Buyers' Guide

Getting Started on Buying a House in Hawaii

Is the inkling arising that you may be ready to buy a home? Are you thinking about securing your space in Hawaii paradise?

Before you rush into one of the biggest transactions you may ever make, take some time to contemplate home ownership. Buying a home can offer financial responsibility, stability, and equity, and contemplating a few aspects of Hawaii home ownership prior to purchase can ensure a happy home. Read more to learn how to buy a house in Hawaii.

What are the Hawaii neighborhoods like? How long will you live in Hawaii? 

While we cannot predict the future, it is recommended that you ideally stay in your first home for three to five years before moving again. Those years in your new place help pay down the mortgage and gain equity, so you can transition to a new place.

If you know you will want to go to a different neighborhood or island within the next year, it may be better to wait and save more for a larger down payment. Then you could possibly buy the house of your dreams in your desired neighborhood.

If you do unexpectedly move out of the neighborhood, you could always rent your home, but being a landlord has a whole other set of considerations.

Hawaii home ownership might require repairs. Before buying a house in Hawaii, ask yourself, ‘Can I fix things?’

Being a homeowner means being responsible for repairs and home upgrades. You have two options:

  • Fix your home yourself.
  • Pay money to hire someone.

If you are a do-it-yourselfer with some home repair experience, you can save on labor costs, but the costs of materials should also be considered. A new refrigerator isn’t cheap. Repairs are a part of homeownership and considering them financially and psychologically prior to purchasing a home will assist in getting started on the right path.

Hawaii home ownership requires a stable job.

Are you happy in your job now? Is your current career satisfying or do you plan on shifting your path any time soon? Transitioning jobs while paying a hefty mortgage can be tricky, so a stable job and career will also lead to greater stability with your house purchase.

To buy a house in Hawaii, you will need to get your finances in order.

Before beginning the house hunt, ask yourself these simple questions:

  • How much credit card debt do you have?
  • How much are your student loans, auto loans, or personal loans?

Your total monthly debt payments, including the desired mortgage amount, should be less than 43% of your gross monthly income for most mortgage programs. Another debt-to-income ratio used by lenders says the monthly mortgage payment should be less than 28-31% of your gross monthly income.

In addition to debt amounts qualifying you to buy a home, habits of responsibly paying loans and handling credit cards, help develop positive mortgage-paying habits.

If you choose to go with a conventional loan, you typically need to put 20% down in order to forgo the required mortgage insurance costs. If you are in the military, you sometimes can finance your home purchase in Hawaii through a VA loan, which often will not require any down payment.

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  • What’s your credit score?

Do you have an excellent 820 or average 620? Your credit score is an important number that lenders use to qualify potential buyers for a home. Getting your finances in order is essential in realizing your dream of homeownership.

Hawaii home ownership requires some savings. Do you have money for a down payment and closing costs?

A huge chunk of money is often needed for a down payment, ranging from 20, 15, 3, 3.5, 5, and even zero percent down to qualify for a loan. For a $700,000 house in Hawaii, that could mean $140,000 for 20% down. Also, the closing costs, insurance, taxes, and money for furniture and repairs should also be saved prior to purchasing a home.

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If you can afford the upfront costs associated with purchasing a home in Hawaii, while also having extra cash to breathe the fresh Hawaiian air, you are well on your way to starting your home buying process. We dive deeper into finances and closing in our other buyer’s guides.

Before buying a house in Hawaii, plan ahead! Can you really afford the home payment?

If you are used to paying monthly rent, a monthly mortgage payment that goes toward your own home instead of someone else’s may make sense. However, when making your monthly house payment calculations, be sure to not only include the principal and interest of your mortgage loan but also the following:

  • Property taxes
  • Insurance
  • HOA/condo fees
  • Water, electricity, Internet, and other utilities
  • Repairs and upkeep
  • Furniture

Doing the math about all the costs of Hawaii homeownership before buying, will help to assure you make a sound financial decision.

What type of home will suit your lifestyle and situation?

Hawaii has a range of housing options in a variety of neighborhoods. There are quaint condominiums in low-rise buildings and modern apartments with all the amenities in high-rise new-build towers. There are older Hawaii-style plantation homes with only a couple of bedrooms and multigenerational mega-homes able to hold the entire family. 

Think about your situation. Are you single, newly married, with a large family, downsizing? Do you want to live in a friendly community near condo or community neighbors? Do you want privacy and space to garden? These broad questions can assist you in determining the basic number of rooms and bathrooms that might be suitable for your situation and whether a single-family home or condominium might be right for you.

How will you know when you have found the right home in Hawaii? Have you made a list of your ‘must haves’ and ‘wants’?

When making such a big purchase, it often helps to write down or make a picture collage of what you are looking for. Also, make a realistic list. We may all want five bedrooms and four bathrooms in some of Oahu’s most desirable neighborhoods like Lanikai, but is that feasible with your budget and in Hawaii? 

A Hawaii realtor will be able to better educate you on the Hawaii housing market, but before and after speaking with a real estate agent, you may want to think about your ‘must-haves,’ which might include the following:

  • Single-family home or condominium
  • Number of bedrooms
  • Number of bathrooms
  • Hawaiian Island 
  • Neighborhood possibilities on that island
  • Price range (based on preapproval from a mortgage lender)
  • Move-in-ready or fixer-upper

Once you have your ‘must have’ list, then you can make a list of ‘wants’ which might include the following:

  • Mountain or ocean views
  • Yard size 
  • Certain plants, like plumeria or fruit trees
  • Certain home finishes, such as vaulted ceilings, windows, appliances, double sinks in bathrooms, or types of flooring
  • Exterior and interior home colors
  • Solar panels
  • A pool
  • Proximity to certain amenities, such as the gym, schools, or the beach

While ‘wants’ might be nice to have, they are often hard to find, especially in the hot Hawaii home market. You might have to settle if you find a place that has your ‘must-haves.’ The good part about being a Hawaii homeowner, is that you can often put in some ‘sweat equity’ or hire someone to remodel the home or landscape the yard to achieve your dream home look. And these finishes can be done over time and as you secure financing for the home upgrades.

Are you ready for the commitment?

Buying a house is a huge decision – one of the biggest financial decisions you will make in your lifetime. Are you ready to pay the mortgage each month? Can you keep up with the maintenance? If you are buying a home with your spouse or other significant other, is your relationship ready to add a home into the mix? Who will take care of what – the mortgage and utility payments, repairs – and how will the property be titled?

While many people are homeowners and owning a home in Hawaii has a lot of benefits, such as appreciation, no rule says you must buy a home by a certain age – or ever. If you have calculated the numbers, spoken with your significant other, and articulated a plan for owning a property, you might be well on your way to being ready to buy a home in Hawaii. However, buying a home is not for everyone. The housing market, your career, your family situation, and other factors might lead you to continue renting until the time is right to purchase a home in Hawaii – and that is fine.

Buying a house in Hawaii must be done at the right time. So, is it the right time for you to make Hawaii home ownership a reality?

If you were not able to answer ‘yes’ – don’t worry! Home ownership in Hawaii is a huge responsibility. Maybe renting is right for you, or your dream home in paradise will come at a later time. 

If you answered ‘yes’ to the above questions, it may be the right time to get started on your home-buying journey. Get your finances in order and build your team to begin making your homeownership dream a reality.