Washington First-Time Homebuyer Programs

An image of a home is used to illustrate an article about first time homebuyer programs in Washington. Credit: Getty Images
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Housing prices in Washington were up nearly 15% year-over-year at the end of the second quarter this year, but help is available to qualified homebuyers. 

Data collected by the University of Washington shows that all but one county throughout the state had an increase in the median sales price in the past year. Some counties, such as Adams and Skamania County, increased by more than 30%. 

Purchasing a home has gotten increasingly difficult. Not only have mortgage interest rates risen, but so have housing prices. Homebuyers have had to begin saving for a larger down payment, or find a way to budget for a bigger monthly mortgage payment. 

Fortunately, Washington first-time homebuyer programs can help offset this increased cost of homeownership. Programs can vary by city and county. However, those who are qualified can receive a substantial amount of assistance in the form of lower interest rates, tax credits, and down payment and closing cost assistance. Some programs even allow for monthly payments to be deferred or forgiven after a period of time.  

Washington Down Payment Assistance Programs

Down payment assistance programs are available throughout the state of Washington. “Many cities offer these programs to incentivize people to move”, says Robert Lopez, a mortgage loan officer with Carrington Mortgage Services. “You should definitely take advantage of these programs if you can find one that works for you. Just be sure you read the fine print and fully understand the terms under which the loan must be repaid.“

Home Advantage Down Payment Assistance

Home Advantage DPA is a program offered by the Washington State Housing Finance Commission (WSHFC). Eligible homebuyers can get this second mortgage to cover the down payment. Payments are deferred for 30 years at a 0% interest rate. The amount of assistance available is up to 3% or 4% of the total loan amount, while 5% can be provided for buyers using Home Advantage conventional or FHA loans

To qualify for this program, you must have an income below $180,000 annually and complete a homebuyer seminar. Home Advantage DPA must also be combined with a Home Advantage first mortgage loan with a participating lender. 

Home Advantage Needs Based Program

Combined with a Home Advantage first mortgage from a participating lender, this needs-based program is a second mortgage that can provide up to $10,000 in assistance. Payments are deferred for 30 years at an interest rate of 1%. Eligible homebuyers must complete a homebuyer seminar and not exceed an annual income of $105,300 ($134,600 for King and Snohomish Counties). 

A participating lender will review your loan application to determine how much you may qualify for. Veterans are exempt from the requirement to establish a need for these funds. 

Opportunity Down Payment Assistance

The Opportunity down payment assistance program is a needs-based second mortgage loan that can provide up to $15,000 in assistance. The loan offers deferred payments for 30 years at a 1% interest rate, and must be combined with an Opportunity first mortgage loan.

Veterans are exempt from meeting the needs-based requirements for this program. All other homebuyers will have their application reviewed by a participating lender to determine if they are eligible. Except for those purchasing a home in a targeted area, this program is only available to first-time homebuyers.

Veterans Down Payment Assistance

Veterans purchasing a home in Washington can qualify for up to $10,000 in down payment assistance in the form of a second mortgage with up to 30 years of deferred payments. This second mortgage is currently offered at a 3% interest rate and combines with either a Home Advantage or House Key first mortgage loan program. 

Unless purchasing a home in a targeted area, you must be a first-time homebuyer. You also may not exceed the maximum income limits of $134,600 in King/Snohomish County, or $105,300 annually in all other counties. 

HomeChoice

Borrowers who have a disability or have a disabled family member living with them can qualify for the HomeChoice down payment assistance program. HomeChoice combines with either a House Key or Home Advantage program through a participating lender. Eligible homebuyers can receive down payment assistance of up to $15,000 in the form of a second mortgage after the completion of one-on-one counseling and a homebuyer seminar. Payments can be deferred, and the second mortgage is issued at a 1% interest rate. 

Homebuyers seeking assistance through HomeChoice must also be first-time homebuyers, a requirement that is waived if purchasing a home in a targeted area. This down payment assistance program also has a maximum income limit of $134,600 in King/Snohomish Counties, and $105,300 elsewhere. 

Seattle Down Payment Assistance

Up to $55,000 in down payment assistance and closing cost assistance is available for first-time homebuyers looking to purchase a primary residence in the city of Seattle. This program combines with either a Home Advantage or Opportunity first mortgage through a participating lender. Down payment assistance comes in the form of a second mortgage loan at a 3% interest rate, with payments deferred for 30 years. To be eligible, you must meet the maximum income limits and have at least 1% of the purchase price or $2,500 (whichever is greater) for a down payment. 

ARCH East King County Down Payment Assistance

Although called a down payment assistance program, funds from the ARCH East King County DPA program can be used for down payment and closing costs if you’re looking to buy property in an ARCH member city. Homebuyers can qualify for up to $30,000 at a 4% interest rate. No monthly payments are required, with the balance due and payable only when the property is sold, refinanced, paid off, or is no longer used as a primary residence. 

