How Much Down Payment Do You Need To Buy In Hawaii?
When talking to many 1st Time Home Buyers one of the questions they always ask is “How much down payment do I need?” There are still home buyers out there that think they need 20% down payment. In Hawaii, because of our home prices it is very rare to see a 1st time home buyer put down 20% (unless they get gift funds from family). Waiting to buy with 20% down will take years to save up due to the high cost of rent and home price appreciation. Hawaii real estate is a moving train and it's better to get on the train early than to let it pass you by.
The general rule for down payment is: the more down payment you have the better your loan terms become and the stronger your offer looks to a seller. If you can put 15% down or 10% down you are ahead of most 1st time home buyers. The National Association of REALTORS released an article last month stating:
“For the past three years, the median down payment for first-time buyers has been 6 percent and 14 percent for repeat buyers, according to the National Association of REALTORS®’ Profile of Home Buyers and Sellers. Yet, when consumers are asked about the down payment amount they need to buy, 87 percent of non-owners say that a down payment of 10 percent or more is necessary.”
In Hawaii there are options for buying real estate with 5% down or less and many 1st time buyers take advantage of them. The first step to home ownership is getting educated and to get in touch with a loan officer that will take the time to go over your options. Down payment may be gifted depending on your loan program which makes home ownership even more attainable.
5% Down Payment – This is a very common option for 1st time home buyers in Hawaii. With less than 20% down payment some type of Private Mortgage Insurance will be required (Monthly Mortgage Insurance vs. Lender Paid Mortgage Insurance).
FHA Loan (3.5% Down Payment) – This option can be quite costly as there is both an upfront MIP (Mortgage Insurance Premium) and an annual mortgage insurance premium. More of a last resort due to the buyer’s profile, an FHA may be the only option for certain buyers to purchase now. Learn more about FHA loans
3% Down Payment – May be available to 1st time home buyers who go through a HUD approved home ownership counseling class. This is a great option if down payment is a concern.
1% Down Payment – This program is very limited and not offered by every bank. Essentially this is the 3% down payment loan mentioned above but the borrower only needs to bring in 1% of the down payment and the lender will contribute 2% as down payment assistance. This is limited to certain areas.
100% Financing USDA loan – This option is used my many 1st time home buyers looking is specific areas. Many times this loan is used on Oahu when looking to purchase further west, such as in Ewa Beach & Kapolei. Learn more about USDA Loans
100% Financing VA Loan – This loan is meant for both active duty and retired military. Low interest rates make this a great option for those eligible. Learn more about VA Loans
The first step in learning about your options is to get in touch with a lender. After taking just a few minutes to learn about your situation and your real estate goals I can get you in touch with the right loan officer to fit your needs. We work with various lenders and loan officers which specialize in the loans mentioned above. Please contact us to take the 1st step to home ownership.
