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Getting Started with Buying a Home in Hawaii

Do you have any suspicions that you might be ready to buy a home? Are you thinking about securing your spot in Hawaiian paradise?

Before you rush into one of the biggest transactions you’ll ever make, take the time to think about home ownership. Buying a home can offer financial responsibility, stability and equity, and thinking through some aspects of owning a home in Hawaii before purchasing can ensure a happy home. Read more to learn how to buy a home in Hawaii.

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

While we can’t predict the future , it’s ideal to stay in your first home for three to five years before moving again. These years in your new location help pay off your mortgage and build equity so you can move to your new location.

If you know you’ll want to move to a different area or island within the next year, it may be better to wait and save more money for a larger down payment. Then you could buy your dream home in your desired area.

If you unexpectedly move out of the area, you can always rent your home, but being a landlord has a completely different set of considerations.

Homeowners in Hawaii may need renovations. Before you buy a home in Hawaii, ask yourself, “Is there anything I can fix?”

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

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

If you’re a DIYer and have some home renovation experience, you can save on labor costs, but you should also consider material costs. A new refrigerator is not cheap. Renovations are part of home ownership, and considering them from a financial and psychological perspective before purchasing a home will help get you started on the right track.

Homeownership in Hawaii requires a stable job.

Are you happy with your job now? Are you satisfied with your current career or are you planning to change your path in the near future? Changing jobs while paying off a hefty mortgage can be challenging, so having a stable job and career will also lead to more stability when buying a home.

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

Before you start house hunting, ask yourself these simple questions:

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

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

In addition to the amounts of debt that qualify you to purchase a home, responsible loan repayment and credit card habits help you develop positive mortgage repayment habits.

If you decide to go with a conventional loan, you’ll typically need to put down 20% to waive the required mortgage insurance costs. If you’re in the military, you can sometimes finance the purchase of a home in Hawaii with a VA loan, which often requires no down payment.

• What is your credit score?

Do you have a great 820 or an average 620? Your credit score is an important number that lenders use to screen potential home buyers. Getting your finances in order is essential to achieving your dream of home ownership.

Owning property in Hawaii requires some savings. Do you have the money for a down payment and closing costs?

A down payment often requires a huge amount of money, ranging from 20%, 15%, 3%, 3.5%, 5% and even zero percent to qualify for a loan. For a $700,000 home in Hawaii, that could mean $140,000 for a 20 percent discount. Additionally, closing costs, insurance, taxes, and money for furniture and renovations should also be saved until you purchase the home.

If you can afford the upfront costs associated with purchasing a home in Hawaii and also have some extra cash to breathe in the fresh Hawaiian air, you are well on your way to beginning the home buying process. 

We’re diving deeper into finance and closing out our other buyer’s guides.

Before you buy a home in Hawaii, plan ahead! 

Can you really afford the house payment?

If you’re used to paying monthly rent, a monthly mortgage payment that goes toward your own home rather than someone else’s might make sense. However, when calculating your monthly home payments, be sure to consider not only the principal and interest on your mortgage, but also the following:

• Property tax
• Insurance
• Apartment fee
• Water, electricity, internet and other utilities
• Repair and maintenance (Maintenance)
• Furniture

Calculating all the costs of owning a home in Hawaii before you buy will help you make the right financial decision.

What type of home will suit your lifestyle and situation?

Hawaii has a variety of housing options in different areas. There are quaint condominiums in low-rise buildings and modern apartments with all the amenities in high-rise new buildings. There are old Hawaiian-style plantation homes with a couple of bedrooms and multi-generational megahomes that can accommodate an entire family. 

Think about your situation. Are you single, newlyweds, have a large family, or are you downsizing? Do you want to live in a close-knit community close to your apartment or community neighbors? Do you want privacy and space for a garden? These general questions can help you determine the basic number of rooms and bathrooms that may be appropriate for your situation and whether a single-family home or condominium is right for you.

How will you know when you’ve found the right home in Hawaii? Have you made a list of your “shoulds” and “wants”?

When making such a large purchase, it is often helpful to write down or make a collage of pictures of what you are looking for. Also, make a realistic list. We may all want five bedrooms and four bathrooms in one of Oahu’s most desirable neighborhoods like Lanikai, but is that possible on your budget in Hawaii, too? 

A Hawaii realtor will be able to best tell you about the Hawaii housing market, but before and after speaking with a real estate agent, you may want to think about your “must-haves,” which may include the following:

• Single-family home or condominium
• Number of bedrooms
• Number of bathrooms
• Hawaiian island 
• Neighborhood opportunities on this island
• Price Range (Based on Mortgage Lender Pre-Approval)
• Ready to move or fix top

Once you have your “must-have” list, you can create a “wish-to-have” list, which could include the following:

• Mountain or ocean view
• Yard size 
• Some plants such as plumeria or fruit trees
• Certain home finishes, such as vaulted ceilings, windows, appliances, double vanities in bathrooms, or types of flooring.
• House colors outside and inside
• Solar panels
• Pool
• Proximity to certain amenities such as a gym, schools or the beach.

While “wants” can be nice, they are often hard to come by, especially in the hot Hawaiian home market. You may have to live with it if you find a place that has everything you need. The benefit of being a homeowner in Hawaii is that you can often put up some “capital” or hire someone to remodel the house or landscape the yard to achieve the look of your dream home. And these finishes can be done over time and as you secure financing for home upgrades.

Are you ready for commitment?

Buying a home is a big decision and one of the most important financial decisions you will make in your life. Are you ready to pay your mortgage every month? Can you keep up with the service? If you’re buying a home with your spouse or significant other, is your relationship ready to add a home? Who will do what – mortgage and utility payments, repairs – and how will the property be registered?

While many people are homeowners, and owning a home in Hawaii has many benefits, such as recognition, no rule says you have to buy a home by a certain age or ever. If you’ve crunched the numbers, talked to your significant other, and formulated an estate plan, you may be well on your way to being ready to buy a home in Hawaii. However, buying a home is not accessible to everyone. The housing market, your career, your family situation, and other factors may cause you to continue renting until the time is right to buy a home in Hawaii—and that’s okay.

Buying a home in Hawaii must be done at the right time. 

So, is it time for you to make a home in Hawaii a reality?

If you couldn’t answer “yes”, don’t worry! Owning a home in Hawaii is a huge responsibility. Renting may be right for you, or your dream home in paradise may come later. 

If you answered yes to the questions above, now may be the right time to begin your home buying journey. Get your finances in order so you can start making your dream of owning your own home a reality.

If you have any questions about real estate in Hawaii, you can fill out the form and we will answer you as soon as possible.