Ready to buy a home in the Aloha State?
With its year-round tropical climate, breathtaking landscapes, and laid-back island lifestyle, Hawaii offers a desirable lifestyle with financial benefits. Your dream home could be a charming single-family house in Oʻahu or luxury condo in Waikīkī.
Whether you’re a first-time homebuyer or new to the Hawaii housing market, this guide will teach you everything you need to know. We’ve broken down the entire home-buying process into 13 actionable steps.
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Key Takeaways:
- Get Pre-Approved ASAP: In a buyer’s market like Hawaii, a pre-approval letter helps you stand out.
- Save Thousands with Assistance Programs: Explore programs offered by the Hawaii Housing Finance and Development Corporation (HHFDC), such as Hula Mae Mortgage Loans and county-level down payment assistance. These programs can help reduce upfront costs, though availability and benefits vary by island, so research eligibility carefully.
- Don’t Skip Hawaii-Specific Inspections: Because of Hawaii’s climate, insurers often focus on roof condition, electrical systems, plumbing, and hurricane exposure. A 4-point inspection is commonly required, and homes in coastal or high-wind areas may also need additional underwriting reviews.
- Ask for Credits, Not Repairs: If the inspection has issues, ask the seller for credit at closing. This allows you to hire your own contractors and prevent closing delays.
- Protect Your Investment and Your Wallet: Many Hawaii properties, near the coast or in low-lying areas, benefit from a separate flood policy through the NFIP or private insurers. Also, be sure to file for your county Homestead Exemption, which can significantly reduce your property’s taxable value if the home is your primary residence.
How to Buy a Home for the First Time in Hawaii: 13 Steps!
These steps to buy a house in Hawaii will walk you through everything, from assessing finances and budgeting for a down payment to choosing the right mortgage. These 13 steps make the Hawaii real estate process clear, simple, and manageable.
Step 1: Assess Your Finances
As a first-time home buyer in Hawaii, the two factors that should matter the most to you are your credit score and Debt-to-Income (DTI) ratio. Additionally, you must also consider how much you can afford for a down payment, a monthly mortgage, taxes, and insurance.
What Is Your Credit Score?
A credit score is a three-digit number that indicates your creditworthiness to lenders. The minimum credit score to buy a house in Hawaii depends on the type of mortgage you get.
Minimum and Ideal Credit Scores by Loan Type
| Loan Type | Minimum Score | Ideal Score |
|---|---|---|
| FHA | 500 (10% down) | 580+ (3.5% down) |
| Conventional | 620 | 740+ for best rates |
| VA | No minimum | 620 |
| USDA | No minimum | 640 |
Portfolio mortgage loans are easy to qualify for. Here, the credit score needed to buy a house starts at around 580. VA loans are available only to veterans and active-duty service members, and require a score of 620. FHA loans also accept scores as low as 580. They are good for buyers with lower credit scores looking for houses in Hawaii.
When purchasing property in Hawaii, you can check your credit score using several reliable methods. Most of them are free and will not harm your score:
- Annual Credit Reports: Federal law entitles you to one free credit report every 12 months from each of the three major credit bureaus: Equifax, Experian, and TransUnion. These can be accessed through the official, government-authorized website, AnnualCreditReport.com.
- Credit Monitoring Services: Many banks, credit card issuers, and financial service apps provide complimentary and regular access to the FICO score. This is a convenient way to track your credit health over time.
Knowing how to repair your credit score is important to get better mortgage rates. If you’re a first time home buyer in Hawaii, here’s what you need to do:
- Pay down credit card balances and make all payments on time.
- Avoid opening multiple new accounts quickly.
- Consider becoming an authorized user on a family member’s account with a good history.
- Monitor your score regularly to track progress.
How to Calculate Your Monthly Mortgage Payment in Hawaii?
As a first time home buyer in Hawaii, knowing your average mortgage payment helps you plan your budget. Your total payment includes 4 key components, often called PITI:
- Principal and Interest: This is a major chunk of your payment, covering the amount you borrowed (principal) and the cost of borrowing (interest). It’s determined by your loan amount, interest rate, and loan term.
- Taxes: Hawaii property taxes are based on your home’s assessed value. The lender holds these funds in an escrow account and pays the tax on your behalf.
- Insurance: Lenders require you to have homeowners’ insurance to protect the property. The annual premium is usually divided by 12 and added to your monthly payment, also managed through the escrow account.
Apart from PITI, your monthly payment may also include Private Mortgage Insurance if your down payment is less than 20%, and HOA fees.