Bellingham Down Payment Assistance

The Bellingham DPA program provides up to $40,000 in funds that can be used for both down payment and closing costs based upon need. Loan proceeds are issued in the form of a second mortgage at a 3% interest rate with payments deferred for 30 years. Repayment is not required until the property is sold, refinanced, no longer used as a primary residence, or paid off. The Bellingham down payment assistance program combines with a Home Advantage or House Key Opportunity first mortgage loan for those looking to purchase a primary residence in the city of Bellingham. 

Tacoma Down Payment Assistance

First-time homebuyers looking to purchase a primary residence in Tacoma can qualify for up to $30,000 in financial assistance which can be used for down payment and closing costs based upon need. The Tacoma down payment assistance loan program is a second mortgage issued at a 2% interest rate, and combines with the Home Advantage or Opportunity first mortgage loans. 

Payments on this second mortgage can be deferred for 30 years, and repayment is not required until the property is sold, refinanced, paid off, or is no longer used as a primary residence. 

Other Assistance Programs

First-time homebuyer programs aim to reduce the financial burden of homeownership. This is often in the form of down payment and closing cost assistance. However, there are other types of programs that can achieve similar goals, such as reducing your tax liability or helping you obtain a more competitive interest rate. 

House Key Opportunity

The House Key program can offer more competitive interest rates for lower-income households who are also utilizing a qualifying down payment assistance program. Eligible borrowers must meet income limits and can combine this with multiple types of loan programs, including FHA loans, USDA loans, VA loans, and conventional loans. 

To qualify for the program, homebuyers must complete a homebuyer education seminar and work with a participating lender. 

Home Advantage Rates

Through the Home Advantage program, participating lenders can offer homebuyers competitive interest rates for a 30-year loan. Eligible properties include single family homes, condominiums, townhomes, and manufactured homes. 

Borrowers may not exceed income limits, currently $180,000 annually, and must complete a homebuyer education seminar. Home Advantage rates are not restricted to first-time homebuyers.  

Is Washington a Good Place to Buy a Home?

Data from the Office of Financial Management and University of Washington shows that the median housing price in the state has risen dramatically in the past several years. In 2017, the median price of a home was $348,900, rising to $560,400 in 2021. 

For those looking to purchase a home to occupy as a primary residence, the cost of homeownership here in Washington should be considered when determining whether the pros outweigh the cons. 

Should I Buy a Home Right Now?

The decision to buy a home should largely be driven by whether you can afford it. Housing prices have increased significantly in the past few years, and you can expect to have to make a higher monthly mortgage payment. Interest rates are also significantly higher than they were at the start of this year, with the average 30-year fixed-rate mortgage having doubled. If purchasing a home would put too much strain on your budget, you may be better off continuing to rent.

Tips for Buying Your First Home

Buying a home can be a complex, stressful, and overwhelming experience. For many, this is likely the largest type of purchase they’ll have in their lifetime. As a result, making mistakes during the homebuying process can be costly. 

If you’re a first-time homebuyer, here are a few things to look out for:

Get Preapproved (Not Prequalified) 

The first-step you should take as a homebuyer is to get preapproved through a reputable lender. This is proof of how much house you’ll be able to buy as it requires a lender to verify your income, credit, and assets. Preapprovals are not to be confused with prequalifications, which carry far less weight and credibility as they do not require any of those verifications. With a pre-approval letter in hand, you’ll be able to more easily find a real estate agent to work with, and sellers will know that you are a qualified buyer when you begin submitting offers on homes. 

Account for All Expenses in Your Budget

One of the last things you want is to purchase a home, only to find that you may not be able to afford it. Homes require regular maintenance, and the costs can quickly add up. Water heaters can break down, garage doors may need repairs, and property taxes and insurance costs could increase each year. And don’t forget to account for non-housing related expenses, such as childcare expenses, food, cell phone, or car maintenance. 

Location, Location, Location

It’s hard to physically move a house, so before you sign on the dotted line, make sure it’s in a location you enjoy. Even the most fabulous home can end up being less than ideal if you don’t like the neighborhood. Consider things like distance to shopping centers, entertainment, crime rates, road noise, and quality of school districts. 

Washington Mortgage Rates

For Saturday, January 28, 2023, here are the current mortgage rates in Washington. The average 30-year fixed mortgage rate is 6.410%. The average 30-year fixed mortgage refinance rate is 6.470%. Today, the average 15-year fixed mortgage rate is 5.550%.

Looking at variable rate loans, the average 5/1 adjustable-rate mortgage (ARM) rate is 6.000%. 

This information is from Bankrate’s latest survey of the nation’s largest mortgage lenders.