Buying a Home in Hawaii With Bad Credit

Buying a Home In Hawaii With Bad Credit

Gustan Cho Associates are mortgage brokers licensed in 48 states


In this blog, we will cover and discuss buying a home in Hawaii with bad credit. Hawaii is one of the most beautiful places in the world. Many people relocate to Hawaii, especially retirees. Thousands of people have goals of buying a second home in Hawaii. It is no secret everything is expensive in Hawaii, including home prices.

Great news for homebuyers thinking of buying a home in Hawaii is Hawaii has one of the lowest property tax rates in the nation. Gustan Cho Associates is licensed in Hawaii and has hundreds of mortgage loan options for borrowers buying a home in Hawaii with bad credit. In the following sections, we will cover and discuss buying a home in Hawaii with bad credit.

Buying a Home in Hawaii with Bad Credit

What Credit Score Is Needed To Buy a House in Hawaii?

Buying a home in Hawaii with bad credit is absolutely doable. But what credit score is needed to buy a house in Hawaii? Gustan Cho Associates can help homebuyers with credit scores down to 500 FICO qualify for FHA, VA, and non-QM loans in Hawaii. Buying a home in Hawaii with bad credit and low credit scores is doable even with high-balance jumbo loans.

Mike Gracz, a loan officer assistant for Gustan Cho is an expert in helping borrowers in Hawaii buying in Hawaii with bad credit. Here is what Mike Gracz says about homebuyers buying a home in Hawaii with bad credit:
Not all mortgage lenders in Hawaii have the same lending requirements for government and conventional loans.

How To Get Pre-Approved in Hawaii After Being Denied By Multiple Lenders?

Over 80% of our clients at Gustan Cho Associates are folks who could not qualify for a mortgage at other lenders due to lender overlays. Gustan Cho Associates has no lender overlays on government and conventional loans in Hawaii. Plus, Gustan Cho Associates has lending partnerships with over 190 wholesale lenders.

Do Lenders in Hawaii Have Different Requirements For The Same Mortgage Program?

We have a national reputation for being able to do mortgage loans other lenders cannot do. Most realtor partners refer to us as a one-stop mortgage shop due to our offering thousands of mortgage options including non-QM loans and alternative loan programs for owner-occupant, second homes, and investment property mortgages other lenders do not offer.

What Is The Lowest Credit Score You can Buy a House With

One of the frequently asked questions from our viewers and clients is what is the lowest credit you can buy a house with? Again, not all lenders have the same credit score requirements on FHA, VA, USDA, and conventional loans. Gustan Cho Associates can help borrowers with credit scores down to 500 FICO. Here is a statement by Dale Elenteny, a senior mortgage loan orignator at Gustan Cho Associates:
Even though buying a property on the islands of Hawaii is often a challenge, it’s not impossible. It is very doable and realistic for those with not-so-good credit reports and a bit of prep work. In many cases, those who had previously declared bankruptcy are always concerned about whether or not they can qualify for a mortgage.

Non-QM Mortgage One Day After Bankruptcy in Hawaii

Gustan Cho Associates offers non-QM mortgages one day out of bankruptcy for homebuyers in Hawaii.

Even with a bankruptcy record in your financial history, one can qualify for a mortgage after a couple of years. All you need is to 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 that 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. 

How Do Mortgage Underwriters Qualify Homebuyers in Hawaii?

While it’s true that mortgage lenders heavily consider a borrower’s credit scores, there are other factors that they consider, which means that if you have bad credit. However, if all the other factors they consider are good, you can still qualify for the mortgage. These factors are as follows:

Income history:

this is a very crucial aspect of a mortgage application. Essentially, you need to 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 in which you work. Also, the lender will want to know your income – is it a salary or a commission? You will need to prove whatever type it is with years of history earning the income. For self-employed individuals, you will need to provide bank statements, tax returns, and 1099s to demonstrate how your income has been for a specific period. 

Debt-to-income ratio

Gustan Cho Associates has no lender overlays on debt to income ratio on government and conventional loans. We can go up to 46.9% front-end and 56.9% back-end debt-to-income ratio on FHA loans. We have no maximum debt-to-income ratio caps on VA loans.

  • Your debt-to-income ratio, which divides your total monthly debt service payments by your monthly income, is crucial for mortgage underwriters.
  • The preferable DTI should not surpass 43 percent by most lenders
  • If you have a bad credit history, it is important that you have a much lower ratio. 

How Much Down Payment Is Required To Buy a House In Hawaii

Down payment on a home purchase in Hawaii:

  • 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 the private mortgage insurance premium
  • 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 good mortgage productsthere 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, making them ideal for individuals with a not-so-good credit score and those who do not have a consistent income.

What Types of Loans Are Available For Homebuyers With Bad Credit in Hawaii?

There are several such loans, government and conventional loans with no lender overlays, FHA high-balance jumbo loans, VA high-balance jumbo loans, conventional high-balance jumbo loans, bank statement loans, non-QM jumbo mortgages, 1099 loans, no-doc loans, asset-depletion mortgages, stated income loans, ITIN mortgages, doctors mortgage loans, and hundreds more mortgage loan options for owner-occupant, second homes, and investment properties. 

Steps To Buying a Home in Hawaii With Bad Credit

Once you sort out the funding aspect of your investment, you can now start the process of finding your dream home on the island.

The first step is to Get a real estate agent in Hawaii:

  • The agent will be your main ally throughout the process.
  • Other than helping find an ideal property, the agent will also help when making an offer, negotiating the contracts, and, lastly, navigating 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. 

Get approved for the mortgage when buying a house in Hawaii with bad credit:

  • as discussed above, approach a lender who could offer you a mortgage
  • even with a not-so-perfect credit score, and get a pre-approval letter, which would come in handy when looking for a house.
  • Many home sellers in Hawaii need to see a mortgage pre-approval before showing the house to determine whether they are serious buyers or you might just be wasting their time.

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 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. 

Best Places To Buy a House in Hawai During Competitive Housing Market

So, where should you look for property 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 that everyone wants to have a piece of. With that said, here are the top areas you should concentrate on in your house hunt:


  • The town of Wailuku is an area that 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. 


  • The town of Waikiki is full of life and has been a favorite to tourists and locals as well, and has recently seen home values increase by 11 percent last year.
  • With many tourists coming into this area, it is the perfect place for investment property. 

Metro Honolulu:

  • the Metro Honolulu area has modest growth and 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, as they also have a thriving property market. With regards to the prices of properties in these areas, there are over 5000 properties on the market, with the average price per house at 830,000USD, which is about 660USD per square foot.

Making a Home Purchase Offer

Make offer after you get a home that 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. It would be best if you involved an expert in this. Then as the last step, you just need to navigate through the closing process where with the help of your agent and a lawyer. It should be smooth and accurate, especially when signing documents and making final payments. 

Getting Pre-Approved Buying a Home in Hawaii With Bad Credit

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 in the past, it doesn’t mean you can’t qualify for a mortgage today. If you have turned your financial situation around and proven that you have a solid income and a large down payment, you will qualify for a loan. A mortgage broker will help you go through the processes, which is why you should get in touch with one today.      

This article on Buying a Home in Hawaii with bad credit was published on October 12th, 2022.

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