Washington First-Time Home Buying Assistance Programs & Grants for 2024

Washington First-Time Home Buying Guide

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    By Susan Guillory

    (Last Updated – 02/2024)

    With its abundance of forests, mountains, and water, Washington is an incredibly beautiful state. It’s also a great place to work: The booming tech scene has created numerous job opportunities. It’s no wonder then that so many people, including first-time buyers, are looking to purchase a home in the Evergreen State.

    But living in Washington isn’t necessarily cheap: Homes sell for an average of $563,764, according to Zillow, which is substantially higher than the U.S. average of $342,941.

    If you’re a first-time homebuyer in Washington, however, there are several first-time homebuyer programs in the state that may help you save on your first home, as well as other ways to make purchasing a property more affordable. Read on for details.

    Who Is Considered a First-Time Homebuyer in Washington?

    In Washington, anyone who hasn’t owned a home in the last three years is considered a first-time homebuyer. Some programs may offer access to those who don’t fit this mold, so it can be worthwhile to check the fine print.

    💡 Quick Tip: You deserve a more zen mortgage loan. When you buy a home, SoFi offers a guarantee that your loan will close on time. Backed by a $5,000 credit.‡

    3 Washington Programs for First-Time Homebuyers

    First-time homebuyer programs in the state may have certain requirements you must qualify for, including income and purchase price. However, if you meet the criteria, you can save on the interest with mortgage loans or get down payment and closing cost assistance with these options.

    1. WSHFC: House Key Opportunity Program

    The Washington State Housing Finance Commission offers low-interest loans to qualified first-time buyers (meaning those who have never owned a home or haven’t owned and occupied a home in the last three years).

    There are income and acquisition cost limits you must meet, and you will likely need a credit score of at least 620. Plus you will also need to attend a free Homebuyer Education Seminar offered by WSHFC.

    2. WSHFC: Home Advantage Program

    This program can help first-time home buyers get a low-interest rate on a mortgage. To be eligible, you must have an annual household income within certain limits. First, you’ll need to attend a free Homebuyer Education Seminar. Once you receive your certificate of completion, contact a Commission-Trained loan officer to see if you qualify for the program.

    3. WSHFC: Down Payment Assistance

    If you take out a mortgage through WSHFC, you may also be eligible for its Down Payment Assistance
    , which provides, on average, $10,000 to be used toward a down payment. The loan is often deferred, and you won’t have to pay until the mortgage is paid off or you sell or transfer the property.

    To quality, you must have a household income within certain limits and a credit score of 620 or more. Using an online mortgage calculator can help you see how much you’d pay for a home loan each month and size up various options.

    How to Apply to Washington Programs for First-Time Homebuyers

    First you must meet the program’s qualifications, as outlined above. In addition, you may need to attend a free Homebuyer Education Seminar. The next step in the process is to contact a loan officer trained by the commission to see if you qualify. Find out more at the WSHFC website .

    Federal Programs for First-Time Homebuyers

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner-occupied, approved condos, townhomes, planned-unit developments, and some manufactured homes.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Here are a few key points to note:

    •   Prospective homebuyers choose from a list of approved lenders that participate in the FHA loan program. These loans typically have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with low credit scores (say, between 500 and 579) must put at least 10% down.

    •   In addition to examining your credit score, lenders will typically look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 57% in some cases, vs. a typical 45% to 50% maximum for a conventional loan.

    •   If you are lucky enough to receive gift money for the down payment, that is often allowed from certain donors and will be documented in a gift letter for the mortgage.

    •   FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years.

    Want to learn more about these loans, including FHA loans for refinance and rehab of properties? Read up on FHA requirements, loan limits, and rates.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. Consider these points:

    •   These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    •   The Home Possible mortgage is for buyers who have a credit score of at least 660.

    •   Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which can help lower your mortgage payments.

    Fannie Mae HomeReady Mortgages

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. Here are some of the advantages:

    Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

    •   VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

    •   VA loans do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%.

    •   These loans have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

    Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

    💡 Quick Tip: A VA loan can make home buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee. You can learn more about these loans by emailing [email protected].

