article updated: Jan 20, 2026
Quick Summary
The homebuying process in Hawaii follows standard steps, but VA buyers often face hidden delays like appraisal issues, condo approval problems, and title complications. Knowing these pitfalls early can help buyers avoid costly surprises and close on time.
Buying a home in Hawaii isn’t hard — unexpected delays are. VA buyers who understand appraisal rules, condo approval requirements, and island-specific legal issues can avoid most closing problems and move forward with confidence.
Key Takeaways
- The homebuying process in Hawaii includes unique hidden delays
- VA appraisals and condo approval issues are common
- Title and probate problems can slow closings
- Seller education matters more in Hawaii
- Local VA expertise helps prevent costly surprises
The Homebuying Process in Hawaii (And the Hidden Delays Buyers Miss)
The homebuying process in Hawaii generally follows the same steps as anywhere else: pre-approval, offer, appraisal, and closing. However, Hawaii’s unique real estate landscape creates hidden delays that often surprise buyers, especially those using VA loans.
From condo approval issues to appraisal challenges and complex ownership histories, these “small” problems can stall or even derail a purchase if they aren’t identified early.
- This guide breaks down:
- The standard homebuying process in Hawaii
- The most common hidden delays
- How VA buyers can avoid them
The Standard Homebuying Process in Hawaii
Most Hawaii home purchases follow these steps:
- Mortgage pre-approval (VA or conventional)
- Home search and offer submission
- Offer acceptance and escrow opening
- Appraisal and inspections
- Underwriting and final loan approval
- Closing and recording
While the steps look simple on paper, Hawaii adds extra layers that buyers — and even some agents — don’t always anticipate.
Hidden Delays in the Homebuying Process in Hawaii
VA Appraisal and Tidewater Value Issues
VA appraisals in Hawaii can be a major source of delay — not because they’re “harder,” but because values can vary dramatically by neighborhood, building, and even floor level.
Common issues include:
- Limited comparable sales
- Rapid price changes
- Properties priced ahead of market value
When a VA appraisal comes in low, the Tidewater process may be triggered, adding time to the transaction. Buyers who aren’t prepared often feel blindsided.
How to avoid delays:
Work with a lender who understands Hawaii VA appraisals and can prepare strong comparable data upfront.
A few idiosyncrasies in this current market and here on Oahu
Appraisal Clause
Where this comes into play for Veteran buyers is when the appraisal comes in lower than the price agreed upon in the purchase contract. In normal markets, buyers would not accept this. However, because it is such a competitive market and most houses have numerous asking price offers, an appraisal clause is usually necessary to keep VA buyers competitive.
Appraisal clause – One thing much less common in normal markets, but something Veteran buyers utilizing their Hawaii VA home loan benefit now usually need to include is an appraisal clause. An appraisal clause is something written in the purchase contract stating the veteran agrees to pay up to a certain amount over the appraised value and/or agrees to pay the value agreed to on the purchase contract.
Where this comes into play for Veteran buyers is when the appraisal comes in lower than the price agreed upon in the purchase contract. In normal markets, buyers would not accept this. However, because it is such a competitive market and most houses have numerous asking price offers, an appraisal clause is usually necessary to keep VA buyers competitive.
VA condos – So you have a condo you like?
Unlike most conventional financing, you need to check if your condo is on the VA-approved list. You can check if your condo is on the VA-approved list here https://lgy.va.gov/lgyhub/ condo-report. If you do not see your condo on the approved condo list, that does not mean you cannot buy it, it just means you’ll likely need to go through the condo approval process.
This can take 1-2 months and will involve your lender working with the VA and the condo association to provide the necessary documents. These could include:
- Homeowner association bylaws and budget
- Declaration of covenants, conditions, and restrictions
- Special assessments/litigation statements
- Current financials
- Plat or map
- Minutes of the last two homeowner association meetings
The VA will look at owner-occupancy rates and other potential areas which could be red flags with your VA condo purchase. Pending litigation in the condominium complex or pending assessments can be issues that could lead to VA denial of the Condo approval request.
Lava zones
Lava zones are something VA buyers will only have to worry about on the Big Island. There are only two things VA buyers need to be aware of.
First, the VA will lend in any Lava Zone. Most conventional loans do not allow lava zone 1, and neither does FHA. With a VA home loan Hawaii, you have the ability to buy in any lava zone. That being said, the VA will require “lava” insurance for at least the amount of the loan, for homes purchased in lava zone 1 & 2.
Lava insurance will vary by which lava zone the VA buyer is in, and will be more expensive in lava zone 1 than lava zone 2. It’s important to note, Lava insurance will add a significant amount to the monthly payment. Houses tend to be 100-200K less expensive in lava zone 1&2, but the increase in monthly payments due to lava insurance usually offsets most of the savings a buyer will receive from the cheaper price
https://www.benefits.va.gov/HOMELOANS/appraiser_cv_local_req.asp#:~:text=Lava%20Zones%20%E2%80%93%20The%20VA%20will,1%20and%20Lava%20Zone%202.
Water system /water catchment
Another thing common on some of the other islands not named Oahu is properties having water wells or catchment systems. Regardless of which one the property has, the VA requires a water test for a Hawaii home loan.
Click here for the particular VA circular regarding testing requirements, but usually entail water tests for ecoli, metals, etc.
Sewage system acceptability is also a requirement, usually needed for homes on the Big Island, but there are still places on Oahu that have Cesspools. For cesspools, your lender will need to check with the state/local government to confirm the proper permitting of the cesspool. If the home cesspool was improperly permitted, a new/update permit will be needed. Of note:
- If it is an unpermitted cesspool, the buyer may have to install a septic system in order to complete the purchase.
- If additions have been made to the house, then confirm the cesspool/septic can handle additions (ie was a 2-bedroom house and homeowners added another room)