Know How Much Home Can You Afford in Hawaii Get an instant monthly payment estimate with Houzeo’s free Hawaii mortgage calculator.
What Is a Debt-to-Income (DTI) Ratio?
Your debt-to-income ratio shows how much of your monthly income goes toward debt payments, including mortgage, car loans, credit cards, and student loans. To calculate it, add all monthly debts and divide the total by your gross pre-tax monthly income.
A high DTI can prevent you from qualifying for a mortgage, as it shows that you struggle to manage your debt. For the best mortgage rates and a higher likelihood of mortgage approval in Hawaii, aim for a DTI ratio of 36% or lower.
💡 You can still qualify for a loan in Hawaii despite a high DTI if you have compensating factors like a strong credit history, significant cash reserves or savings, stable long-term employment, etc.
Recommended DTI Ratios by Loan Type
| Loan Type | Recommended DTI Ratio | With Compensating Factors |
|---|---|---|
| Conventional | 36% back-end | 45-50% |
| FHA | 43% back-end | Up to 50% |
| VA | 41% | Can exceed 50% with the residual income test |
| USDA | 41% back-end | 44% with strong credit |
To improve your DTI ratio for a mortgage, you can either reduce your monthly debts or increase your verifiable income.
- Pay Down Debt: Use a tax refund or bonus to clear smaller loans, or consolidate multiple debts into a single loan with a lower monthly payment.
- Increase Verifiable Income: Ask for a raise, take on part-time work, or start a side business. Include all consistent income sources on your application, such as bonuses or commissions, but remember that lenders require a two-year history for secondary income.
- Adjust Your Housing Budget: A larger down payment reduces your loan amount and your monthly mortgage payment. You can also consider a lower home purchase price to keep your future housing costs down.
Step 2: Budget for Your Down Payment and Closing Costs
You should set aside money for the down payment and closing costs. Hawaii’s first time home buyer programs help make homeownership accessible and affordable.
How Much Down Payment Does a Hawaii First Time Home Buyer Need?
Typically, the down payment on a house for a first time home buyer in Hawaii usually ranges from 3% to 20% of the property’s price. However, it can vary based on the loan type. FHA loans require just 3.5% down, while some conventional loans allow a 3% down payment.
To help with these upfront costs, there are many state and local down payment assistance programs in Hawaii. They provide grants or loans to cover these expenses.
👉 First-Time Home Buyer Programs in Hawaii: Find out which is the #1 downpayment assistance program in the Aloha State.
How to Estimate Closing Costs in Hawaii?
Closing costs are fees and expenses paid at closing beyond your down payment. Typically, buyer closing costs in Hawaii usually range from 2% to 5% of the home’s price. So, for a $752,300 home, buyers might pay $15,046 to $37,615.
These fees cover lender charges, appraisals, inspections, title insurance, taxes, agent commissions, and recording fees when buying a property in Hawaii.
Step 3: Get Pre-Approved for a Mortgage
Secure your financing early by getting pre-approved for a mortgage as a first time homebuyer in Hawaii. This step helps you understand your budget and strengthens your offer when buying a house.
How to Get Pre-approved as a First Time Home Buyer in Hawaii?
You need to follow these steps to get pre-approved when buying a house in Hawaii:
- Gather Financial Documents: Provide proof of income (recent pay stubs and W-2s), tax returns (last two years), asset statements, debt information, and a government-issued ID.
- Choose a Lender and Apply: Compare lenders in Hawaii and submit a mortgage application to get the best rates and terms.
- Receive Pre-Approval Letter: The lender verifies your info and issues a letter stating your approved loan amount, usually valid for 30–90 days.
A mortgage preapproval turns you from a casual house hunter to a serious buyer in Hawaii, as it:
- Strengthens Your Offer: 86% of the sellers prefer buyers with a pre-approved mortgage. For the strongest position, ask for a fully underwritten pre-approval, where the lender has already verified all your documents.
- Defines Your Budget: It clarifies exactly how much you can afford, allowing you to focus your home search on a realistic price range.
- Speeds Up Closing: With much of the financial vetting already completed, the mortgage process is streamlined once your offer on a home is accepted.
Yes, you can get pre-approved and even buy a home with bad credit in Hawaii. However, your loan options may be limited. You can also expect higher interest rates with poor credit.
