While most people know that VA loans allow military buyers to get into Hawaii real estate with zero down, most don't know that there is a similar loan backed by the USDA (yes, the beef people) that also allows zero down purchases for regular civilians.

The USDA home loan will allow any buyers who make less than $109k/ year to buy a house with no money down. Similar to the VA loan, there is a funding fee of 2%, but other than that, it's quite simple.

If you have more than 5 people in your family, you can actually make a lot more money and still be eiligible.  There is no loan amount limit as long as your debt ratios still qualify.

Just doing the math, a family of 4 with no other debt making $109,000 a year could buy a house of around $500k with zero down. And there is really no other requirement as long as you have a credit scrore over about 620.

This loan is available only the areas that the USDA calls "rural," which on Oahu includes these areas, much of which I don't consider rural at all:

  • Village Park and Royal Kunia
  • All of Ewa Beach
  • Makakilo
  • Kapolei
  • The Waianae Coast
  • Central Oahu starting from Whitmore Village going North to the North Shore
  • All of the North Shore
  • The North part of the Windward coast, from Ahuimanu to Kahuku
  • Waimanalo to Sea Life Park

The USDA loan can be a great deal for buyers of Hawaii real estate, since it has no monthly mortgage insurance, no prepayment penalty, and no max loan amount.  One nice thing is that lenders can order their own appraisals, unlike the VA loan.  That means turn times are faster!

Thanks to Chris at Guild mortgage for teaching me about the UDSA loan.