Local lending solutions to the Native Hawaiian housing crisis

Kaua'i Federal Credit Union is addressing the island's housing affordability crisis with culturally responsive programs for Native Hawaiians, including down payment assistance and cesspool conversion loans. Backed by Filene Research Institute's Racial Economic Equity Incubator, the credit union's efforts aim to keep families rooted in their communities through accessible, place-based financing solutions.

In a housing market where the median home price ranges from $1.3 million to $1.7 million, only one in five households on Kaua'i can afford to buy a home. For many Native Hawaiian families, generational ties to the island are at risk as soaring costs, limited housing inventory, and environmental mandates make homeownership increasingly unattainable. Kaua'i Federal Credit Union is working to change that.

By offering programs focused on down payment assistance and environmental compliance loans designed specifically for Native Hawaiians, the credit union is helping residents stay rooted in the community. These initiatives emerged, in part, from its participation in Filene Research Institute's Racial Economic Equity Incubator, a program aimed at addressing wealth gaps through community-led innovation.

A perfect storm of economic and environmental pressure

The affordability crisis on Kaua'i is shaped not only by high home prices but also by additional barriers unique to the island. Many homes require costly upgrades, and a state mandate requires that all cesspools (outdated private waste pits that pose environmental risks) be converted to septic systems by 2050 to protect groundwater and native ecosystems. The average cost of conversion? Between $40,000 and $50,000. This is out of reach for most households, especially those on fixed incomes or living on Department of Hawaiian Home Lands (DHHL) properties.

"Some of these families have been on this land for generations," said Nikki Ige, community impact director at Kaua'i Federal Credit Union. "They're being told they have to make changes that are unaffordable, just to continue living in the homes they've always had."

Programs that keep residents rooted

In response, the credit union created a cesspool conversion loan that fills a crucial gap in state and county grant programs. While public funding can reimburse up to $20,000, those grants are only issued after the work is completed. Kaua'i Federal Credit Union's solution allows members to secure the full amount up front, defer payments during construction, and apply grant funds to the loan balance once the project is finished. The loan is then reamortized to create manageable monthly payments.

"It's a way to make the whole process less intimidating and more accessible," Ige said. "It's not perfect, but it's better than telling people they're on their own."

At the same time, Kaua'i Federal Credit Union launched a housing access initiative in partnership with the Federal Home Loan Bank of Des Moines. The program offers down payment assistance through Home$tart® for first-time buyers and through the Native American Homeownership Initiative (NAHI) for Native Hawaiian families building on DHHL land.

The credit union does not originate mortgages from these grants, but still handles the technical assistance needed to connect eligible applicants to the funding. That includes navigating deed restrictions, construction loan processes, and communications with state agencies—especially for buyers new to DHHL programs.

"We did the first NAHI-funded DHHL mortgage the Federal Home Loan Bank had ever seen," said Hazelmae Overturf, chief impact officer at the credit union. "Now that they've seen it work, they're doing more. And we're helping other credit unions on other islands learn how to do the same."

Collaboration as a cultural and strategic imperative

Both the cesspool conversion loan and down payment programs are guided by Native Hawaiian values such as the ahupua'a system—a traditional way of managing land and water through shared stewardship and mutual support. That ethos extends to the credit union's partnerships as well, including its work with local nonprofit Hawaiian Community Assets and other cooperatives statewide.

"We try to build everything around the ecosystem," said Overturf. "No single institution can solve a problem like this. You need the land, the people, the government, and the lenders all moving together."

That collaborative spirit has made a measurable difference. Since launching the NAHI program, Kaua'i Federal Credit Union has helped four Native Hawaiian families become homeowners. The credit union is currently capped at six participants per year, and demand remains strong. On the cesspool conversion loan side, more than 100 local residents received application assistance, with dozens completing conversions or qualifying for funding.

Even so, the team measures success one household at a time.

"When someone says, 'We're not going to have to move to the mainland because of this,' that's the win," Ige said. "That's four families with stability and roots. That matters."

A model for mission-driven innovation

While Kaua'i Federal Credit Union's programs may be small in scale, they offer a replicable model for other credit unions serving historically marginalized communities. The key, Ige and Overturf say, is to listen deeply, build relationships, and co-design solutions that are relevant to the people they're meant to serve.

"Sometimes people think this is some big, complex program," Ige said. "But really, it's just about doing the right thing for your neighbors. If we can do that here, other credit unions can do it in their own communities, too."

With support from national partners like Filene Research Institute and a growing network of like-minded cooperatives, Kaua'i Federal Credit Union continues to scale its impact—one septic system, one down payment, and one family at a time.