Washington First-Time Home Buyer | 2022 Programs and Grants

What to know about buying a house in Washington

If you’re a Washington first–time home buyer, you face some real hurdles. Home prices are high and have been rising quickly. But take heart!

The Evergreen state offers extensive support. From free home buyer education to special mortgages, help is at hand. And, if you’re eligible, you could be in line for cash assistance that bridges the gap between your savings and down payment needs. Ready to get started?

Verify your home buying eligibility in Washington. Start here (Jan 7th, 2022)

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Washington home buyer overview

The median list price in Washington state was $575,000 in November 2021, according to Redfin. That was an increase of 17.7% over the previous 12 months.

High home prices and home–price inflation can be challenging for a Washington first–time home buyer. So be sure to read on for sources of financial and practical help.

Washington Home Buyer Overview
Average Home Listing Price in WA	$575,000
Minimum Down Payment in WA (3%)	$17,250
20% Down Payment in WA	$115,000
Average Credit Score in WA1	730
Maximum WA Home Buyer Grant/Loan2	$90,000 loan in Seattle only

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

Verify your home buying eligibility in Washington. Start here (Jan 7th, 2022)

First–time home buyer loans in Washington

If you’re a first–time home buyer in Washington state with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first–time buyers have saved enough for 20 percent down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low–down–payment mortgage programs:

• Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years once you reach 20% home equity
• FHA loan – Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move home, or pay off your loan
• VA loan – Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
• USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
• WSHFC loans – May include competitive interest rates and down payment assistance. More information below

Note that government loan programs (including the FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

Find the best first-time home buyer loan for you (Jan 7th, 2022)

Washington first–time home buyer programs

The Washington State Housing Finance Commission (WSHFC) has two main mortgage programs: Home Advantage and House Key Opportunity. Both are likely to offer preferred interest rates for first–time home buyers and may come with down payment assistance.

Both WSHFC mortgage programs can be combined with most mainstream mortgages, including FHA, VA, USDA, and conforming loans.

Assume you’ll need a credit score of 640 or better for these, but you may get away with one as low as 620 if your debt–to–income ratio is low. You’ll also have to complete an approved home buyer education course to be eligible. You can attend a free virtual online seminar or pay $50 for an online self–study course.

As is usual with state–run mortgage programs, you’ll have to choose your lender from a list approved by WSHFC. There are also caps on home purchase prices and household income limits.

But, assuming you clear those hurdles, you should be able to get a WSHFC mortgage – and probably a down payment assistance loan to go with it.

If you have questions about the Home Advantage Program, call (800) 767–4663 or email info@heretohome.org. For more information about the House Key program, contact a participating lender.

Washington first–time home buyer grants

The good news for Washington first–time home buyers is that the state offers a wide range of down payment assistance programs. In fact, it has so many options that we can’t lay them out in full here.

Even the state’s own website acknowledges this in the FAQ, “You have a lot of down payment programs. How do I know which one is right for me?” It answers, “Ask your lender – or, fill in this quick form with information about your location, household size, and income. One of our Homeownership staff will reply with recommendations just for you.”

That webpage says the average eligible borrower gets about $10,000 in the form of a loan with an interest rate of between 0% and 4%. That’s wrapped up in your main mortgage so you make only one monthly payment.

If you’ve chosen a Home Advantage mortgage, your DPA can be 4% (5% with a conventional or FHA loan) of your main mortgage’s value. And there are special programs for some areas where home prices are high. For example, you can borrow up to $55,000 in Seattle.

The sheer range of offerings could make your choice difficult. So, take the WSHFC’s advice and fill in its form or talk to one of its approved lenders to narrow down your options. Also, compare what it offers with other DPA programs that might be operating in your city or county.

Verify your home buying eligibility in STATE. Start here (Jan 7th, 2022)

Buying a home in Washington’s major cities

Of the Evergreen state’s three biggest cities, Seattle has by far the highest home prices. And Spokane has the lowest. Indeed, the latter are lower even than the state average, as are Tacoma’s.

But home prices rose less quickly in Seattle in 2021, while they shot up by 20.3% in Spokane.

Whichever of these cities you’re buying in, you should check out local DPA programs. So read on.

Seattle first–time home buyers

In November 2021, the median list price of homes in Seattle was $749,600. That was an increase of 7.1% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $22,490 for 3% down payment
• $149,920 for 20% down payment

The City of Seattle’s Office of Housing has a DPA program for first–time buyers with modest incomes. Those who qualify and who wish to buy a home with three or more bedrooms can get up to $90,000, or $70,000 for fewer bedrooms. Another cap applicable to some types of loans is $55,000.

But the details of the program are not laid out clearly. So ask the Office of Housing for more details by calling (206) 684–0721. Or ask your loan officer for details.

Spokane first–time home buyers

In November 2021, the median list price of homes in Spokane was $385,000. That was an increase of 20.3% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $11,550 for 3% down payment
• $77,000 for 20% down payment

We couldn’t find any trace of a DPA program specifically for Spokane. But SNAP (Spokane Neighborhood Action Partners) says its “Pre–Purchase Counseling and Homebuyer’s Education Seminars will discuss a number of down payment assistance programs that are available to home buyers and identify how much you may be eligible for (subject to mortgage loan program criteria and specific income restrictions).”

Tacoma first–time home buyers

In November 2021, the median list price of homes in Tacoma was $449,700. That was an increase of 15.3% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $13,490 for 3% down payment
• $89,940 for 20% down payment

The City of Tacoma’s down payment assistance program combines with the Washington State Housing Finance Commission’s Home Advantage first mortgage loan program. If eligible, you can borrow up to $20,000 at a simple (not compound) interest rate of 2%. That’s pretty good.

And you don’t make any monthly payments. You simply repay what you borrowed (plus the interest due) when you move, sell, refinance, or zero your mortgage balance.

Click the first link for eligibility criteria and terms and conditions.

Where to find home buying help in Washington

All the organizations we’ve listed above should provide advice freely to any first–time home buyer in the state of Washington or within their areas.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a few lists for statewide, regional, and local resources:

Statewide and Regional first-time home buyer resources in Washington

First-time home buyer resources in Western Washington

First-time home buyer resources in Eastern Washington

What are today’s mortgage rates in Washington?

You can see today’s live mortgage rates in Washington here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

Show me today’s rates (Jan 7th, 2022)

¹ Source: Experian.com 2021 study of 2020 data

²Based on a review of the state’s available DPA grants at the time this was written