Buying a Home in Hawaii with a VA Loan – VA Mortgage Basics

First and foremost… thank you to all our service-members, veterans, and their families. Not a day passes that I don’t take a moment to reflect on the freedoms that I enjoy and how good my life is today because of your sacrifices yesterday.

Steps to Getting a VA Mortgage:

1. Verify your eligibility
2. Obtain your “Certificate of Eligibility”
3. Partner with an experienced REALTOR® and find the perfect home.
4. Lock in your loan with a VA participating lender. (Credit unions and your local banks are good places to start. Your agent is a great source for referrals too!)

Key Points & Potential Pitfalls to be Aware of:

• The VA will only guarantee (insure) loans up to $700,000 on Oahu, and $625,500 for the rest of Hawaii. This does not preclude you from using a VA mortgage to buy a more expensive property, but lenders that allow this will require a conventional down payment of at least 20-25% on any amount above the guarantee.
• In most cases, you may only have one VA loan out at a time. It usually needs to be paid in full prior to your eligibility being restored for a new loan. You must be an owner-occupant.
• Condominiums and town-homes must be in VA approved projects. Your agent should be able to access this information and screen for suitable properties.  While your lender can try to have an ineligible project approved, it can take a long time. It’s also possible that the property you want will sell during the weeks or even months it can take to get it approved.
• You should partner with a REALTOR® that has experience working specifically with VA buyers. A purchase offer on a property subject to VA financing is quite different than a traditional purchase and good listing agents and informed sellers are well aware of the impact this has on their negotiating leverage. From a sellers point of view, a VA offer is often viewed as weaker than its conventional counterpart. Certain closing costs (VA “non-allowables”) that are customarily paid for by a buyer are charged to the seller instead, resulting in less net profit for them. Also, there can be complications weeks into the escrow if the VA appraisal reflects a lesser value than the contracted price. The VA can also require that any repairs it deems necessary be performed prior to the buyer taking possession of the property. Many sellers do not want to assume these risks and prefer either not to entertain VA offers or at least expect to be offered a higher purchase price in exchange for the potential complications that they may not necessarily face with an all-cash or conventional transaction. These are just a few of the considerations that you and your agent should factor in preparing your purchase contract.

Questions? Contact Me