A retiree I met in Kahului mentioned that it's difficult to cover living expenses with fixed income alone. The cost of living in Maui is higher than on the mainland. Grocery bills and utility costs are also significant. They said that Social Security alone is not enough. The house has been paid off for a long time. So, how can they utilize this equity? I will outline the items to check in order.

First, the eligibility requirements. You must be over 62 years old, and the home must be your primary residence. If there is an existing mortgage, it must be at a level that can be paid off with the loan amount. You also need to pass a financial capability assessment to ensure you can continue to pay property taxes and insurance. It's important to check these four items first. If any one of them is not met, the loan itself will not be approved, so it's best to address this early in the consultation to save time.

Second, the size of the equity. The average home value in Kahului is $1,016,632. This is as of February 2026 and represents a 5.0% decrease from the previous year. Expanding to the entire island of Maui, the median sale price over the last three months is $945,000, which is also down 5.8% from the previous year. Even though recent market prices are adjusting somewhat, they are still relatively high compared to the mainland. If you have owned your home for a long time, you likely have significant equity already. The larger this equity, the more you can receive through a reverse mortgage. However, considering that the market is in a correction phase, it's wise to keep in mind that the appraised value at the time of loan approval may come in lower than expected.

Third, ongoing costs. Maui County classifies residential properties with an assessed value of $1.3 million or less as Tier 1, applying a property tax rate of $1.65 per $1,000, while those above that are classified as Tier 2, with a rate of $1.80 per $1,000. This is based on the 2025-26 fiscal year, and if you file for owner-occupied status, you can deduct $200,000 from the taxable value. While this is relatively low compared to other counties in Hawaii, receiving a reverse mortgage does not exempt you from paying these taxes. The same goes for insurance. Considering disaster insurance for hurricanes or wildfires, annual expenses can add up significantly. If you cannot continue to manage these two costs, you risk losing your home due to default.

Fourth, initial costs. When you add up origination fees, mortgage insurance, and closing costs, the initial outlay is higher than with a traditional mortgage. While the larger equity means you can receive a larger amount, it also means that the upfront fees can be substantial, which can lead to surprises later if not properly considered. Comparing estimated costs through multiple advisors is one way to prepare.

Fifth, equity reduction. Over time, as loan principal and interest accumulate, home equity decreases. This means the assets you can pass on to your children may also diminish. However, because of the non-recourse structure, if the home value falls below the loan balance later, heirs are not required to pay the excess. This can be seen as a minimal safety net.

To summarize:

• Eligibility requirements - over 62 years old, primary residence, ability to pay off existing loan balance, pass financial capability assessment
• Equity size - check current home value and remaining loan balance
• Ongoing costs - ability to manage property taxes, insurance, and maintenance costs
• Initial costs - origination fees, mortgage insurance, closing costs
• Equity reduction - changes in the size of assets to leave to children

As of 2025, 22.6% of Hawaii's population is over 65 years old, a figure that is growing faster than the national average. It seems that the number of retirees in Kahului struggling with fixed income will continue to rise. Just because you've checked all the items doesn't mean you should make a decision right away. Be sure to go through the mandatory counseling with a HUD-approved agency before applying, and discuss it thoroughly with your family. This article is not investment or legal advice, and consulting with a professional before making any actual contracts is recommended.