Purchasing a home in the Paradise of the Pacific should feel as natural as the Ahalanui Warm Springs. Whether you're looking to be on the big island or one of the smaller ones, buying a house in the Aloha State is a great choice.
If you’re considering buying a home in Hawaii, don’t let the high cost of living and countless mortgage options make your head feel like a volcano about to erupt! FHA loans are a popular option for Hawaiians, so keep reading to see if an FHA loan in Hawaii is right for you.
Why consider an FHA Loan in Hawaii
With Hawaii being a popular destination for tourists, it’s easy to see why so many people love living there. As of April 2019, the total value of FHA loans in Hawaii was nearly $27 million as homebuyers have leveraged the program to counteract the state’s median home price of over $600,000.
Benefits of using an FHA Loan in HI
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable
FHA Loan Limits in Hawaii
As stated above, there are many benefits of choosing an FHA loan, and since there are maximum FHA loan amounts in Hawaii, you'll need to have some idea of how much you can borrow before you start shopping. The maximum is adjusted every year and, for Hawaii, depends on which county you reside in. The maximum loan limit in Hawaii is $331,760; however in Honolulu it is $721,050 due to a higher cost of living. See the table below for a full list of Hawaii FHA loan limits for 2021.
Hawaii FHA Loan Limits by County
|County||FHA Loan Limit|
|All other areas||$331,760|
Are You Eligible for an FHA Loan in HI?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30-day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
Learn More About FHA Loan Requirements
What Do You Need to Apply for an FHA Loan in HI?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.