If you’re getting a loan to purchase a condominium here in Hawaii, here are six considerations you need to make:

1. What’s the owner occupancy level of the condominium project? Some loan types, such as FHA and government loans, require a minimum occupancy level of 50%.

2. Does the condominium association have the right insurance? Lenders won’t write a loan for a property that’s not covered.

3. Is there any pending litigation against the homeowners association? If there is, it’s unlikely you’ll be unable to get a loan of any kind to purchase the property and you may have to pay cash. I once had a client who bought a condo inside a building where the homeowners association was suing the developer, and during the three years the litigation process played out in court, there wasn’t a single sale that wasn’t all cash.

“Lenders won’t write a loan for a property that’s not covered.”

4. Are the reserves sufficient for the homeowners association? If they don’t have the reserves to cover the maintenance needs for the next, say, 10 years or so, your lender may decide against writing a loan for the purchase.

5. What is the delinquency rate on the homeowners association fees? If this rate is over 15%, some government-backed loans might not be able to be finalized due to the extra risk implied.

6. Is the building FHA- or VA-approved? Not all buildings are approved for FHA or VA loans, so make sure you do your research and find out. Also, keep in mind that these approvals aren’t lifetime approvals. They get renewed or discontinued every three years, so just because someone bought a unit in your building using a VA loan five years ago it doesn’t automatically mean you can do the same thing.

If you have any more questions about getting a loan to purchase a condominium here in Hawaii, don’t hesitate to reach out to me. I’d be happy to help you.