With outdoor beauty, big companies like Amazon and Microsoft, and no state income tax, Washington continues to welcome new residents. In fact, more people have moved into the state than out of the state in the past three decades.
This influx can mean trouble for you First time buyer. The median home sales price in the state rose nearly 15 percent last year to $ 475,000, according to real estate agent Redfin.
However, don’t let that price tag discourage you. The Washington State Housing Finance Commission works with mortgage lenders to offer a range of programs designed to help first-time buyers. The government definition of a first-time homebuyer also offers some leeway: someone who has not owned and occupied a primary residence in the past three years, not necessarily someone new to home ownership.
Washington first-time home loan programs
The Washington State Housing Finance Commission (WSHFC) has two primary first-time home mortgage programs, Home Advantage and House Key Opportunity, both of which can be applied to a conventional loan, an FHA, a VA, or a USDA loan. To qualify, you must complete a five hour homebuyer training course (courses are currently being held held virtually) and other program requirements.
WSHFC home advantage
The Home Advantage program can help first time buyers qualify for a low interest rate. The requirements are pretty simple:
- Minimum score of 620
- A maximum of 50 percent debt-to-income ratio
- Annual income less than $ 145,000
There are no restrictions on the type of property you can buy, but there is a heavy residual charge on any Home Advantage loan over $ 548,250.
WSHFC House Key Opportunity
House Key Opportunity is aimed at lower income homebuyers who also use certain down payment support programs. The Income limits The range is between $ 75,000 and $ 140,000 depending on where you want to buy and the size of your household. The home you want to buy cannot exceed a certain amount – between $ 265,000 and $ 575,000 – depending on the location of the home.
As with Home Advantage, the House Key Opportunity benefit is a competitive interest rate that is lower on FHA, VA, and USDA loans. You can get a discount on a traditional loan if your income is less than 80 percent of the Area Median Income (AMI). Here is a Guide to the 80 percent limits by county.
If you qualify for the Home Advantage program, you may want to buy a home that is environmentally friendly or that can be renovated to meet Washington’s environmental standards. In this case, you may be able to take advantage of the EnergySpark program, which offers an additional discount on your interest rate.
- Must be a new home that exceeds state energy efficiency standards by at least 15 percent; or
- Must be an existing home that can be renovated to save 10 percent energy compared to its existing use
Washington Down Payment Assistance
Finding a down payment on a Washington home can be daunting, but if you’re a first-time home buyer, the state has a few options that can help. According to WSHFC, the average home buyer makes $ 10,000 Advance payment assistance through the agency.
All of the following utilities are loans that you must repay when you sell your home, refinance, or pay off your mortgage. To qualify, you must have a minimum credit value of 620 and meet income requirements, which vary by program. You can also be eligible if you are not a first-time buyer but are shopping in a certain “target area”.
Home Advantage Down Payment Aid (DPA)
When combined with a Home Advantage Initial Mortgage, this down payment support loan can be up to 4 percent of the total amount of your mortgage (or 5 percent if you have a traditional HFA Preferred Loan). No interest is charged on the loan and payments are deferred for 30 years.
Home Advantage DPA Needs Based
This program is also combined with a Home Advantage Initial Mortgage and is aimed at homebuyers earning well below the $ 145,000 income threshold. If your annual income is less than $ 89,800 (or $ 113,300 in Counties King or Snohomish), you may be eligible for a loan of up to $ 10,000 to cover your down payment needs. You pay 1 percent interest on the loan and your payments are deferred for 30 years.
This Down Payment Support Program, combined with House Key Opportunity’s first mortgage, is a second mortgage of up to $ 10,000 with a 1 percent interest rate and a 30 year grace period. Income limits are much lower and vary based on location and the number of people in the household:
|district||1-2 people||3+ people|
|King, Snohomish||$ 76,200||$ 88,250|
|Clark, Kitsap, Pierce, Skamania, Thurston, Whatcom||$ 56,250||$ 70,300|
|All other||$ 49,950||$ 62,400|
Veterans and their surviving and never-married spouses and dependent children can also qualify for up to $ 10,000 in down payment wrapped up as a second mortgage. The mortgage payments are deferred for 30 years at a 3 percent interest rate. The assistance can be combined with either the Home Advantage or House Key Opportunity first mortgage.
HomeChoice Disability DPA
If you or someone in your household has a disability, you can qualify for up to $ 15,000 down payment assistance, including as a second mortgage. The second loan has an interest rate of 1 percent and, like other down payment aids, postpones payments by 30 years.
Other first-time buyer loan programs
First time buyers in Washington can also find help through local housing initiatives. For example, in Seattle, individual homebuyers with an annual income below $ 61,800 (the limit is higher for larger households) could receive up to $ 55,000 to cover closing costs and part of a down payment. Other areas, including Tacoma, Bellingham, and Pierce Counties, have similar programs.
It’s not just about where to buy either – where to get financing for your home can make a huge difference in your ability to get help. For example, BECUWashington-based Boeing Employees’ Credit Union offers eligible members a first-time homebuyer grant of up to $ 7,500. Grants are usually better than second mortgages because you don’t have to pay them back (although some second mortgage loans may expire after a period of time).
Be sure to use Bankrate’s First-time buyer program guide to see if you qualify for other forms of support available nationally.
For more Washington home ownership programs, including by region, see HUD.gov.
Ready to get one step closer to your first Washington home? As you sort through the options for mortgage and down payment assistance, you can fill them out this form through the Washington State Housing Finance Commission so that the agency can help you identify the programs that best meet your needs.
When looking for a mortgage lender, be sure to compare the options of different lenders. You can use the … WSHFC website to find loan officers to help you direct the process. Everyone works for a lender that others might have interest and terms, so comparison is key.