    US Department of Agriculture (USDA) Loans

    No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

    HUD Good Neighbor Next Door Program

    If you are a police officer, firefighter, emergency medical technician, or teacher, you may qualify for an affordable path to homeownership in the area you serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

    As part of this program, there are certain types of mortgage loans that are available to first-time homebuyers that may offer lower interest rates or down payment assistance.

    First-Time Homebuyer Stats for 2024

    Here are a few numbers to know about homebuyers in America:

    •   First-time homebuyers nationwide: 50% of all homebuyers

    •  Median age of first-time homebuyers in U.S.: 36

    •  Average down payment percentage in Washington: 28.6%

    •  Average home price in Washington: $563,764

    •  Average credit score of homebuyer in Washington: 730

    Financing Tips for First-Time Homebuyers

    Now that you know the mortgage basics for a first-time homebuyer in Washington, here are other financial strategies that may help you purchase a house.

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer.

    You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may take a sizable bite out of your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason, though you need to have held the account for five years.

    You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. If your employer sponsors and allows borrowing from a 401(k) plan, you may consider taking a loan against the 401(k) account to help finance your home purchase.

    With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 25 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction.

    To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often, the savings from the lifetime of the credit can outweigh these fees, however.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses. It can be worthwhile to check with your benefits team to see what may be available.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

    Finally, using an online home affordability calculator can show you how much house you can afford.

    The Takeaway

    First-time homebuyers in Washington may qualify for one of the state’s programs designed to help them save money on a mortgage, down payment, and closing costs. There are also other options, such as federal and conventional loans, that can help them achieve their goal of owning a home in the Evergreen State.

    Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

    SoFi Mortgages: simple, smart, and so affordable.

    View your rate


    Should I take first-time homebuyer classes?

    It can be a smart move. First-time homebuyer classes can help familiarize you with the lingo involved with buying a home, as well as important principles and steps to follow when purchasing a property. What’s more, these classes are required for some government-sponsored loan programs.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Often they do. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications aso do your research.

    Is there a first-time veteran homebuyer assistance program in Washington?

    Yes. The U.S. Department of Veterans Affairs offers home loans to servicemembers, veterans, and eligible surviving spouses.

    What credit score do I need for first-time homebuyer assistance in Washington?

    Credit score requirements vary, depending on the homebuyer assistance program. For example, the Down Payment Assistance Program offered by WSHFC requires a credit score of 620.

    What is the average age of first-time homebuyers in Washington?

    Data about first-time homebuyers in Washington is hard to find, but the median age of first-time homebuyers in the U.S. is 36.

    Photo credit: iStock/MarkHatfield

    *SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

    †Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

    SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will provide you $2,000.^ Terms and conditions apply. This Guarantee is available only for loan applications submitted after 6/15/22 for the purchase of a primary residence. Please discuss terms of this Guarantee with your loan officer. The property must be owner-occupied, single-family residence (no condos), and the loan amount must meet the Fannie Mae conventional guidelines. No bank-owned or short-sale transactions. To qualify for the Guarantee, you must: (1) Have employment income supported by W-2, (2) Receive written approval by SoFi for the loan and you lock the rate, (3) submit an executed purchase contract on an eligible property at least 30 days prior to the closing date in the purchase contract, (4) provide to SoFi (by upload) all required documentation within 24 hours of SoFi requesting your documentation and upload any follow-up required documents within 36 hours of the request, and (5) pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. The Guarantee will be void and not paid if any delays to closing are due to factors outside of SoFi control, including delays scheduling or completing the appraisal appointment, appraised value disputes, completing a property inspection, making repairs to the property by any party, addressing possible title defects, natural disasters, further negotiation of or changes to the purchase contract, changes to the loan terms, or changes in borrower’s eligibility for the loan (e.g., changes in credit profile or employment), or if property purchase does not occur. SoFi may change or terminate this offer at any time without notice to you. ^To redeem the Guarantee if conditions met, see documentation provided by loan officer.
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