Step 4: Choose the Right Mortgage
As a first time homebuyer in Hawaii, assess your finances and select a loan that fits your budget and qualifies you for available programs.
| Feature | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Min Credit Score | 620 | 580 (500 w/10% down) | No minimum | 640 |
| Min Down Payment | 5% to 20% | 3.5% | 0% | 0% |
| Max DTI | 45% to 50% | 43% to 50% | 41%+ | 41% to 44% |
| Mortgage Insurance | PMI if <20% | Always | None | Always |
| Loan Limits | $1,149,825+ | $1,149,825 | No loan limit (subject to entitlement) | Varies by county |
| Property Eligibility Criteria | Few | Must meet FHA standards | Must meet VA standards | Rural/suburban areas only |
Step 5: Decide Where to Buy a Home in Hawaii
Deciding where to buy is one of the most important steps for a first time homebuyer in Hawaii. Consider factors like local housing markets, popular neighborhoods, cost of living, and amenities to help you find the best places to live in Hawaii.
Why Now Is the Time to Buy in Hawaii
The Hawaii housing market is a buyer’s market. You now have more negotiating power and a wider selection of properties to choose from:
- Housing Supply is High: Hawaii has a 6-month housing supply, which is the benchmark for a buyer’s market.
- Prices Have Stabilized: The median home price has remained relatively constant at $752,300. This allows you to set your budget with more certainty.
- Sellers are Negotiating: 13.7% of homes in Hawaii have seen price drops, signaling increased seller flexibility.
- Homes are on the Market Longer: Properties are taking an average of 99 days to sell, which allows you to make more informed decisions.
These trends show that now is the best time to buy a house in Hawaii. According to Mauricio Umansky, founder of The Agency, the current market provides “great opportunities for buyers to be aggressive and write strong offers.”
Popular Areas for Different Buyer Types
With the market now in your favor, you can be more selective about where you buy. Use this advantage to find a neighborhood that matches your priorities, whether it’s schools, commute, or lifestyle.
- Best Areas for Families: Neighborhoods like Mililani, Hawaii Kai, and Kailua are top choices for their excellent schools and family-friendly parks. If you envision life in a community designed for family connection, explore homes for sale in Mililani Mauka, HI. Properties with access to top-tier schools and parks typically range between $900,000 and $1,600,000.
- Best Areas for Retirees: For those seeking an active retirement, Venice, Punta Gorda, and Stuart offer low-maintenance living and vibrant social activities. If you are interested in a community renowned for its active lifestyle, consider homes for sale in Princeville, where prices generally range from $600,000 to $1M.
- Best Areas for Young Adults: Cities like Honolulu, Kakaʻako, and Waikīkī offer thriving job markets and vibrant social scenes. If a cosmopolitan lifestyle is what you seek, browse the latest Kakaʻako houses for sale, where you can find modern condos and apartments starting at $800,000.
Consider the Cost of Living When Choosing a Location
When looking for the best place to buy a house in Hawaii, consider the overall cost of living, as lower home prices can be offset by higher taxes or insurance.
- High-Cost Areas: Honolulu, Kakaʻako, Waikīkī, Lahaina (Maui), and Wailea are 25–40% above the national average.
- Moderate-Cost Areas: Mililani and Kapolei are 10-20% above the national average.
- Low-Cost Areas: Hilo, Pahoa, and Kaunakakai are 5–10% below the national average.
Ensure Your New City Fits Your Wallet Check the cost of living in Hawaii and compare expenses across multiple cities in an instant.
Step 6: Start House Hunting in Hawaii
Once you’re pre-approved and know where you want to live, the next step is finding the right house. As a first-time home buyer in Hawaii, you have two options:
- Work with a Realtor.
- Search for homes online.
An experienced agent can give you valuable local insights and expert guidance on neighborhood trends. However, you’ll have to negotiate the buyer agent commission with the seller, which may raise the home sale price.
If you prefer to take the lead, a high-tech platform like Houzeo is what you need. Whether you’re looking for beachfront mansions, high‑rise penthouses, spacious big homes, or luxury homes in Hawaii, Houzeo has you covered. You can browse through thousands of listings, set alerts, and save your search. You can even schedule showings and submit offers, all by yourself.
Don’t Just Browse. Buy.
Your entire home purchase, managed in one place.
Download the Houzeo Mobile AppStep 7: Schedule and Attend Home Showings
After you narrow down your list of potential homes, schedule and attend showings to see each property in person. For a first-time home buyer in Hawaii, visiting homes firsthand helps you evaluate condition, layout, and neighborhood, ensuring you make an informed choice.
During the showing, ask specific questions like:
- How long has the home been on the market?
- Why is the owner selling?
