With outdoor beauty, major companies like Amazon and Microsoft and no state income tax, Washington continues to welcome new residents. In fact, more people have moved in than out of the state over the past three decades.
That influx can spell difficulties for first-time homebuyers. The median home sale price in the state increased by nearly 15 percent in the last year, rising to $475,000, according to real estate brokerage Redfin.
Don’t let that price tag discourage you, though. The Washington State Housing Finance Commission works with mortgage lenders to offer a range of programs to help first-time homebuyers. The state’s definition of a first-time homebuyer provides some leeway, too: someone who hasn’t owned and occupied a primary residence in the last three years, not necessarily someone new to homeownership.
Washington first-time homebuyer loan programs
The Washington State Housing Finance Commission (WSHFC) has two primary first-time homebuyer mortgage programs, Home Advantage and House Key Opportunity, both of which can be applied to a conventional, FHA, VA or USDA loan. To qualify, you’ll need to complete a five-hour homebuyer education course (currently, courses are being held virtually) and meet other program requirements.
WSHFC Home Advantage
The Home Advantage program can help first-time homebuyers qualify for a low interest rate. The requirements are fairly straightforward:
- 620 minimum credit score
- Maximum 50 percent debt-to-income ratio
- Annual income under $145,000
There are no restrictions on the type of property you can buy, but any Home Advantage loan above $548,250 is subject to a high balance fee.
WSHFC House Key Opportunity
House Key Opportunity is geared toward homebuyers with lower incomes who are also leveraging certain down payment assistance programs. The income limits range from $75,000 to $140,000, depending on where you want to buy and how big your household is. The home you want to buy cannot exceed a certain amount — ranging from $265,000 to $575,000 — based on the location of the home.
Like Home Advantage, the benefit of House Key Opportunity is a competitive interest rate, which is lower on FHA, VA and USDA loans. For a conventional loan, you’ll be able to qualify for a rate discount if your income is below 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 might want to explore buying a home that is especially eco-friendly or one that can be renovated to meet Washington’s green standards. That’s because, if so, you could be eligible to take advantage of the EnergySpark program, which offers an additional discount on your interest rate.
- Must be a new home that exceeds the state’s energy efficiency standards by at least 15 percent; or
- Must be an existing home that can be renovated to deliver 10 percent energy savings compared to its existing usage
Washington down payment assistance
Coming up with a down payment for a home in Washington can be daunting, but if you’re a first-time homebuyer, the state has a few options that can help. In fact, according to the WSHFC, the average homebuyer scores $10,000 in down payment assistance through the agency.
All of the following assistance programs are loans, and you’ll need to pay them back when you sell your home or refinance your mortgage or pay it off. To qualify, you’ll need a minimum credit score of 620 and to meet income requirements, which vary by program. You can also be eligible if you’re not a first-time homebuyer but purchasing in a specified “targeted area.”
Home Advantage Down Payment Assistance (DPA)
Combined with a Home Advantage first mortgage, this down payment assistance loan can provide up to 4 percent of the total amount of your mortgage (or 5 percent if you’re taking out a conventional HFA Preferred loan). There is no interest charged on the loan, and payments are deferred for 30 years.
Home Advantage DPA Needs Based
Also paired with a Home Advantage first mortgage, this program is for homebuyers making considerably less than the $145,000 income threshold. If your annual income is less than $89,800 (or $113,300 in King or Snohomish counties), you could be eligible for up to a $10,000 loan for your down payment needs. You’ll pay 1 percent interest on the loan, and your payments are deferred for 30 years.
This down payment assistance program, combined with the House Key Opportunity first mortgage, is a second mortgage of up to $10,000, with a 1 percent interest rate and 30-year deferred payments. The income limits are much lower and vary based on location and number of people in the household:
|As of July 2, 2020
Source: Washington State Housing Finance Commission
|County||1-2 persons||3+ people|
|Clark, Kitsap, Pierce, Skamania, Thurston, Whatcom||$56,250||$70,300|
Veterans and their surviving and never-remarried spouses and dependent children can also qualify for up to $10,000 in down payment funds packaged as a second mortgage. The payments on the mortgage are deferred for 30 years, with an interest rate of 3 percent. 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 might qualify for up to $15,000 in down payment assistance, also as a second mortgage. The second loan has a 1 percent interest rate and, like other down payment assistance, defers payments for 30 years.
Other first-time homebuyer loan programs
First-time homebuyers in Washington can also find help through local housing initiatives. In Seattle, for example, individual homebuyers with an annual income under $61,800 (the limit is higher for larger households) could qualify for up to $55,000 to cover closing costs and a portion of a down payment. Other areas, including Tacoma, Bellingham and Pierce County, have similar programs.
It’s not just about where you buy, either — where you get the financing for your home can make a big difference in your ability to get assistance. For example, BECU, the Boeing Employees’ Credit Union based in Washington, offers a first-time homebuyer grant up to $7,500 for eligible members. Grants are typically better than second mortgages because you don’t have to pay them back (although some second mortgage loans are forgivable after a certain timeframe).
Be sure to use Bankrate’s guide to first-time homebuyer programs to find out if you qualify for other nationally-available forms of assistance.
For other Washington homeownership programs, including by region, visit HUD.gov.
Ready to move one step closer toward buying your first home in Washington? As you sort through mortgage and down payment assistance options, you can fill out this form through the Washington State Housing Finance Commission so that the agency can help you determine which programs best fit your needs.
As you start searching for a mortgage lender, be sure to compare options from different lenders. You can use the WSHFC website to find loan officers to help you navigate the process. Each works for a lender that could have different interest rates and terms, so comparison is key.