BY KATRINA VALCOURT
It sounds too good to be true, but imagine taking out a loan to buy a house without putting any money down. Conventional wisdom suggests you need to front at least 20 percent of the purchase price of a home, but it turns out there are ways to qualify for a loan without a huge down payment. “Most people don’t know about it,” says Kalama Kim, president of the Honolulu Board of Realtors, who will lead a seminar on March 26 explaining how this is possible. Here’s a quick rundown of each option:
1. JOIN THE MILITARY
VA loans from the U.S. Department of Veterans Affairs are available to veterans who meet certain criteria. While most people probably won’t want to join the military just to buy a house, current or soon-to-be veterans should look into VA loans, which Kim says offer the same fixed rate as regular mortgages, but with no money down.
2. BUY A HOUSE IN A RURAL AREA
The U.S. Department of Agriculture issues loans with no money down for houses in certain areas along the Wai‘anae coast, in Kapolei, ‘Ewa Beach, Makakilo, Waikele, Waipi‘o, Kunia, along the North Shore and in Waimānalo. “A lot of the island is eligible,” says Kim, though there are income restrictions and you will have to pay a mortgage insurance premium if you don’t put any money down. USDA loans are only for owner-occupied residences.
3. GO NATIONAL
There’s another, non-government program that utilizes national vendors to get you a loan for a house anywhere on the island, worth up to $1 million. The interest will be higher and you’ll have to join a credit union, but you won’t have to put any money down at the start.
A fourth option could be a Hula Mae loan, but Kim says the program has not been funded in two years.
Learn more at the “Buying with No Money Down” seminar, where Kim, along with a loan officer and a realtor, will go into detail about these programs. They will also go over how to negotiate when you’re up against someone else who can put money down. “It’s actually not too good to be true,” he says.
(source: buy a house with no money down)