Richie Taylor · October 26, 2026
Yes. You can get a mortgage on a non-warrantable condo in Hawaii, even when your bank or a local lender has told you the building “can’t be financed.”
I hear that line every week. Most buyers who hear it walk away unless they can pay all cash. That’s a shame, because some of the best investment condos in Honolulu are non-warrantable, and they can be financed.
I’m Richie Taylor, a mortgage broker with Kama‘aina Mortgage Group in Honolulu. Financing the buildings banks turn down is my niche. Here’s how it works, using the building I know best: Punahou Gardens.
What makes a condo non-warrantable?
A non-warrantable condo is one in a building that doesn’t meet Fannie Mae or Freddie Mac project standards. Most banks only make loans they can sell to them, so when a building fails those standards, the bank says no.
Common reasons a Honolulu building fails, from Fannie Mae’s ineligible project rules:
- Small units. Units under 400 square feet are flagged as a sign of hotel-style use, and many lenders simply won’t finance them.
- Hotel or condotel operations. Buildings run like a hotel, with a front desk and rental program.
- Too much commercial space. More than 35% of the building used for shops, offices, or hotel rooms.
- One owner holds too many units. In a building with 21+ units, one entity owning more than 20%.
- Pending litigation involving the association.
- Critical repairs or unfunded special assessments.
Non-warrantable doesn’t mean a bad building. It just means it doesn’t fit the box. That’s where I come in.
Case study: Punahou Gardens
Punahou Gardens is the most important building I work on. It’s non-warrantable because of unit size: the studios are all under 400 square feet. Conventional banks and local banks won’t touch it.
That’s exactly why it’s interesting. Here’s what my clients typically see:
- Purchase price: about $200,000 for a studio
- Out of pocket: around $60,000, including down payment and closing costs
- Monthly cost: about $1,700 for principal, interest, taxes, insurance, and HOA
- Monthly rent: about $2,300
That’s a unit that cash flows in Honolulu. In today’s rate environment, that is very rare.
These figures are examples from past clients, not a quote or a guarantee. Your numbers will depend on price, down payment, credit, and the rent you get.
How the loan works
When the banks say no, I go to private money. For Punahou Gardens, that’s a DSCR-style investor loan with no minimum ratio requirement. These units cash flow anyway, so the ratio rarely matters.
Private money rates for this building are on par with conventional investor financing. Expect about 2 points to finance, which can be rolled into your closing costs. Points on a rental property may be tax-deductible, so ask your CPA how that works for you.
Who qualifies
- Credit score: 660 minimum
- Down payment: 20% to 25%
- Reserves: none required
- Occupancy: investors only (no owner-occupants)
- First-time investors: welcome
What documents you need
Very few. Plan on one month of bank statements. That isn’t to prove you have the funds, since your down payment can be a gift. It’s so the lender can see where the money is coming from.
How fast it closes
This is one of the fastest loans I do. It can close in under 3 weeks. Punahou Gardens is already approved on our list, so your agent doesn’t need to chase the budget or reserve study. It’s a green light.
Why Punahou Gardens works as an investment
In my opinion, this is a really good building and a really good buy. Here’s why:
- Location. It’s close to Punahou School and UH Manoa, right in the middle of town. Many owners don’t even own a car.
- Fee simple. You own the land interest, not a lease.
- Low HOA fees. That’s a big reason the numbers work.
- Fully insured. The building carries full insurance coverage.
- A pool. A nice extra for tenants.
- Parking varies. Some units have a stall and some don’t, so check the listing.
It’s one of the only buildings I know of in Honolulu that cash flows like this. The others that come close are usually small four-unit walk-ups without an elevator, and even those don’t cash flow as well.
The only thing that kills these deals
It’s not the building. It’s not the buyer. The only thing that kills these deals is not knowing I exist.
Buyers get told “this building can’t be financed” and walk away. Agents lose the sale. The listing sits.
I keep a Rolodex of more than 60 banks and lenders, on both the conventional and non-conventional side. Behind them, I have a handful of private money investors for when the banks can’t come through. We’re the last stop shop. If we can’t do it, we’d like to think it can’t be done.
Advice for out-of-state and first-time investors
First-time investors are welcome on this loan. You don’t need a portfolio to get started.
If you’re buying from the mainland, the most important thing is a local real estate agent you can trust. They’ll know the building, see the unit in person, and help you price the rent. Still deciding on a neighborhood? Read my guide to where to buy on Oahu.
Get your condo reviewed in 24 hours
Found a condo you love but got told it can’t be financed? Send it to me before you walk away.
- Go to my Condo Review page.
- Upload the building documents you have.
- Get an answer with a 24-hour turn time.
You can also see all my non-warrantable condo loan options or start on my homepage. Prefer to talk? Call or text me at (808) 670-4663.
Frequently asked questions
Can you get a mortgage on a non-warrantable condo in Hawaii?
Yes. Banks that only sell loans to Fannie Mae or Freddie Mac will say no, but private money and portfolio lenders can finance these buildings.
Why is Punahou Gardens non-warrantable?
Its studios are all under 400 square feet, which most conventional lenders won’t finance.
How much do I need to buy a Punahou Gardens studio?
Recent clients have bought around $200,000 with about $60,000 out of pocket, including down payment and closing costs.
Can I live in the unit?
Not with this loan. It’s for investors only.
Can my down payment be a gift?
Yes. The lender just needs one month of bank statements to see where the money is coming from.
How long does it take to close?
It can close in under 3 weeks.
Do I need reserves?
No reserves are required.