- What is the age of the roof, HVAC system, and water heater?
- Are there any HOA fees or pending special assessments?
- Is the property located in a flood zone?
When buying a home in Hawaii for the first-time, check the property carefully during the open house. Look for roof sagging, foundation cracks, water stains, uneven floors, or sticking doors, which may indicate serious issues.
As a first time home buyer in Hawaii, there are three main aspects you need to focus on when shortlisting homes:
- Insurance Risks: Verify the home’s flood zone using FEMA’s maps. Get a 4-point inspection and a wind mitigation report to assess insurability and identify features, like an old roof or the lack of impact windows, that could drive up insurance costs.
- Commute and Lifestyle: Test your commute during rush hour. Visit the neighborhood at different times to check for noise from traffic, airports, or nightlife. Ensure convenient access to key amenities like schools, groceries, and parks.
- Hawaii Home Loans/Assistance Program Eligibility: If you’re applying for a loan or first time buyer program in Hawaii, ensure that the house complies with its property requirements, or you may risk losing the assistance.
Pro Tip If multiple major risks stack up like an older roof, suspect electrical, moisture indicators, or weak condo reserves, move the property down your shortlist.
Step 8: Make an Offer
When crafting an offer, make a competitive bid but stay within your budget. As a first-time home buyer in Hawaii, consider factors like the home’s market value, recent comparable sales, and any repairs needed. This increases your chances of getting a fair deal.
Step 1: Analyze Recent Sales
Your agent will pull up real estate comps that are similar to the one you want. Focus on the final sale price, not the list price. Home prices in many Hawaii metro areas have seen modest declines, so your offer should reflect this trend.
Step 2: Adjust for the Home’s Condition
Factor in the age and condition of the roof and HVAC. If a comparable home sold for $752,300 but had a new roof, and your target home needs a $20,000 replacement, adjust your offer to account for that expense.
Step 3: Factor in Today’s Market
With more homes for sale, you have leverage. Even home builders are lowering their prices by almost 6% to attract buyers. So, for a home that is priced fairly, offer 3% to 5% less. If it is overpriced, you can justify an even lower offer, citing both the comps and market trends.
What is an Earnest Money Deposit in Hawaii?
An earnest money deposit is a “good-faith” payment that shows you are a serious buyer. This money is held in escrow and applied towards your down payment at closing.
In Hawaii, the standard deposit is 1% to 3% of the purchase price. On a $752,300 home, this would be between $7,523 and $22,569. In highly competitive markets like Honolulu, Kakaʻako, and Waikīkī, sellers may expect a deposit closer to 10%.
Once your offer is accepted, you typically have 3 business days to submit the deposit to an escrow agent, such as a title company or real estate attorney.
Yes, you can get your earnest money deposit back in Hawaii, but only if you back out of the sale for the following reasons:
- The inspection reveals major issues, and you exercise the inspection contingency.
- The appraisal comes in low, and you exercise the appraisal contingency.
- You’re unable to secure the required financing, and exit during the financing contingency period
- Title issues are discovered.
Many HI first time home buyer forfeit their earnest money because:
- They back out after the contingency periods expire without a valid reason.
- They violate contract terms.
- The seller meets all contract obligations, but the buyer still refuses to close.
Step 9: Conduct Home Inspections
First-time home buyers in Hawaii should schedule home inspections to uncover any issues before buying a house. You typically get the inspection report within 24 to 48 hours.
Which Hawaii Home Inspections Should You Schedule?
A standard home inspection in Hawaii isn’t enough. The state’s unique climate and weather risks require a few specialized inspections:
- General Home Inspection ($400–$700): A licensed inspector will examine everything from the roof to the foundation. They pay special attention to storm damage, proper drainage, and the age of the AC unit.
- 4-Point Inspection ($150–$250): Insurance companies require a 4-point inspection for homes over 30 years old. It focuses on the four most critical systems: the roof, HVAC, electrical, and plumbing. An old roof or an outdated electrical panel can result in the insurance coverage being denied.
- Hurricane Mitigation Inspection ($100–$250): Verifies hurricane shutters, concrete tie-downs, hip roofs, and reinforced shutters for 20-50% discounts via Hawaii Hurricane Relief Fund. Critical for coastal Oahu and Maui facing tropical cyclones.
- WDO / Termite Inspection ($200–$400): A termite inspection report (TIR) is mandatory for VA and FHA loans in Hawaii and is standard in most local purchase contracts. Inspectors check for both Drywood Termites and the highly destructive Formosan Subterranean Termites.
