the bank has a long history of providing financing to citizens of the state.

There are many types of financing available at Hawaii National Bank, but we wanted to learn more about their construction loan process. We contacted the bank and here is what they said:

  • Build your dream home with a loan based on the value of your land and the cost of construction.
  • Pay interest only until the home is completed.
  • Upon completion of the construction, the loan is converted to a permanent fixed-rate or adjustable rate mortgage.

If you’re interested in connecting directly with a loan officer at Hawaii National Bank that specializes in construction loans, we can put you in touch with them directly.

Tips for using a construction loan in Hawaii

When considering whether a construction loan is a good idea for you, you’ll want to make sure you’re ready for the entire process of building a home. This is especially important in Hawaii where goods and labor may not be as readily available as it is on the mainland. 

Here are some tips to help you use a construction loan the right way: 

Be prepared and organized. When taking out a construction loan to build a new home, it is crucial to be prepared and organized. Lenders will want to see a detailed construction schedule and budget. Having all of your ducks in a row will help make the process smoother and quicker.

Factor in all construction costs for your loan amount. Be sure to factor in any extra costs that may arise during construction. Unexpected problems such as water damage or labor shortages can add up quickly, so it is crucial to have a cushion built into your budget.

Keep track of the construction process. Stay on top of the construction process and keep your lender updated on any changes or delays. Lenders want to ensure the project is progressing as planned and on schedule.

If you’re looking to explore construction loans in other states, check out our national guide to construction loans and get started exploring all 50 states.

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Joshua Holt

Josh’s blog has become my one-stop shop for the latest in financial news, strategies, and tactics. There are plenty of other finance and investing sites, but nothing so squarely targeted at lawyers. If you’re a lawyer who wants to better understand your finances and the markets, it’s a must read! —Keith Lee

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