Thinking about buying a house in Hawaii? You’re probably already dreaming of sunshine, surfing, lush greenery and blue water. There is plenty to love about living in the Aloha State, obviously — but the process of purchasing property here won’t feel like a vacation. As you try to figure out where to live, what to expect and how much to budget, use this as your guide to buying a home here on Hawaii Island.

Tips for buying a house on Hawaii Island

The most unique aspect of buying a home on Hawaii Island is figuring out which area on the island in 1 of 9 island wide zones to call home.

Learn More About Each Region by clicking on the links below:

North Kona, South Kona, North Kohala, South Kohala, Hamakua, North Hilo, South Hilo, Puna and Kau.

The Big Island is by far the most affordable option in the Hawaiian Island chain. Single-family home sales from 2022 peg the median price between $900,000 to $1,300,000 depending where along the West Hawaii region you want to call home. If your interested in something less there are more affordable areas across the island. Call to inquire.

That $1 million price tag means you’ll want to compare jumbo loan options. In Hawaii, any loan over $970,800 exceeds conforming loan limits in 2022 our Hawaii  Jumbo loans are available for owner occupants, second homeowners or investors shopping for loans greater than $1,089,300 throughout Hawaii. You have the choice of a fixed or adjustable rate.

Things to know about buying a house in Hawaii

  • Property taxes: Buying a house in Hawaii may be expensive, but property taxes here are actually quite affordable. Relative to tax rates in other states, Hawaii’s property tax rate is very low. According to the Tax Foundation, you can expect to pay an average of 0.31 percent of your property’s value each year.
  • Dual agency: In Hawaii, your real estate agent might potentially also represent the seller of the home you are trying to purchase. It’s called dual agency, and it’s legal throughout the state — but if it’s the case, your agent is required to inform you prior to signing a contract.
  • Seller’s disclosure: The state of Hawaii requires all sellers to complete a disclosure document that outlines their knowledge about the property, including defects and past damages. Read this report carefully before you sign off on the deal.
  • Closing costs: As in any state, buyers here need to set aside additional funds for their portion of the closing costs. In 2021, the average closing costs in Hawaii — excluding transfer taxes, which are typically paid by the seller — added up to $5,879. Keep in mind that closing costs vary based on the lender, too, so be sure to shop around for a lender with limited or no origination and underwriting fees.
  • Attorneys: Unlike some other states, you are not legally required to hire a real estate attorney in Hawaii.
  • Climate and weather considerations: The natural beauty and idyllic weather of Hawaii are world-famous, but don’t forget that you’re also subject to nature’s challenges here. State data estimates that around 66,000 residents are in potential coastal flooding risk zones. So in addition to a standard homeowners insurance policy, you may need to pay extra for flood insurance, too. Outside of natural sea level rise, you should also think about hurricane insurance to protect your investment from a major storm. And here’s a Hawaii-specific consideration you may not have thought about: You should also check to see if your policy covers potential damages from volcanic lava flow.

How much house can I afford in Hawaii?

Before you think about how much you should spend on a house in Hawaii, think about how long you plan to live here. Buying a house comes with a lot of one-time fees, so you need to be fairly confident that you aren’t going anywhere for a while. If that’s the case, you may well be a good candidate to buy a house.

Now, it’s time to think about what you can comfortably spend. Developing a budget for a house can be overwhelming: To help make sense of the money to budget try this home budget calculator. The general rule of thumb is that you should not spend more than 28 percent of your monthly income on a mortgage payment. So, if you earn $40,000 each month, your monthly housing bill should not exceed $11,200.

Saving for a down payment in Hawaii

The down payment can be the most daunting piece of trying to buy a home and in Hawaii, with home prices being so high, it can feel almost impossible. However, there are a few ways to get some help with that upfront cost. For example, an excellent local program offered by the Hawaii Homeownership Center is affiliated with non-profit organizations, HHOC Mortgage and HHOC Housing and Land Trust. HCOC first-time homebuyer down payment assistance program can offer funds for eligible buyers.

In addition to state and local programs, be sure to consider national down payment assistance options.

Need a Loan? Get pre-approved for a mortgage-know what you can afford.

A mortgage pre-approval is one of the most important pieces of the home buying puzzle. It serves as evidence that a lender has looked through your finances and is highly likely to offer you a loan. A seller isn’t likely to take you as seriously without it. Having this also helps me determine your search parameters for properties int he various areas of interest to purchase. Narrowing the price option ability helps guide Buyers to homes that make sense for their bottom line.

-Find the best lender for you

You don’t have to find a bank or a credit union or a private mortgage broker with a physical branch in Hawaii to get your mortgage. There are plenty of Hawaii mortgage lenders are licensed in the state but conduct their operations online. Regardless, finding the best lender for your needs involves comparing a few different options to see who can offer you the best mix of low rates, low fees and a fast closing timeline.Check out this link to my preferred lender list right here in Hawaii. If you have any questions anytime please give me a call. 

Start house hunting and make an offer

You can now start imagining yourself waking each morning in Hawaii, sipping Kona coffee while breathing in the fresh Pacific air. However, that might not be a ton of properties for sale. According to 2022 2022 data comparisons to 2021, the number of listings has declined by more than 13 percent over the last year. Certain locations might have very slim pickings.

Start the process with an open mind and a willingness to consider anything that comes close to meeting your needs. You can always renovate, remodel and upgrade to your liking in the future. Don’t rule out condos, either: here on Hawaii Island a condo costs less than half of a single-family home in some cases.

Recommending a home inspection and appraisal (lender requirement)

How exciting you’re now in contract and it’s time to make sure everything you can’t see is in good working condition. It’s smart to make your offer contingent on the property passing a home inspection. A professional inspector will take a look at the wiring, plumbing, roofing, HVAC system and more to make sure there won’t be any surprise issues after you move in.

If you’re getting a mortgage, your lender will require a professional appraisal as well. This verifies that the home is worth what you have agreed to pay for it. It’s a way of protecting the lender in the event that you default on the loan.

Do a final walk-through and close on your Hawaii home

A lot can happen between the time you submit an offer and closing day. So, before you head to your closing, be sure to schedule a final walk-through. This is your last chance to make sure that the home is ready for you, in the condition you expected. Give it a close look, and then, it’s finally time. Go to your closing, sign everywhere the various representatives tell you to put your autograph, and hand over a certified or cashier’s check for your closing costs.

My favorite part—here are your keys!