Consider Other Specialized Inspections
Based on the property, a Hawaii first-time home buyer may want to conduct additional tests. For older homes, a sewer scope can detect cracks or tree roots in the main sewer line, saving you from a $15,000 repair down the road. If you see large cracks or uneven floors, a $700 foundation inspection is worth the investment.
For rural properties, a septic inspection is essential. If the home has a pool, a separate pool inspection will check the pump, filter, and structure for costly defects.
It’s not recommended. Even if you plan to buy cheap homes in Hawaii, skipping a home inspection can lead to unexpected repair costs.
Step 10: Complete the Home Appraisal
After the inspection, your lender will typically order a home appraisal, which professionally values the property to ensure it matches your offer.
Why Do Lenders Need Appraisals?
A home appraisal in Hawaii confirms the property’s market value. Appraisers typically focus on the following parameters:
- Flood Zone and Elevation: Homes in FEMA high-risk flood zones (A, AE, VE, common along Oahu’s leeward coast or Maui streams) or Lava Zones 1-2 (Puna/Kilauea areas on Big Island) face depressed values. These values are of 10-25% versus inland equivalents due to mandatory NFIP flood insurance ($2,000+/year) and uninsurable lava risks.
- Insurance and Mitigation Features: Roof age over 15 years, lack of hurricane straps/shutters, or non-impact windows slash insurability in typhoon-prone areas like Kailua, inflating premiums 50-100% via Hawaii’s wind pool, directly eroding market value by 5-15%.
- Condo/HOA Health: Appraisers closely examine a condo association’s financial health. They look for anything that may reduce the unit’s value, like the association’s reserve funds or any pending special assessments.
A standard appraisal in Hawaii costs between $500 and $900 and typically takes 7 to 14 days to complete. For luxury or waterfront properties, the cost and timeline can be higher.
If the appraisal comes in lower than your offer price, you have an appraisal gap. In such a situation, you can either:
- Renegotiate the Price: Ask the seller to lower the price to the appraised value. In the current market, many sellers are willing to negotiate.
- Cover the Gap: If the seller won’t budge, you can choose to pay the difference in cash.
- Dispute the Appraisal: If you believe the appraiser made a factual error or used poor comparable sales, you can file for a Reconsideration of Value.
- Walk Away: If you cannot reach an agreement, your appraisal contingency allows you to cancel the contract and get your earnest money back.
Step 11: Negotiate Repairs and Credits
As a first time home buyer in Hawaii, use your home inspection results to negotiate repairs and request credits from the seller. This step can help reduce unexpected costs and ensure your new house is move-in ready.
How to Use Your Inspection Report to Negotiate Repairs?
Your negotiation strategy should center on issues that impact the home’s safety, structural integrity, and insurability. Minor cosmetic flaws are not worth fighting over and can make you seem unreasonable. It’s easy to make this mistake as a first home buyer in Hawaii.
Focus your request on these critical areas:
- Safety Hazards: This includes outdated and dangerous electrical panels, faulty wiring, or missing safety features like GFCI outlets near water.
- Structural Problems: Any issues with the foundation, load-bearing walls, or the roof structure.
- System Failures: A failing HVAC system, major plumbing leaks, or an old roof.
Get 2 to 3 written estimates from licensed contractors for any major repairs. A repair request that includes professional quotes shows you are serious and have done your homework.
Should You Ask for Repair Credit?
While you can ask the seller to perform the repairs themselves, it’s better to ask for credit instead. Credit gives you the funds to hire your own contractors and ensures the work is done to your standards, not just the cheapest way possible. It also allows the sale to proceed on schedule, without any delays.
How to Negotiate Seller Concessions
Seller concessions are a powerful tool for reducing your out-of-pocket closing costs when buying real estate in Hawaii. Here, the seller pays for some of your expenses, such as the appraisal, title insurance, or property taxes.
Your ability to negotiate concessions depends on your loan type. Each loan program sets a maximum limit on how much a seller can contribute:
| Loan Type | Minimum Down Payment | Maximum Seller Concession |
|---|---|---|
| Conventional | Less than 10% | 3% of the purchase price |
| Conventional | 10% or more | 6% of the purchase price |
| FHA Loan | Any amount | 6% of the purchase price |
| VA Loan | Any amount | 4% of the purchase price |
| USDA Loan | Any amount | 6% of the purchase price |
Step 12: Review Your Closing Costs
After negotiating repairs and credit as a first time home buyer in Hawaii, review all closing costs carefully. Check title fees, escrow, insurance, and taxes so you can finalize your budget and confidently buy your house.
