How to Pay for Property in the Virgin Islands
Whether you’re looking to buy property in St. Croix as your primary residence, as a vacation home, or as an investment, your first consideration is how you’ll pay for it. Below, the common options for paying for your piece of paradise.
Cash
It goes without saying that cash is king in any real estate transaction — if you can afford it, of course. Cash offers are generally most attractive to sellers because of the lack of hassle, and cash real estate transactions typically have shorter closes of as few as 30 days.
Conventional Financing
You can of course purchase a home in the Virgin Islands with a conventional mortgage, but your loan must come through a local lender. We at Farchette & Hanley recommend local mortgage brokers who can find you the best rates. However, fixer-upper properties — ones that are not “functional” in their current form — are typically ineligible for mortgage financing. Also, Fannie Mae recently changed the condo requirements for lenders and all complexes will require an extensive review prior to financing approval. We anticipate this to be a bumpy road for many, and the result will likely be that many complexes are no longer eligible for mortgages. We strongly suggest checking with a reputable mortgage broker regarding any property you seek to purchase with a mortgage.
VA/FHA Loans
Those who may qualify for VA or FHA loans should speak with a local mortgage broker to ensure compliance. Also, as FHA and VA loans have specific rules regarding a property’s condition and functionality, you may find that the property you have selected may not qualify for VA or FHA financing. For example, louvred windows in a bedroom that do not allow egress — a common construction in the Virgin Islands — will not pass muster for an FHA or VA loan.
Home Equity or Other Asset-Based Loan
An option for those who have adequate equity in their primary residence, home equity loans or HELOC (home equity line of credit) may be an option, as might an asset-based loan such as a portfolio line of credit. These have the benefit that they act like a cash purchase of property in the Virgin Islands — which means you may be able to buy a condo or other property that doesn’t qualify for conventional financing. It’s best to seek the advice of a trusted financial advisor to see if this is the right option for you.
Seller Financing
Though not very common, some Virgin Islands property sellers may offer financing plans to qualified buyers. Just be aware that these typically require a large down payment of 50% or more as well as an aggressive short-term repayment plan, with a large balloon payment due upon completion of the term.
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