When my husband received orders to Hawaii, we were on our fourth military assignment and about ten years into our military life. The idea of moving to Hawaii was extremely exciting due to the fact that he received the news while on an eight-month sea deployment while I was home with a then two-year-old and a baby – it was a light at the end of a long year!

I’m not sure if it was more the desire to put down roots amidst a lifestyle that had been so transient or more that the opportunity to buy a home in one of the most beautiful places in the world was so freshly appealing, but while waiting for his deployment to end, we began looking online at homes for sale on Oahu.

Getting Started

We knew a little bit about the VA home loan program at the time. Primarily, that we could buy up to the VA loan limit for Oahu with no down payment.

The year was 2012 and the VA loan limit was $695,750.

I set that sale price as our max and started searching from there. On our own, we also contacted a Hawaii realtor who set us up with MLS listing feed.

We zeroed in on Kailua as my husband would be assigned to Marine Corps Base Hawaii.

There were a few things we figured out as soon as we started looking:

  • Kailua’s market was not going to give us much to choose from (as far as 3 bed/2 bathroom single family homes in above average or excellent condition) at a VA loan limit under $700,000.
  • Homes for sale that did fit our preferences in Kailua were in the range of $750,000 to $800,000 in 2012.
  • The 2012 BAH for Hawaii at my husband’s rank would be $3,168 per month. At an interest rate of 3.75%, that gave us an estimated single family home price of $617,000 – under the VA loan limit, but well under our desirable listing price range of $750K-$800K.


How would we be able to afford a higher mortgage payment to get the kind of home we wanted?

We had a couple of good things going for us:

  • Our only debt was two car payments. We paid off any credit card purchases each month.
  • We had a good chunk of savings for a down payment. Personal note: I worked full-time before having kids, and we saved a large percentage of my paychecks each month and used the rest to pay off student-loan debt.

We called a VA loan lender to get pre-approved and pre-qualified. What they told us was exciting: due to our current financial situation, if we paid off our highest car payment, we could get pre-qualified for approximately $900,000.

Wow, we thought, that seems like a lot!

So, how could we afford a higher mortgage payment with a current BAH of $3,168?

  • We’d have to consider using COLA (Cost of Living Allowance). At the time, COLA was roughly $1,100 per month.
  • If we used both BAH and COLA, that would give us a monthly mortgage payment of $4,268 and an estimated home price of $850,000 at a 3.75% interest rate.

Was it worth going “all in” with BAH and COLA to get the type of home we wanted? We decided that it would be, if we found something that we considered our perfect investment. We continued looking, but increased our search to homes around $900,000.

The Home Search & VA Jumbo Loan

Now that we were headed over the VA loan limit price, we had to look at the VA JUMBO LOAN option which required a down payment. We calculated that our comfortable max offer on a home would be $860,000 to leave us some home improvement funds.

For a VA Jumbo Loan, that down payment and financing scenario would look like this:

  • Purchase Price = $860,000
  • Honolulu County VA Loan Limit in 2012 = $695,750
  • Difference = $164,250

Since the VA will guarantee 25% of the total loan amount, we would need to cover 25% of the difference shown above:

  • Difference = $164,250 x 25% = $41,062.50
  • Down Payment = $41,062.50

Then, subtract the down payment requirement from the purchase price and get the “Base Loan Amount”:

  • Purchase Price ($860,000) – (Down Payment) $41,062 = Base Loan Amount of $818,938

After calculating, that would give us about a $4,100/month mortgage payment with the VA’s benefit of no mortgage insurance required. Again, we’d be going all in with BAH and COLA.

One of the house hunting strategies I had was to look at homes up to $900,000 that were on the market for more than a couple months. That would be difficult in Kailua, because homes sell pretty fast, but nevertheless, I continued to focus on the amount of time a home was listed, because the longer a home was on the market, perhaps the seller would be more willing to contemplate a lower offer.

Finding the House

I was doing my usual online search for Oahu homes and suddenly a 3 bedroom/2 bathroom home in Kailua appeared that I had not seen come up yet. Its price had recently been reduced from $925,000 to $895,000. The pictures looked inviting: simple, open, lots of green, and above average condition. I looked at the listing date – January! It had been listed for nearly three months. How could it still be for sale?

I immediately sent the link to our agent and told her that we’d love to look at it in a couple weeks when we went for house hunting leave (if it was still on the market). I checked the listing every day hoping that it would never be updated to “In Escrow.” Each day, I would still be in awe that it wasn’t. Yes, pictures can be deceiving, but I was sure that this home was no trick.

Making an Offer

During our house hunting trip to Oahu, we looked at several houses and condos on the Windward side, but our agent saved the best for last: the home in Kailua listed at $895,000 that had been on the market since January.

We pulled up to the home in our agent’s car.

“The sellers’ agent said they reduced the price today to $875,000,” our agent told us.

Whaaaaat?????? Another price reduction!

We walked inside. It was exactly as pictured, except for what wasn’t pictured: the bathrooms.

They needed a ton of work. They were original from the home’s construction in the early sixties, but they were functional. The fans and lighting could use updating, there was no AC, but other than that, it had a nice layout, open-beam ceilings, and a beautiful garden/yard. As we sat in the living room listening to the tradewind through the palms, we knew it was the house we would make an offer on.

“Let’s start at $830,000,” our agent advised knowing our max was $860,000.

We submitted our offer and waited. Later that evening, the sellers countered at $850,000. We couldn’t believe it! We accepted and continued with the VA loan process.

The VA Appraisal

After the VA appraisal, we received some worrisome news. The VA appraised the home in the low $800,000 range. In order for us to go ahead with the purchase, the sellers had to agree to that sale price. Would they accept or wait for a higher offer? If they accepted, that would be more than $100,000 less than their original listing price in January 2012. We thought we may have lost the home. Still, we waited for our agent to call us with the news…

The sellers accepted the VA appraised sale price!

From there, the VA loan process went smoothly, and we closed exactly two months from our first offer.

Becoming Hawaii Homeowners

It has been six years since we moved into our Hawaii home. My husband was able to do two assignments in Hawaii (along with an unaccompanied one year tour elsewhere), and we are looking ahead to his military retirement in less than two years. We enjoy living in Hawaii so much. The energy here is so special and we just want to be a part of it. Our family hopes to live here for as long as we possibly can.

Today, our mortgage payment is covered by BAH. From 2012-2015, BAH increased $876 for us. I also started working again once my kids started school. When my husband retires and begins job hunting, we’ll need to make sure we reevaluate our finances. Since we’ve purchased, our home value has increased approximately $200K-$300K based on various websites like Zillow and Realtor.com. We’re proud of our investment!

Final Thoughts

VA home buyers to future VA home buyers, our advice is this:

  • Don’t doubt that your service can benefit you in terms of your ability to become a homeowner and invest in real estate.
  • Find out what you can get pre-qualified for and what you can do to get pre-qualified for a higher amount.
  • Pay off or down your debt.
  • Save any extra income you can. A year of financial discipline can help you achieve so much.
  • Be willing to see the potential in a listing over what may be an eyesore (in our case, it was both bathrooms that eventually had to have their plumbing replaced).
  • Don’t give up on your home buying goals. As you can see from our experience, timing is important. Be patient with the market even when it looks like there’s nothing available for you. Stay committed, and your time will come!