Buying a house in Hawaii with zero down - Yes you still can

While most lenders on earth have stopped doing 100% financing of any kind, there are still 2 ways (that I know of) to get a house for zero down in Hawaii.

One is to use a VA loan, which is now one of the best deals out there. There is no monthly mortgage insurance, and instead a 2.15% funding fee at closing. All you have to do is be in the military at some time and get your "certificate of eligibility." The VA loan goes up to $625k with zero down, and they actually will go above that.

If you want a buy a house in Hawaii Kai or Kailua, or anywhere in East or Windward Oahu, you'll need quite a bit more than $625k. Well the VA will in fact give you that loan, as long as you have 25% of the amount above $625k. So if you are buying a house in Kailua for $700k, you just need $18,750 down. You can still finance the closing costs through seller credits, and also get some of your debt paid off too. VA is awesome.

The other way is to join Navy Federal Credit Union, which has zero down up to $850k if you have good credit. Nave Fed also has terrible customer service, maybe the worst I have ever encountered. Getting a loan from them is like getting teeth pulled without Novocaine. They apparently have no concern for customer satisfaction or retention. Every client I have ever worked with that used Navy Fed hated every minute, but the interest rates and zero down loans programs are often hard to beat.

In order to join Navy Federal CU, you'll need someone in your family to have been in the Navy, or you need to work at a Navy base, or have some ties to the Marines. I don't know how they actually verify the info though.

So yes you can still buy a home with zero down in Hawaii, up to about $850k. And there is some discussion about raising the loan limit on VA loans in Hawaii to about $793k, which is the current temporary conforming limit.

Falling real estate prices at resorts - Another reason why Oahu is better than Neighbor Isles

The Advertiser report today that at the end of 2007, Hawaii resort real estate sales (mostly on the Big island and Maui) declined 20 percent last year to 1,535 properties. While average prices rose 22 percent to $1.6 million for the full year, prices fell the second half of the year.

761 of the 1,535 Hawaii resort real estate sales were for under $1 million, down from a year earlier when 1,119 of 1,914 sales were under $1 million.There were 160 sales for over $3 million last year, up from 133 in 2006. That's pretty amazing. I guess the recession hasn't hit the very wealthy.

These numbers count Oahu real estate sales at master-planned communities with resort zoning, which includes Ko Olina Resort but exclude sales in Waikiki. But most of the numbers come from Maui, Kauai, and the Big Island, where there are a lot more large resorts. On Oahu, Ko Olina is the only big resort selling property. Sure there are some condos at Turtle bay, but nothing big enough to effect our market here.

That's a big reason why Oahu's real estate prices have remained stable while prices in Maui, Kauai, and the Big Island have seen sharp declines. Our market is more for people who live here and work here, meaning owner occupancy is far higher on Oahu than the Neighbor islands.

That helps our market stay stable, as investor speculation is lower, and recessions effect vacation homes and investment properties more than they do owner occupied properties.

So if you're considering buying property in Hawaii, Oahu real estate once again sounds like the best investment.

This Kailua house is in escrow

Some clients of mine have this Kailua home in escrow as of this weekend. It's a great old house built in 1968 with 2,586 sqft of space, which is listed for $725k. It's a big house which has 5 bedrooms and 3.5 baths., which is divided into two separate units.


This house has 2bedrooms and 2baths upstairs and 3bedrooms and 1.5baths downstairs w/separate entrances. Many houses in Kailua have a 2nd unit that is either rented or used by extended family.

Since the average price of a starter home in Kailua is about $700k to start, and over $1million for a nice renovated home, many people have some kind of second unit to reduce the costs.

Besides the beach nearby and the great town, one of the advantages of Kailua is that the drive over the Pali into town is usually pretty quick, at around 20 minutes.