Hawaii’s high cost of living and rising interest rates have made it increasingly difficult for families and service members to buy homes. One way to lower monthly payments in paradise is to assume an existing VA mortgage. A VA assumable loan allows a buyer to take over the seller’s mortgage and keep the original interest rate. In today’s environment, many existing VA loans carry rates in the 2–3 percent range, while new mortgages often exceed 6 percent. Assuming a low-rate loan can translate into significant monthly savings.
The following sections explain what VA assumption means, who qualifies and–most importantly–how to search for VA assumable loan homes for sale in Hawaii.
1. What is a VA Assumable Loan?
A mortgage assumption occurs when a buyer steps into the seller’s shoes and continues making payments under the existing loan rather than obtaining a new mortgage. VA, FHA and USDA loans are generally assumable. VA assumptions are particularly attractive because the Department of Veterans Affairs allows any qualified buyer—not just veterans—to assume a VA loan. In Hawaii’s high-priced market, taking over a loan with a 3 percent rate can lower monthly payments by 20–40 percent.
1.1 Benefits
Lower interest rates: Many VA loans originated in 2020–2022 when rates were historically low. Assuming an existing loan allows you to keep those terms and avoid today’s higher rates.
Reduced closing costs: Because you are not creating a new mortgage, closing costs and lender fees tend to be lower.
Simpler qualification: Anyone meeting the lender’s credit and income requirements can assume a VA home loan. There is typically a funding fee of 0.5 percent of the loan balance.
1.2 Limitations
- Availability: Only loans explicitly labeled as assumable (mostly VA, FHA or USDA) can be transferred. Conventional loans often contain a due-on-sale clause that prevents assumption.
- Equity gap: Buyers usually pay the difference between the purchase price and the outstanding loan balance. While this lump sum can often be financed with a second loan on the mainland – most lenders do not offer a second loan to a VA assumable in Hawaii. Thus, assumable loans typically increase the cash requirement to close.
- Lender approval: Even if buyer and seller agree, the lender must approve the assumption. Buyers must submit financial documentation and meet credit and income standards.
2. VA Assumption Requirements
The process of assuming a VA loan mirrors traditional loan underwriting; buyers must meet the lender’s credit score, income and debt-to-income requirements. They must also pay a funding fee (0.5 % of the principal balance) unless exempt due to a service-related disability. Lenders review the buyer’s financial documents and decide whether to approve the assumption. Once approved, both parties sign the assumption agreement, pay the fee and close the transaction.
Although the new buyer does not need to be a veteran, the seller’s VA entitlement will remain tied to the property if the buyer does not substitute their own VA entitlement. Sellers should also obtain a release of liability so they are no longer responsible for the loan.
3. How to Search for VA Assumable Loan Homes in Hawaii
Finding va assumable loan homes for sale Hawaii requires targeted strategies because assumable listings are still relatively rare. Below are research-backed methods to locate these opportunities.
3.1 Use Real Estate Listings and Filters
- Multiple-listing service (MLS) and major portals: Many agents flag assumable loans in the property’s remarks section. Search for keywords like “VA assumable,” “FHA assumable” or “assumable mortgage” on portals such as Zillow, Redfin or Realtor.com.
- Dedicated assumable-mortgage platforms: New prop-tech companies aggregate assumable listings nationwide. AssumeList claims to maintain the largest network of VA, FHA and USDA assumable properties and allows users to search both listed and off-market homes. Roam is another service focusing on mortgages under 5.5 %. However, I do not recommend these as subscription services are often required. A local expert, such as Cathy Possedi can help you.
- Review listing details carefully: Even if the listing doesn’t explicitly say “assumable,” you might find hints—such as a low interest rate or mention of a VA loan—within the property description. Contact the listing agent to confirm whether the loan can be assumed and to ask about the remaining balance and monthly payment.
3.2 Work with VA-Savvy Agents and Lenders
- Local real-estate agents: Agents who specialize in VA transactions can help identify assumable properties, particularly near Hawaii’s military bases. It is always good for buyers to use agents who specialize in VA loans because they can locate properties with assumable mortgages and navigate the process.
- Neighborhood focus: In Hawaii, many military bases are on Oahu and neighborhoods near bases offer the best chance to find sellers willing to accept a loan assumption. Bases such as Schofield Barracks, Joint Base Pearl Harbor–Hickam, and Marine Corps Base Hawaii anchor several communities. Concentrating your search in these areas increases the odds of finding VA assumptions.
