Buying a home in the state of Washington means paying a higher price than most in the U.S. But there are ways to stretch your budget thanks to financial assistance from first-time homebuyer programs.
According to data from the University of Washington, the statewide median sales price of $654,500 in the second quarter of 2022 was substantially higher than the nationwide median of $403,800 in July. This means that you’ll need a larger down payment, or to have a higher income than most, to get into your dream home.
If you’re not fortunate enough to be in that situation, don’t be discouraged. Financial assistance is available from first-time homebuyer programs to help cover expenses like closing costs and down payment requirements. If you’re eligible, you could end up being able to afford more house than you think. There are also different types of mortgage programs available, and choosing the right one could not only save you money, it could mean the difference between being approved or denied.
If you’re looking to get a mortgage in the state of Washington, here’s what you should know about rates, fees, loan programs, and financial assistance.
What Are Today’s Mortgage Rates in Washington?
For Tuesday, September 20, 2022, here are the current mortgage rates in Washington. The average 30-year fixed mortgage rate is 6.360%. The average 30-year fixed mortgage refinance rate is 6.370%. Today, the average 15-year fixed mortgage rate is 5.650%.
Looking at variable rate loans, the average 5/1 adjustable-rate mortgage (ARM) rate is 5.750%.
This information is from Bankrate’s latest survey of the nation’s largest mortgage lenders.
Current Mortgage Rates in Washington
How Much of a Mortgage Do You Need to Buy a Home in Washington
One of the things you’ll need in order to buy a home is a down payment. The amount of the required down payment will primarily depend on the type of loan you’re getting. Conventional loans, which are a popular choice for many borrowers, can require as little as 3% down. FHA loans require a slightly higher 3.5% down payment, but can be a good choice for folks who do not qualify for a conventional loan due to credit or income issues.
It’s also possible to buy a house with no down payment at all. VA loans do not require any down payment, and also do not require any mortgage insurance payments. VA loans are not available to everyone, as you’ll need to have some type of qualifying military service to be eligible.
While those are just the minimums, you should also consider a larger down payment if possible. Dina Maeweather, a licensed real estate agent with Keller Williams, says that you want to be sure you can live comfortably after adding the monthly mortgage payment to your budget. Having less than a 20% down payment on a conventional loan means you’ll need a larger loan amount and higher monthly payments. You’ll have an added monthly expense of private mortgage insurance (PMI), although PMI can be dropped from a conventional loan once you hit 20% equity.
|Metro Area||Median Home Price||3.5%||10%||20%|
|Kennewick – Richland||$415,800||$14,553||$41,580||$83,160|
Types of Home Loans Available in Washington
You’ll find there are many mortgage lenders licensed to conduct business in Washington. These lenders can offer different types of loans, including conventional loans, FHA loans, and VA loans. Each has their own unique requirements and features that can impact whether you qualify for the loan, how much you’ll pay in closing costs, and what your monthly payments will be.
As a first-time homebuyer, you can qualify for a conventional loan with as low as a 3% down payment. Conventional loans are a popular choice with many borrowers because they can offer competitive rates and fees. The minimum credit score is typically 620, with a debt-to-income ratio maximum of 45%.
That said, some lenders have more restrictive criteria. Many also rely on an automated underwriting system to issue a decision based on a holistic review of the loan. As a result, some lenders may require a higher credit score or require a lower debt-to-income ratio.
If you’re not able to be approved for a conventional loan, consider looking into FHA loans. FHA loans are insured by the Federal Housing Administration, and offer more flexibility for borrowers who do not meet credit or income requirements for a conventional mortgage. FHA loans require a minimum down payment of 3.5%, but allow credit scores as low as 580. With a 10% down payment, the minimum credit score requirement drops to 500.
FHA loans can be more expensive. Borrowers will have to pay a one-time upfront mortgage insurance premium, in addition to paying a monthly mortgage insurance premium.
VA loans, insured by the Department of Veterans Affairs, require no down payment. On top of that, borrowers do not have to pay mortgage insurance. As the down payment can often be a challenging item to satisfy, VA loans can be a fantastic option for those who are short on cash, but still want to become homeowners.
However, VA loans are not available to everyone. In order to be eligible for a VA loan, you must have some type of qualifying military service. The VA website contains details on who is eligible, and you’ll want to confirm your eligibility first, before getting too far into this process.
First-Time Homebuyer Programs in Washington
With home prices in Washington sitting significantly higher than the U.S average, it would seem that prospective homeowners could use all the help they can get. Fortunately, there are a number of first-time homebuyer programs available in the Evergreen State to help with down payment requirements and closing costs.
The Washington State Housing Finance Commission (WSHFC) lists a handful of programs you may be eligible for:
- WSHFC Home Advantage Program: Borrowers who are below the specified income limits can take advantage of preferred pricing through a participating lender. Income limits will vary depending on the specific county, and those interested in this program must also complete a homebuyer education seminar.
- WSHFC House Key Opportunity Program: This program’s preferred rates are available to applicants who are also using a designated down payment assistance program. Eligible borrowers can qualify as a first-time homebuyer, or as a repeat homeowner purchasing in a targeted area. The completion of a homebuyer education seminar, use of a participating lender, and having an income under the program limits are several other requirements.
- WSHFC Downpayment Assistance: Eligible borrowers must have a credit score of at least 620, and not exceed household income limits. Borrowers can typically get around $10,000, but due to the number of down payment programs available, the WSHFC recommends you contact a lender to determine the best option for you.
- WSHFC EnergySpark Home Loan: Borrowers purchasing an energy-efficient home can save up to 0.25% on the interest rate. This program is also designed to work in conjunction with the Home Advantage and down payment assistance programs. To be eligible for this type of loan, borrowers must have a credit score of at least 620, have a household income below $180,000, and purchase an eligible energy-efficient home.
Despite the name, some first-time homebuyer assistance programs are available for those who are repeat buyers.