Understanding Closing Costs in Hawaii
- Hawaii-Specific Taxes ($1,500+): Closing costs include Hawaii’s Conveyance Tax (state/county deed transfer tax): 0.10%-1.25% of sale price based on value tiers ($350K+ homes hit $425-$12,500+), plus Documentary Stamp Tax at $0.35/$100 on loans and Intangible Tax at $0.20/$100. On a $800K Oahu home with $600K loan, expect $2,100+ just in these transfer and financing taxes.
- Title Fees ($2,500+): These fees cover the title search, settlement services, and title insurance policies for both you and your lender. In Hawaii, the party responsible for paying the owner’s title insurance varies by county.
- Third-Party Fees ($1,500 to $2,500): This category includes the appraisal fee, credit report fee, and flood certification fee. It also covers any inspections you ordered, like the general, 4-point, and WDO inspections.
- Prepaid and Escrow Costs ($5,000 to $10,000): You will pay for your first year of homeowners’ and flood insurance upfront. You will also fund your escrow account with several months of property tax and insurance payments to cover future bills.
Step 13: Close on Your New Home
Closing day is the moment you officially become the owner of your new Hawaii home. Its success depends on a careful final walk-through, a smooth funding process, and making sure all legal documents are properly signed and recorded.
Complete Your Final Walk-Through
Within 24 hours of closing, you will do one last walk-through of the property. This is not a formal inspection, but rather your final chance to see if you want this home. Use this checklist:
- Verify Repairs: Bring your inspection report and repair addendum. Confirm that all negotiated repairs have been completed to a professional standard.
- Test Everything: Run the air conditioning and test all appliances. Make sure every system is functioning as it should.
- Check for Included Items: Ensure all items that were supposed to be included in the sale, like appliances, window treatments, and light fixtures, are still in place.
- Look for Signs of Additional Damage: Make sure no new damage has occurred since your last visit. If you see any issues, notify your agent and the title company immediately before you sign any documents.
Sign the Documents
While there are numerous documents to sign, the most important ones are:
- The Closing Disclosure: You will sign the final version of this document, which outlines all your loan terms and costs.
- The Promissory Note: This is your legal promise to repay the loan. The promissory note outlines the loan amount, interest rate, repayment schedule, and maturity date.
- The Mortgage: This document secures the property as collateral for your loan.
Once you have signed everything, you will provide your “cash to close” amount via a cashier’s check or wire transfer. After your lender sends their funds to the title company, the deal is officially funded.
Get Your Keys and Celebrate
Once the deal is funded, the title company will record the new deed with the county, officially transferring ownership to you. After they pay the seller and other parties, you will finally get the keys to your new home.
Congratulations, you are officially a Hawaii homeowner! 🎉
🚩 What are the Red Flags to Look for When Buying a House in Hawaii?
A new home is a huge financial investment. To ensure that you don’t sink your money into a dud, look out for these red flags:
1. Bargain-Priced Homes
An asking price that’s significantly lower than comparable homes in the area seems like a dream come true. But that’s just until the roof collapses or faulty electrical systems burn the house down.
An extremely low price could mean the property is uninsurable, or is located in a high-risk flood zone with steep insurance costs. So before you put in an offer, check the home’s sale history and other permits from the local county’s office. Also, get insurance quotes to understand your total expense better.
2. Neighborhood Sell-Out
During the open house, if you notice too many “For Sale” signs on a single street or in a small community, it should ring alarm bells. It could be due to skyrocketing HOA fees, declining school quality, or a recent increase in crime rates. It could also point to a future nuisance, like a commercial development planned nearby.
Talk to potential neighbors to get their opinion on the area. You can also check community social media pages or online forums like Nextdoor for discussions about local issues.
3. Excessive Use of Air Fresheners
A few scented candles create a welcoming atmosphere, but if a home smells like a lavender bubble burst in it, then there’s something fishy. It may be covering up a musty smell that highlights the presence of mold and plumbing issues.
Pay close attention to the smell in the closets, bathrooms, and around the air conditioning unit. Open kitchen and bathroom cabinets and smell the area under the sink. If you detect a musty odor, ask for a separate mold inspection along with the standard home inspection.
4. Sloping or Uneven Floors
Uneven or bouncy floors in Hawaii homes may indicate structural movement, termite damage, or deterioration from moisture, especially in older plantation-style homes or properties built on slopes.
