The Hawaii VA Loan is very popular on Oahu because we have such a large military presence. Here are a few basic points you should know about how to get a VA Loan in Hawaii. Your experienced and knowledgeable Oahu REALTOR can help you get started with much of this.
PC Michael Jung / Shutterstock Image – Hawaii VA Loan Family
Who is eligible for a Hawaii VA Loan?
A Buyer may be eligible for a VA Loan in Hawaii if any of the following are true:
- the buyer has served 90 consecutive days of active service during wartime; or
- the buyer has served 181 days of active service during peacetime; or
- the buyer has more than 6 years of service in the National Guard or Reserves; or
- the buyer is the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
How Do You Prove Eligibility for a Hawai VA Loan?
To prove your eligibility for a Hawaii VA Loan, you must obtain a Certificate of Eligibility (COE), which will then be provided to your lender to show that you are eligible for a VA Loan. This does not automatically mean you will get the loan. You still have to qualify for the loan based on income, assets, liabilities, and credit scores. On the COE will be an entitlement. The entitlement shows how much VA Loan benefit you are entitled to. It will also show what funding fee you must pay for a VA Loan in Hawaii.
A COE can be requested online or by mail, but usually, it is done through your lender. You will need your basic information, like name and SS#, and you may need a copy of your DD214 to prove military service.
Do YOU Qualify for a Hawaii VA loan?
To find out if you qualify for a Hawaii VA Loan, you will need to provide your lender proof of your income, assets, and liabilities. They will also run your credit to find out your credit score. Generally speaking, they will need things like your last two years’ tax returns, proof of employment and your last two months’ paystubs, and your last two months’ bank statements.
I always advise my clients to use a local VA lender on Oahu. It is a lot easier to work with a lender who is familiar with lending on Oahu and Hawaii properties, than a lender that works from a call center on the mainland. There are lots of VA lenders on Oahu. Often, the Oahu lenders have better rates than some of the mainland lenders. I have found that with a local lender, you typically get better service and better results – i.e., quicker close, fewer hassles with appraisals, etc.
You should always find out also whether your Hawaii VA lender will pay non-allowables. Having this in place will make your offer more attractive to sellers. If the lender does not pay the non-allowables, the seller will have to absorb this cost. Sellers usually do not like to pay these costs, which is a reason why VA Loans can sometimes be unpopular with sellers.
You will have to state on your loan paperwork that you intend to occupy the property on the VA Loan as your primary residence. While intent is what is required, you should actually owner-occupy your home for at least a year or two when using a VA Loan in Hawaii or anywhere. VA Loans specifically are not for purchasing rental properties or vacation homes, though the properties can, later, be used as a rental.
Unless an exception is granted, due to extenuating circumstances (such as deployment), occupancy must begin within 60 days of closing on the property. Spouses can assist with providing the required occupancy as a primary residence.
PC Monkey Business Images / Shutterstock Image
Does the HOME You Would Like to Purchase Qualify for a VA Loan?
A property purchased with a VA loan on Oahu or elsewhere must meet certain minimum requirements. The requirements for a VA Loan are typically more stringent than those for a conventional loan. This is not only to protect the lender, but also to protect the Veteran buying the property.
The VA List
The property you are purchasing, if a traditional apartment or townhome-style condominium, OR a single-family CPR home, must be on a VA-approved list of condominiums (“VA List”). If the property is not on the VA List, you can try to get it on the VA List, but it must qualify – meeting the VA’s standards – and it will cause the loan to take longer to close. And there is no guarantee the property will make the VA list. The Seller of the property would have to agree to this and be willing to wait. Usually, it is better to find a property already on the VA List.
For single-family homes, there is no “VA List” requirement.
Minimum Property Requirements
Both single-family homes and residential condos, however, must also meet certain minimum property requirements (MPR). Generally, the appraiser will want to see that the property is built to residential building codes, in a workman-like manner, and that it is safe, habitable, and sanitary. Some common things that may cause issues with a VA Loan in Hawaii are: peeling or chipped paint, broken doors and windows, lack of basic appliances or flooring, electrical or plumbing problems, lack of stair rails where required, termites, termite damage, dry rot, and/or water leaks or damage.
I work with VA buyers frequently where the homes require repairs before they would be approved by the VA appraiser. Many times, a buyer will go into the purchase knowing that repairs are needed. Sometimes the sellers make these repairs and sometimes it falls upon the buyers. Luckily, I know a few good contractors that can usually get these done quickly for my clients, on either side. Who does the repairs will depends upon how you negotiate the contract. A few examples of the fixes that I’ve coordinated for my clients are adding GFCI outlets near a sink and adding a stair rail to some steps. In another situation, some significant termite damage was repaired.
In all, despite some minor inconveniences, the Hawaii VA Loan is a great loan product. It enables a Veteran to get into a home with minimal or no money down. Also, the rates are usually competitive.
If you are eligible for a Hawaii VA Loan and have questions about buying on Oahu, or about VA loans on Oahu, please give me a call. I have a VA loan myself and, over almost a dozen years, have helped many VA buyers, as well as sellers who have sold to VA buyers.
I’d be honored to help you find a property to purchase on Oahu and find a VA lender, if needed. ~ Aloha