Washington State First-Time Home Buyer Programs of 2021

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By NerdWallet 
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First-time home buyers in Washington can take advantage of special loan programs and down payment assistance available just for residents. Got your eye on a cottage in King County? Or maybe a split-level in Spokane? The Washington State Housing Finance Commission, or WSHFC, knows the lay of the land and the lenders that can help.

National first-time home buyer programs

The WSHFC provides a wide variety of loan programs and down payment assistance; however, there are national loan programs to consider, as well.

Administered by government agencies — such as the VA or FHA — or federally authorized companies, such as Fannie Mae and Freddie Mac, these programs offer low-down-payment options, too.

Conventional mortgage

Best for:

Low down payments, limited mortgage insurance premiums

What you need to know:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.

VA loans

Best for:

Military, low down payments

What you need to know:

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.

FHA loans

Best for:

Low credit score, low down payments

What you need to know:

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

USDA loans

Best for:

Low down payments, rural

What you need to know:

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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WSHFC highlights and eligibility requirements

These are first-time home buyer assistance programs tailored just for residents in the Evergreen State. If you live here, it's a good idea to see if you qualify for them.

Highlights

  • 30-year fixed-rate home loans.

  • Down payment assistance up to 4% of the mortgage amount.

  • Available for single-family houses, condos, townhouses and manufactured homes.

Eligibility

  • A home buyer education course is required, in person or online.

  • Annual household income typically cannot exceed $145,000.

  • Some down payment assistance programs are restricted to first-time home buyers.

  • If you haven’t owned and occupied your primary residence in the past three years, you qualify as a first-time home buyer.

  • Specific areas are exempt from the first-time home buyer requirement.

WSHFC first-time home buyer loan programs

Home Advantage Program

Best for:

Low mortgage rates, down payment assistance

What you need to know:

Washington’s Home Advantage program through qualified lenders offers 30-year fixed-rate mortgages for first-time home buyers or buyers who have not owned and occupied a home in the past three years. Loans can be used to purchase single-family homes, townhomes, condos and manufactured homes. Down payment assistance of up to 4% is available, income limits apply, and home buyer education is required.

Home Advantage Downpayment Assistance

Best for:

Down payment assistance

What you need to know:

Receive up to 5% of your loan amount in down payment assistance, depending on the type of loan you choose (conventional, FHA, VA, etc.). It’s a 0% interest loan, with payment deferred for 30 years. Repayment is due sooner if you sell the home or refinance the mortgage. Income limits apply, which vary by loan program and sometimes by location.

Home Advantage Downpayment Assistance — Needs Based Program

Best for:

Down payment assistance, military

What you need to know:

Provides up to $10,000 in down payment assistance, with needs-based qualifications. Borrowers entitled to VA loans are granted exceptions to some qualifying restrictions.

Opportunity DPA

Best for:

Down payment assistance

What you need to know:

Down payment assistance of up to $10,000 is provided with a 1% interest rate, deferred for 30 years. To qualify, you must be a first-time home buyer or live in certain areas of the state.

HomeChoice Downpayment Assistance Loan Program

Best for:

Disabilities, down payment assistance

What you need to know:

This program is for borrowers who have disabilities — or have a family member living with them who does. It provides up to $15,000 in down payment assistance in a 1% deferred second mortgage.

Veterans Downpayment Assistance Loan Program

Best for:

Military, down payment assistance

What you need to know:

For borrowers who are military veterans, or current or former members of the Washington National Guard or Reserve, $10,000 in down payment assistance is structured as a second mortgage with a 3% interest rate, and deferred for up to 30 years.

Summary: 2021 WSHFC first-time home buyer programs

  • Home Advantage program for reduced-rate mortgages for first-time home buyers.

  • Home Advantage Downpayment Assistance or up to 5% of your loan amount in down payment assistance.

  • Home Advantage Downpayment Assistance — Needs Based Program for up to $10,000 in down payment assistance for qualifying borrowers.

  • Opportunity Downpayment Assistance Loan Program for a down payment loan of up to $10,000 in down payment assistance for first-time home buyers.

  • HomeChoice Downpayment Assistance Loan Program for up to $15,000 in down payment assistance for Washingtonians living with disabilities.

  • Veterans Downpayment Assistance Loan Program for up to $10,000 in down payment assistance for current or former military personnel.

WSHFC provides ample options for first-timers to get into a home. It all starts with a conversation with a lender — or better yet, several lenders. Find someone you feel comfortable with who will take the time to help you make sense of these programs.

Interest rates and loan terms vary by lender, which is why it makes sense to shop around for the best deal.

For full details on any program, visit the Washington State Housing Finance Commission online.

You’ll find lenders that participate in these programs on the WSHFC website.

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