Hawaii's 0.27% effective property tax rate is the lowest in the US. The state funds itself primarily through income tax (up to 11%) and tourism-related general excise tax rather than property tax. Counties run property taxation, and rates vary: Honolulu County is around 0.35% for owner-occupied homes, while Maui and Hawaii County rates are lower.

Leasehold means you own the structure but lease the underlying land from a major estate or trust (such as Kamehameha Schools or the Robinson Family). Lease terms run 30 to 75 years, and the lease can be renegotiated or expire. Most lenders treat leasehold loans differently, with shorter amortization required and higher interest rates. Always check whether a Hawaii property is fee simple or leasehold before making an offer.

Hawaii's top marginal income tax rate of 11% is the second highest in the US after California's 13.3%. On a $200,000 household income, you pay roughly $4,000 more in state income tax than in a flat-tax state like Arizona, which translates to about $30,000 less in mortgage qualification at current rates. Combine this with high home prices and Hawaii is one of the toughest US affordability markets despite low property tax.