- VA loan specialists: Mortgage brokers and lenders familiar with VA loans can check their portfolios for assumable. We likely also know sellers who would consider a VA assumption but haven’t publicly advertised it.
- Online forums and veterans’ groups: Some online communities dedicated to veterans share leads on homes for sale with assumable VA home loan in Hawaii. Posts in military finance forums, specifically focused in Hawaii, may mention upcoming listings or sellers seeking buyers who can assume their loan.
3.3 Top Neighborhoods Near Hawaii Military Bases
Homebuyers looking for va assumable loan homes for sale Hawaii should prioritize communities close to major bases because more sellers use VA financing. The table below lists key neighborhoods and their nearby installations.
| Neighborhood/ Area | Nearby Military Base | Island |
|---|---|---|
| Ewa Beach & Kapolei | Joint Base Pearl Harbor-Hickam, Barbers Point | Oahu |
| Mililani & Wahiawa | Schofield Barracks/ Wheeler Army Airfield | Oahu |
| Kailua & Kaneohe | Marine Corps Base Hawaii | Oahu |
| Waipahu & Waipio Gentry | Joint Base Pearl Harbor-Hickam | Oahu |
| Makakilo & Kapolei | Naval Facilities & H-1 Corridor | Oahu |
These neighborhoods are popular with service members and often have a higher concentration of VA-financed homes. Focusing on these areas can increase your chances of finding an assumable loan listings.
4. Steps to Assume a VA Loan Once You Find a Home
After locating a property with an assumable VA loan, follow these steps to complete the transaction:
- Verify the loan is assumable: Not all VA loans are in good standing. Confirm with the seller and their lender that the mortgage can be assumed.
- Meet credit and income requirements: Provide financial documents—income verification, assets, liabilities, and credit reports—to show that you can handle the payments.
- Submit the assumption request: Both buyer and seller must formally request lender approval for the assumption. Lenders will evaluate the buyer’s financials and the loan’s status before approving.
- Sign paperwork and pay the fee: Once approved, sign the assumption agreement, pay the 0.5 % funding fee (unless exempt), and cover any required down payment to bridge the gap between sale price and the loan balance.
- Close and obtain release: Finalize the transaction. Sellers should obtain a release of liability so that they are no longer responsible for the loan.
5. Tips and Considerations
- Due diligence: Read the original loan documents carefully, paying attention to interest rates, remaining term and any repayment penalties. Ensure that all mortgage payments are current; the loan must be up to date at closing.
- Plan for the equity gap: The sale price will almost always exceed the outstanding balance, so you’ll need cash or secondary financing to cover the difference. Some lenders allow an additional loan as long as the total financing doesn’t exceed about 85–90 % of the home’s appraised value. However, in Hawaii it is very difficult to find lenders who will do a second loan for a VA assumable.
- Allow extra time: VA assumptions can take longer than conventional closings. Buyers, sellers, and agents must coordinate closely and may need contract extensions because lender approval and paperwork can extend timelines.
- Understand VA entitlement: If the buyer is not a veteran, the seller’s VA entitlement remains tied to the loan until it is paid off. Sellers should consider how this affects their future borrowing power. This is especially relevant in Hawaii, as most, if not all VA entitlement typically is used up in Hawaii VA loans. It’s possible the veteran seller would lose the ability to use his VA loan until the loan was paid off.
- Consult professionals: Work with a qualified real-estate agent, lender and, if necessary, a real-estate attorney. Local experts understand Hawaii’s unique market conditions and can advise on whether assuming a loan makes sense given your personal circumstances.
6. Conclusion
The combination of high home prices and rising mortgage rates means buyers in Hawaii must explore creative financing strategies. VA assumable loans offer a unique opportunity to step into a low-rate mortgage and save thousands over the life of the loan. By using targeted search techniques, focusing on neighborhoods near military bases, and partnering with VA-savvy agents and lenders, you can uncover va assumable loan homes for sale Hawaii.
Understanding the eligibility requirements, fees and potential challenges will help you make an informed decision and ensure a smooth assumption process. With diligence and the right team, assuming a VA loan could be your ticket to owning a piece of paradise.
