State of Hawaii – Hawaii Housing Finance and Development Corporation (HHFDC)
Hula Mae is an innovative mortgage loan program created by the Hawai'i State Legislature in 1979 for families of low and moderate income. Through the sale of tax-exempt revenue bonds, the Hula Mae Program provides eligible homebuyers with mortgage loans at interest rates below those available on conventional loans.
HHFDC has the responsibility for the program and works closely with private lending institutions that have made a commitment to participate in the Hula Mae Program. The participating lending institutions accept and review your application to determine your eligibility under the guidelines of the Program. Once your eligibility is verified, the lender processes the loan application and, upon closing, delivers the loan to HHFDC.
Mortgage Credit Certificate
The Mortgage Credit Certificate Program (MCC) was authorized by Congress in the 1984 Tax Reform Act as a means of providing housing assistance to families of low and moderate income. HHFDC is an Issuer of Mortgage Credit Certificates. The MCC reduces the amount of federal income tax you pay, thus giving you more available income to qualify for a mortgage loan and assist you with house payments. The MCC is available to homebuyers who meet household income and home purchase price limits established for the MCC Program, as well as other federal eligibility regulations.
The federal government allows each homeowner to claim an itemized federal income tax deduction for the amount of interest paid each year on a mortgage loan. For a homeowner with a MCC, this benefit is even better: 20% of your annual mortgage interest will be a direct federal tax credit, resulting in a dollar-for-dollar reduction of your annual federal income tax liability. The remaining 80% of your annual mortgage interest will continue to qualify as an itemized tax deduction.
The amount of your mortgage credit depends on the amount of interest you pay on your mortgage loan. However, the amount of your mortgage credit cannot exceed the amount of your annual federal income tax liability. Unused mortgage credit can be carried forward for three years to offset future income tax liability.
Downpayment Loan Program
The Downpayment Loan Program is administered by HHFDC and was developed to provide eligible borrowers with downpayment loans. Funds made available under this program must be applied toward the downpayment for the purchase of a home. The program loan is to be processed simultaneously with the first mortgage and will be recorded or filed as second mortgage on the property purchased with the loan.
HHFDC works closely with lending institutions that have made a commitment to participate in the program. The lending institutions accept applications and screen applicants to determine their eligibility under program guidelines, as well as their ability to qualify for the loan.