Bring a marble or golf ball to showings and place it on the floor to check for noticeable sloping. Also look for cracks around door frames, sticking doors, or warped flooring, which can signal deeper structural issues.
5. Roof and Corrosion Issues
Roofs in Hawaii endure intense sun, salt air, wind, and heavy rain, which can significantly shorten their lifespan. A roof nearing the end of its useful life can lead to insurance denial or high premiums, especially in coastal or high-wind zones.
Look for rusted metal components, corrosion on railings or fasteners, and signs of water intrusion. Ask for the roof’s age and material type, and confirm whether it meets current wind and insurance standards.
6. Lava Hazard Zones (Big Island)
On Hawaiʻi Island, properties are categorized into lava hazard zones (1–9). Homes in Zones 1 or 2 may be cheaper, but they carry significant risk, limited insurance availability, and lower resale demand.
Always verify the lava zone before offering, as it can affect financing, insurance, and property value.
What Should You Do After Closing?
Welcome home! Now it’s time to handle a few must-dos to protect your investment:
- File for Homestead Exemption: If the house is your primary residence, apply for Hawaii’s Homestead Exemption to reduce your property taxes. This exemption reduces your assessed property value—often by $100,000 or more, depending on the county, which lowers your annual property tax bill.
- Set Up Utilities: Arrange connections for electricity, water, sewer, trash, and internet as soon as you close. Pest control is highly recommended across Hawaii due to year-round termite, ant, and roach activity, particularly in humid and coastal areas.
- Get Insurance: Homeowners insurance is required if you’re financing, and flood insurance may be needed in FEMA zones. Insurance rates in Hawaii are influenced by roof age, salt-air exposure, wind zones, and proximity to the ocean, so obtain quotes early to avoid closing delays.
- Home Maintenance Plan: Schedule AC tune-ups at least twice a year, clear gutters regularly, and inspect roofs for storm damage or algae buildup. Consider wind mitigation upgrades to reduce insurance costs.
How to Buy a House in Hawaii Without a Realtor?
Research neighborhoods and browse listings on trusted sites like Houzeo. Then, schedule showings directly with sellers or their agents. You can also hire a real estate attorney to review contracts and handle legal details.
Next, get pre-approved for a mortgage, make an offer, schedule inspections, and negotiate repairs. With the necessary due diligence, you can buy a house without a Realtor.
Which First Time Home Buyer Programs in Hawaii Can You Apply For?
Various programs make homeownership accessible for a first time home buyer in Hawaii. They assist with down payments through grants or low-interest, deferred-payment loans. Applicants must meet the income and credit score criteria and complete a homebuyer education course to avail of these programs.
| Program Name | Eligibility | Grants | Key Benefit |
|---|---|---|---|
| Hula Mae Loan Program | First-time buyers; Hawaii residents; strict income & price limits | 30-year fixed rate mortgage + 3% Down Payment Assistance (DPA) | Very competitive interest rates for those who fit the income bracket. |
| HHOC Down Payment Assistance Loan (DPAL) | Must use a Hula Mae first mortgage | Up to $125,000 as a deferred or low-interest second loan | Reduces upfront cash needed in high-cost markets |
| Hawaiʻi County Down Payment Assistance Program | Income-qualified first-time buyers (Big Island) | Up to $30,000 in down payment assistance | Local assistance for Hawaiʻi Island buyers |
| Honolulu County (Oʻahu) Affordable Housing Programs | Income-qualified buyers; primary residence | Varies by program and project | Supports affordable homeownership on Oʻahu |
1. Hula Mae Loan Program
- Eligible Buyers: First-time homebuyers who are Hawaii residents; must meet strict income and purchase price limits.
- Credit Score: Minimum 640.
- Assistance: 30-year fixed-rate first mortgage plus 3% Down Payment Assistance (DPA)..
The Hula Mae Loan Program, from the Hawaii Housing Finance and Development Corporation (HHFDC), offers very competitive interest rates paired with down payment help. Buyers must complete homebuyer education and fit county-specific income brackets, making it ideal for qualifying first-timers in Hawaii’s high-cost market.
2. HHOC Down Payment Assistance Loan (DPAL)
- Eligible Buyers: Must pair with a Hula Mae first mortgage; income-qualified Hawaii residents.
- Credit Score: Minimum 640.
- Assistance: Up to $125,000 as a deferred or low-interest second loan.
The HHOC DPAL from HHFDC slashes upfront costs in Hawaii’s expensive housing market. This second loan remains deferred (no payments until sale/refinance) or at low interest, helping buyers bridge the gap without immediate repayment pressure.
