We all know that Hawaii is full of unique properties. Site condos and ohana units are two of the property types that cause a lot of confusion. The following paragraphs explain what these two types of properties are and how they are treated for FHA, VA, and conventional loans.

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Site Condos

Site condos often cause confusion because they look and feel just like a single family home, but it is really a part of a condominium complex. It is usually one of several detached homes on a single lot. The easiest way to determine whether a home is a site condo is to look at its TMK or Tax Map Key number. If the last four digits are anything but 0000, it’s a condo. The homes typically share ownership of certain common areas, but the structure belongs to the homeowner. It may be insured as an individual unit or as part of a master policy. For many lenders, all the units within the condo must actually be detached from each other one. If any unit is attached, any home in the complex may be considered attached. Exceptions may be made, but rates may be higher.

Loan Types and Treatment of Site Condos

Fannie Mae, Freddie Mac & FHA treat site condos the same as single family residences. For the VA loan program, all condos must be approved by the VA, site condo or not. See our post related to VA condo approval procedures. They will be the same for site condos as any other VA non-approved condo.

Ohana Units

An “ohana unit” also known as an accessory or mother-in-law unit is a part of a house or a separate structure on the same lot that may contain a relative but which may not legally be rented to the general public. The ohana unit may not have a complete kitchen and is not a legal two unit property.

Loan Types and Treatment of Ohana Units

Fannie Mae, Freddie Mac, FHA and VA all allow ohana units, but rental income can not be used for qualifying. If the unit is legal non-conforming and can not be rebuilt, the area may not be valued. For VA loans, the property must be permitted completely.

We hope that helps clear up some of the confusion that may exist about these properties.

Our team at Hawaii VA Loans is driven to simplify the VA loan homebuying process for you. If you have any more questions about this post or the VA loan process, please don’t hesitate to contact us at 808-792-4251.