Buying a Home in Hawaii With Bad Credit

This guide covers buying a home in Hawaii with bad credit and low credit scores. Even though buying a home in Hawaii on the islands is often a challenge, it’s not impossible.  It is doable and realistic for those with not-so-good credit reports and some prep work. In many cases, those who had previously declared bankruptcy are always concerned about whether or not they can qualify for a mortgage.

Even with a bankruptcy record in your financial history, one can qualify for a mortgage after a couple of years. You must prove to the lender that you have turned your financial situation around.

Even if you don’t qualify for a conventional loan, there are several non-qualified mortgages you can apply for and qualify for. So, if you have a not-so-perfect credit score, you should know you can still realize your home ownership dream in Hawaii. In this article, we will tell more about this, plus what you can do to realize your dream. 

What Are The Eligibility Requirements For a Mortgage Buying a Home in Hawaii

While it’s true that mortgage lenders do heavily consider a borrower’s credit scores, there are also other factors that they consider, which means that if you have bad credit. However, all the other factors they consider are good. You can still qualify for the mortgage. In the following sections, we will cover the factors required to qualify for a mortgage when buying a home in Hawaii.

Employment and Income History

Income history – this is a very crucial aspect of a mortgage application. Essentially, you must show the lender a solid history of earning an income that could support mortgage payments if granted.

The lender will want to know how you earn, how long you have been earning, and the industry type you work in. Also, the lender will want to know the type of income you are earning – is it a salary or a commission?

Whichever type it is, you will need to prove with years of history earning the income. For self-employed individuals, you must provide bank statements, tax returns, or 1099s to demonstrate your income for a specific period. 

How To Calculate Debt-To-Income Ratio Buying a Home in Hawaii

Debt-to-income ratio – your debt-to-income ratio, which divides your total monthly debt service payments by your monthly income, is also crucial for mortgage underwriters. The most preferable DTI should not surpass 43 percent; you must have a much lower ratio if you have a bad credit history. 

Down Payment Requirements Buying a Home in Hawaii

Down payment – the amount you put down as a down payment can also massively influence your eligibility for a mortgage. The more you put down, the more secure the mortgage will be from the lender’s perspective to the point where if you were to put down more than 20 percent, you might not be required to pay private mortgage insurance premiums. Also, the amount you use as down payments should have been in the account for at least two months to have met federal ‘seasoning’ requirements. 

Mortgage Loan Options For Buying a Home in Hawaii

There are favorable mortgage products – there are two types of mortgage products: qualified and non-qualified mortgages. While qualified mortgage requirements are stricter as they must conform to the guidelines set by the government to protect the lender, non-qualified loans have more relaxed requirements, which makes them ideal for individuals with a not-so-good credit score and also those who do not have a consistent income. Several such loans include bank statement loans, jumbo mortgages, 1099 loans, and many more. 

Getting a Realtors Buying a Home in Hawaii 

Once you sort out the funding aspect of your investment, you can start finding your dream home on the island. First, Get a real estate agent in Hawaii – the agent will be your main ally during the entire process. Other than helping find an ideal property, the agent will help make an offer, negotiate the contracts, and navigate the closing process. So, given how crucial the role of an agent is, make sure that you take your time when finding one to ensure that you get the best one. 

How To Get Approved For a Mortgage For a House in Hawaii

Get approved for the mortgage – as discussed above, approach a lender who could offer you a mortgage, even with a not-so-perfect credit score, and get a mortgage pre-approval letter, which would come in handy when looking for a house. The reason is that many home sellers in Hawaii need to see a mortgage pre-approval before they can even show the house to determine whether you are a serious buyer or you might just be wasting their time.

Shopping For a Home in Hawaii

Select the right location for house hunting – when selecting the right neighborhood to buy property in Hawaii, there are a few factors that you need to consider: the prices of the house in that area, the availability of basic amenities in the region, and whether the location can support your lifestyle.

Honolulu should be the first place you start your house hunting as it offers everything property buyers are looking for, from excellent shopping centers and schools to medical facilities.

When it comes to searching for a home, you can go through local listings until you find a house that meets your specific needs. Remember that you will be going through properties that are within your budget. 

So, Where Should You Look Buying a Home in Hawaii?

We can all agree that other than having beautiful beaches, mountains, and nature, Hawaii has a unique culture and traditions, making the island a paradise everyone wants to have a piece of. With that said, here are the top areas you should concentrate on in your house hunt:

Wailuku, Hawaii

Wailuku, Hawaii, is strategically positioned, taking you only ten minutes from Kahului Airport, and has numerous local businesses that go from one generation to the next. It has the most affordable rent on the island and has seen a rise in homes in the last couple of years. 

Waikiki, Hawaii

Waikiki – this town is full of life and has also been a favorite to tourists and locals. And has recently seen home values go up by 11 percent last year. With many tourists coming into this area, it is the perfect place for investment property. 

Metro Honolulu

Metro Honolulu – the area has modest growth. Therefore, it has a strong job market, becoming a magnet to many investors looking to capitalize on the high number of workers in the town looking for places to rent.  Other places you should look at include Hilo and Kihei, which also have a thriving property market. With regards to the prices of properties in these areas – as of now, there are over 5000 properties on the market, with the average price per house at 830,000USD, which is about 660USD per square foot.

How To Make an Offer Buying a Home in Hawaii

Make an offer – after you get a home you like, you should make an offer, where your estate agent helps create a compelling offer that would certainly increase your chances of getting your house. While at it, be sure to visit the house to carry out inspections to ascertain its condition before you pay for it. You should involve an expert in this. Then, as the last step, you need to navigate through the closing process with the help of your agent and a lawyer. It should be smooth and accurate, especially when signing documents and making final payments. 

Getting Started To Qualify For a Mortgage Buying a Home in Hawaii

As you can see, having bad credit should never get in the way of your home ownership dream. If you have had some credit issues, it doesn’t mean you can’t qualify for a mortgage today. If you have turned your financial situation around and prove that you have a solid income and a considerable down payment, you will qualify for a loan. A mortgage broker will help you through the processes, so you should contact one today.  

The team at Gustan Cho Associates has a national reputation for being able to do loans other lenders cannot do. GCA are experts in originating consumer, business, commercial and residential loans.

If you are buying a home in Hawaii and want to explore your mortgage options with a national lender with no lender overlays and the most competitive rates, contact us at Gustan Cho Associates at 262-716-8151. Text us for a faster response. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays. We have a national reputation for being a one-stop lending shop. There is no loon product in the marketplace that Gustan Cho Associates does not have.