3. Hawaiʻi County (Big Island) Down Payment Assistance Program
- Eligible Buyers: Income-qualified first-time homebuyers purchasing on Hawaiʻi Island.
- Credit Score: Program and lender-specific requirements apply..
- Assistance: Up to $12,500 as a second mortgage with a 3% interest rate.
The Hawaiʻi County Down Payment Assistance Program provides targeted local support for buyers on the Big Island. This program helps cover down payment and, in some cases, closing costs for income-qualified households. It’s an excellent option for buyers who qualify for a first mortgage but need help overcoming Hawaii Island’s high upfront cost barrier.
4. Honolulu County (Oʻahu) Affordable Housing Programs
- Eligible Buyers: Income-qualified buyers purchasing a primary residence on Oʻahu.
- Credit Score: Varies by project and lender.
- Assistance: Varies by program, development, and housing project.
The City and County of Honolulu Affordable Housing Programs support homeownership through income-restricted housing developments, resale-restricted homes, and buyer assistance tied to specific projects. These programs are designed to keep housing affordable for local residents on Oʻahu and often include price caps, resale restrictions, and owner-occupancy requirements.
» First Time Buyer Programs: Find the perfect program that helps you get the key to your first home.
What Should You Know Before Buying a House in Hawaii?
Before you buy a home in the Aloha State, you must understand the factors that can impact your budget and lifestyle.
What are Some Additional Costs When Buying Houses in Hawaii?
Apart from the purchase price, you must account for several other expenses, like property taxes and potential HOA fees. However, the most critical consideration for any Hawaii homebuyer is insurance.
- Why Homeowners Insurance is Crucial: Hawaii’s exposure to hurricanes, volcanic lava flows (especially on the $15,460, which isand), flooding, and wildfires demands robust homeowners insurance. Standard policies often exclude floods and earthquakes, so separate coverage is essential to safeguard your home from events like Hurricane Lane remnants or Kīlauea eruptions.
- High Insurance Costs: Hawaii’s extreme risks drive premiums far above the mainland: in 2026, expect annual costs averaging $4,500–$15,460 statewide (up to 5x the U.S. average of ~$2,500). Oʻahu averages $3,800; Big Island hits $6,200+ due to lava/volcano add-ons. Shop via Hawaii Insurance Division for quotes.
- Choosing the Right Policy: Prioritize hurricane deductibles (2–5% of dwelling value), windstorm coverage, and separate NFIP flood insurance (mandatory for high-risk zones like coastal Oʻahu). Cut premiums 20–40% with wind mitigation: install impact-resistant windows, metal roofs, or concrete block construction. Get a free wind mitigation inspection via HHFDC resources.
Do You Need Separate Flood Insurance in Hawaii?
Yes, you do. Standard homeowners’ insurance does not cover flood damage, so a separate policy is necessary for protection. FEMA maps determine your property’s flood risk:
| Flood Zone | Risk Level | Insurance Recommendation |
|---|---|---|
| A, AE, V, VE | High-Risk | Mandatory for most mortgages. These areas have at least a 1% chance of flooding annually. |
| B, C, X | Low-to-Moderate | Highly Recommended. Roughly 25% of all flood claims happen in these “lower-risk” areas. |
When is Flood Insurance Required?
Whether you need flood insurance typically depends on your property’s location, your mortgage lender, and your homeowners’ insurance provider. However, there are two main situations where flood insurance is mandatory in Hawaii:
- Federally-Backed Mortgages in High-Risk Zones: If your home is in a high-risk flood zone and you have a federally-backed mortgage, federal law requires you to have flood insurance.
- Citizens Property Insurance Policies: Many private lenders, condo associations, and HOAs in Hawaii require flood insurance even if the property is outside a high-risk flood zone. This is especially for coastal homes, ground-floor units, or properties in areas prone to heavy rainfall and runoff. Some lenders may also require flood coverage based on updated flood maps or local risk assessments.
Pro Tip Flood maps change over time. You can check your property’s official flood zone using the FEMA Flood Map Service Center.
Why First-Time Homebuyers Should Explore Hawaii Now?
Hawaii is a smart choice for first-time buyers, thanks to its no-income-tax policy and a market that now favors buyers. From Tampa’s job market to Naples’ coastal charm, there’s a community for every budget.
With thousands of homes for sale and numerous down payment assistance programs, homeownership is more attainable than ever.
» Houzeo Reviews: Read what customers have to say about Houzeo, Hawaii’s best home buying website.
