Hawaii VA Loan: Can I Use it to Purchase New Homes on Oahu?
The answer is, it depends. Allow us to explain.
As new homes on Oahu continue to emerge in communities like Ewa Beach, Kakaako, and Midtown Ala Moana, many prospective home buyers are faced with a level of confusion as to what financing options are available to them when purchasing a new home, directly from a developer. Leading the Oahu development charge at the moment are master planned communities like:
- Ho'opili by D.R. Horton Hawaii: sales currently underway in Liko at Ho'opili, Kohina, A'ulu, & Ilima phases.
- Kakaako: available units at Ward Village, and a new condo project named Ililani hot on the horizon.
- Central Oahu: Koa Ridge is currently in the grading stage, with sales hopeful for 2020.
- Midtown Ala Moana: Sky Ala Moana, The Central Ala Moana, Azure Ala Moana
- Leeward Oahu: Recently announced Cottages at Mauna Olu Estates in Makaha.
The truth is, each development has their own unique financing requirements and due to the luxury price points of some of these buildings, certain financing programs have maximum loan limits that just won't fit the bill. But should you purchase a "resale" home, meaning a home being sold from an owner rather than brand new from a developer, you can bank on nearly all mortgage financing options being available, which would allow you to use your VA loan in Hawaii.
In today's market, most Hawaii mortgage lenders offer conventional financing programs requiring only 3-5% downpayment options to owner-occupant homebuyers, as well as government backed loans like the ZERO Down Payment USDA Loan(location and income restrictions apply) FHA loans, and finally the VA Loan. Be sure to reference your Hawaii BAH in 2020 so you know what budget you have to work with. Your BAH in Hawaii will vary from county to county(which means island to island) so be sure to reference the Honolulu BAH chart if you're looking at the Oahu Real Estate market.
So which Oahu New Home Projects Accept VA Loans?
When residential developers embark on the planning, permitting, and approval process of their projects, they take a hard look at the "Buyer Profile" for the specific neighborhood and price point that their product will serve. To allow VA financing, the developer must apply for "VA Approval" of their project which adds yet another layer to the already lengthy development process. That being said, if a developer believes they can sell their units without applying for the VA Approval, they won't bother taking the extra step.
This is why you see don't see VA financing available on new high-rise condo buildings in Kakaako and Ala Moana -- the buyer profile doesn't justify the need for it.
On the other side of the coin(or island) is West Oahu, which has proven to be an extremely "Military Friendly" market place for Oahu VA buyers. This is due in part to its proximity to Military Bases like Schofield Barracks, Joint Base Pearl Harbor Hickam Air Force Base, and Kaneohe Marine Corp Base.
This is why we see developers like D.R. Horton Hawaii and Castle & Cooke securing VA Approval for their Ho'opili & Koa Ridge projects; the buyer profile calls for it. These developers have much more exposure to not selling their inventory if they restrict VA Buyers from purchasing at their projects.
What is the VA loan limit in Hawaii?
As of January 2020, there are no long VA loan limits in Hawaii, or anywhere else for that matter! You'll still have to qualify for the loan and this largely depends on the ratio between your military housing allowance in Hawaii, and your monthly debts. Check out our blog on the Blue Water Navy Vietnam Veterans Act of 2019 to learn more about these recent changes to the VA loan program.
For more information on your Hawaii VA Loan Benefit, check out the VA Resource we created specifically for our prospective military clients!