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CONVENTIONAL LOANS

 "The Most Conservative Loan with the Lowest Rates"

Most of the loans in Hawaii are Conventional Loans. The reason is very simple: most buyers have the 20% required down payment and they can shop around for the lowest interest rate. Rarely we see FHA loans (mainly in low income areas) and 20% of the loan applications are VA loans.

Some of the requirements are:

  • Minimum FICO score 700 and up
  • 20% Equity in the Subject Property
  • Stable Income

FHA

3.5% Down FHA Loans are a good option in Hawaii


For those who are looking for a home loan you may have heard it can be difficult without a down payment of 20% or more. That is true but only in the traditional, conventional loan market. The good news for today's home buyers is that The Federal Housing Authority (FHA) provides loan programs requiring as little as 3.5% down.

FHA is a loan program that has been around since the 1930's but had fallen out of favor. Now however it has become the loan of choice with many advantages versus conventional loans. What are the advantages of an FHA loan?

•FHA requires only 3.5% down payment
•Unlike conventional loans, the entire down payment may come from a family gift. Family members can help the buyer qualify too.
•Your FICO credit score can be as low as 620

•The FHA interest rates are very competitive versus conventional financing (about a quarter lower (0.25%))
•FHA approvals are easier to get
•The loan limits are very high ... In Hawaii, FHA loans can be as high as $793,750!
•No prepayment penalties
•FHA loans are assumable
FHA loans may be obtained through FHA approved mortgage brokers.

VA

VA Loans Represent 20% of Mortgage Brokers Pipeline

If you are eligible for a VA loan, you can take advantage of the following:

  • No down payment on sale prices up to $741,250.00 in the county of Honolulu, all other counties in Hawaii $625,500.00.  Down payment of 25% of the difference is required for sale prices over this amount.
  • The entire down payment and closing costs may be gifted (a relative can give you these funds).
  • Seller may pay all closing costs and up to 4% of the sales price towards funding fees and debt pay-off.
  • No monthly mortgage insurance.
  • No prepayment penalty.
  • Assumable subject to VA approval.
  • Interest rates and discount points are freely negotiated between the borrower and the lender.
  • Property: 1-4 Family Homes, including townhouses or condo units in VA and FHA approved projects are eligible, as well as new construction.  To check if the condo is eligible for VA please go to: https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch