Buying a home in Hawaii is exciting, but the loan side can feel like a lot of paperwork and waiting. It becomes easier once you know what to expect next. At Smart Money, we have helped families across Hawaii finance their homes since 2007, and this guide walks you through each step of the mortgage process, from setting a budget to getting your keys.
The 9 steps in the mortgage process are
- Set your budget
- Get pre-approved
- Choose your loan program
- Find a home and make an offer
- Complete your full loan application
- Schedule a home inspection
- Get the home appraised
- Loan processing and underwriting
- Sign and close through escrow
If you are buying your first home on Oahu, our guide for first-time homebuyers in Honolulu also covers local challenges like high prices and limited inventory.
Step 1: Set Your Budget
Start with the monthly payment you are comfortable with, not the highest price you might qualify for. Your full payment usually includes principal, interest, property taxes, and homeowners insurance. Depending on the loan and the property, it can also include mortgage insurance and condo or HOA fees.
Lenders look at two numbers when deciding how much you can borrow:
- Debt-to-income ratio (DTI): your monthly debt payments, such as car loans, credit cards, and student loans, compared to your gross monthly income.
- Loan-to-value ratio (LTV): the loan amount compared to the home’s value. A larger down payment lowers your LTV.
Try different prices and rates with our mortgage calculators. Rates have a direct effect on what you can afford, so it also helps to understand how mortgage rates affect your buying power.
Step 2: Get Pre-Approved
A pre-approval letter shows sellers that your finances have been reviewed and that you are likely to get the loan. In a competitive market like Hawaii, many sellers and agents expect to see one with your offer.
Pre-Qualification vs. Pre-Approval
- Pre-qualification is a quick estimate based on what you tell us about your income, debts, and assets. It helps you see a price range, but nothing is verified yet.
- Pre-approval goes further. Your income, credit, assets, and debts are reviewed and verified, so the letter carries more weight with sellers.
Documents You Will Need for Pre-Approval
- Recent pay stubs and W-2s
- Your two most recent months of bank statements
- Tax returns, especially if you are self-employed
- Permission to pull your credit report
- A list of your current monthly debts
Your credit score affects both your rate and your loan options. If your score needs work, read our tips on the role of credit scores in mortgage approval. After your credit is pulled, you may also get calls from other lenders. These are known as trigger leads, and you do not have to respond to them.
To get started, see how our loan process works or contact us to pre-qualify.
Step 3: Choose Your Loan Program
Smart Money is a mortgage broker, so we compare loan options from multiple third-party lenders instead of offering one bank’s products. That helps us match the loan to your goals, credit, and down payment. Common programs include:
- Conventional loans for borrowers with solid credit and steady income
- FHA loans with lower down payment and more flexible credit guidelines
- VA loans for eligible veterans, service members, and surviving spouses
- USDA loans for eligible buyers and properties in qualifying areas
- Portfolio and hard money loans for borrowers and properties that fall outside standard guidelines
You will also choose a rate type. A fixed-rate mortgage keeps the same principal and interest payment for the life of the loan, which often suits buyers who plan to stay long term. An adjustable-rate mortgage has a rate that can change after an initial period, which may suit buyers who expect to move or refinance sooner.
Step 4: Find a Home and Make an Offer
With your pre-approval in hand, you can shop within a clear price range. Our open house checklist can help you look past the staging.
When you find the right home, your real estate agent will help you write the offer, including contingencies for financing, inspection, and appraisal. Once the seller accepts, escrow is opened. In Hawaii, a neutral escrow company holds the deposits and documents and handles the closing.
You will also put down an earnest money deposit to show the seller you are serious. Hawaii purchase contracts often include an initial deposit and an additional deposit later in the process. Your agent can tell you what amounts are typical for the property and when each one is due.
Step 5: Complete Your Full Loan Application
Once you have a signed purchase contract, your loan moves from pre-approval to a full application for that specific property. Much of your information is already on file, but expect to provide:
- The signed purchase contract
- Proof of your earnest money deposit
- Updated pay stubs and bank statements
- A signed gift letter if family is helping with your down payment
- Two years of tax returns if you are self-employed
Within three business days of your application, you will receive a Loan Estimate. It shows your interest rate, estimated monthly payment, and estimated closing costs. Look at the APR as well as the rate, since the APR includes certain loan costs. Our guide to the differences between APR and interest rate explains why that matters. This is also a good time to talk with us about locking your rate.
If you are self-employed and your tax returns do not reflect your true cash flow, a bank statement loan may be another option.
Step 6: Schedule a Home Inspection
A home inspection is for your protection and is separate from the appraisal. A professional inspector checks the home’s condition, including the roof, foundation, plumbing, electrical, and major systems. Many Hawaii buyers also order a termite inspection.
If the inspection finds problems, your agent can help you ask for repairs or a credit, renegotiate the price, or cancel within your inspection contingency period. Some buyers skip the inspection to compete, but that means you may not learn about costly repairs until after you move in.
Step 7: Get the Home Appraised
The lender orders an appraisal to confirm the home’s value supports the loan amount. An independent appraiser reviews the property and recent sales of similar homes nearby.
- If the appraisal matches or exceeds the purchase price, your loan moves forward.
- If it comes in low, you can renegotiate the price with the seller, cover the difference in cash, or restructure the loan.
If you are buying a condo, the lender may also review information about the condo association. Leasehold properties can need extra review as well, so let us know early if the home you want is leasehold.
Step 8: Loan Processing and Underwriting
Processing and underwriting are where your loan is verified and approved. Here is what happens behind the scenes:
- Your loan processor verifies your income, employment, credit, and assets.
- A title search is ordered to confirm the property can transfer with clear title.
- Late payments, collections, or large deposits may need a written explanation.
- The processor sends the complete file to the underwriter.
- The underwriter reviews everything against the loan program’s guidelines and may issue a conditional approval with a list of remaining items.
- Once all conditions are met, your loan receives final approval, often called “clear to close.”
How to Keep Your Loan on Track
- Respond quickly to document requests, especially if your rate is locked or your closing date is close.
- Do not move money between accounts without a paper trail.
- Avoid large purchases or opening new credit until after closing.
- If you will be off-island near your closing date, ask us about a power of attorney.
Step 9: Sign and Close Through Escrow
At least three business days before closing, you will receive your Closing Disclosure. Compare it to your loan estimate and ask us about anything that changed.
Closing in Hawaii works a little differently than in many mainland states:
- Signing comes first. You sign your loan and escrow documents in front of a notary, usually a few days before the closing date. This can happen at the escrow office or with a mobile notary.
- Funds go to escrow ahead of time. Your closing funds are sent by wire transfer or cashier’s check. Personal checks are normally not accepted. Always confirm wiring instructions by phone with your escrow officer at a number you know is correct.
- Closing happens at recording. Escrow sends the documents to the State Bureau of Conveyances in Honolulu. Your purchase is officially closed when the deed is recorded, and then you get your keys.
If you are refinancing a home you live in, the timing is different. Federal law gives you three business days after signing to review your documents and cancel if you choose, before the loan funds.
Frequently Asked Questions
How long does the mortgage process take in Hawaii?
It depends on your loan program, how quickly you provide documents, the appraisal schedule, and the closing date in your purchase contract. Getting pre-approved before you shop and responding quickly to requests are two of the most reliable ways to keep your loan on schedule.
What is the difference between a mortgage broker and a lender?
A lender funds your loan. A mortgage broker compares options from multiple lenders and manages your loan from application to closing. Smart Money Inc. is a licensed mortgage broker, and all of our loans are brokered through third-party lenders.
Do I need a large down payment to buy a home in Hawaii?
Not always. VA and USDA loans offer zero down payment options for eligible borrowers, and FHA and some conventional loans allow lower down payments. We can show you what each option would cost before you decide.
Can I get a mortgage if I am self-employed?
Yes. Lenders typically ask for two years of tax returns to document self-employed income. We work closely with self-employed borrowers to find a loan that fits how they earn.
When do I get the keys to my new home in Hawaii?
Usually on closing day, after the deed is recorded at the Bureau of Conveyances and escrow confirms it. Your real estate agent will coordinate the key handoff.
Start Your Hawaii Mortgage With Smart Money
Smart Money is a mortgage broker serving the State of Hawaii. We help first-time buyers, investors, and homeowners looking to refinance with conventional, VA, FHA, USDA, portfolio, and hard money residential home loans. Our team has closed thousands of loans, and we stay with you from pre-approval through closing day.
Ready to see what you qualify for? Apply online or call us at (808) 447-1850, Monday through Friday, 8:30 a.m. to 5 p.m.
Smart Money Inc. Company NMLS ID #273384