If you’re planning to buy a home, knowing what to budget for and the amount you will need for your down payment is likely top of mind. For first-time home buyers, this can be one of the biggest barriers to homeownership.
A down payment on a house is the cash the buyer pays upfront in a real estate transaction and is a percentage of the purchase price. One way to take the fear out of budgeting is to understand your down payment options and how it influences the other steps of the process, including loan eligibility and the overall cost of the loan.
There is a common misconception that you need at least 20% of the home's sale price as a down payment and you can finance the rest with a mortgage. However, there are multiple loan programs that allow you to purchase a home with less than 20% down, and in some scenarios no down payment is required at all.
The good news for home buyers in Washington is that the state offers a wide range of down payment assistance programs through the Washington State Housing Finance Commission (WSHFC).
The Downpayment Assistance programs, administered by WSHFC, are designed to help homebuyers who have limited to no down payment available. These programs provide eligible buyers with a loan to cover the down payment and closing costs of their home purchase.
Who is eligible for the program?
Unlike some programs, you do not necessarily have to be a first-time homebuyer to be eligible for the WSHFC Downpayment Assistance programs. In most cases, a first-time homebuyer is described as someone who has not owned and occupied a primary residence in the past three years. To be eligible you do have to meet the program's income and purchase price limits.
These limits vary depending on the specific down payment program being used and that program's guidelines and restrictions. Additionally, you must have a credit score of at least 620, and you must attend a homebuyer education course.
WSHFC Home Advantage and House Key Opportunity
Homebuyer down payment assistance is only for homebuyers who use a WSHFC home loan program, either Home Advantage or House Key programs. If your household income is under the program limits (up to $180,000), your credit score is at least 620, and you’re otherwise qualified for a home loan, you are probably eligible.
First Fed offers mortgage loans through WSHFC which includes several programs for down payment assistance (DPA).
The goal is to help home buyers who can afford monthly payments but may not have funds saved up to cover the down payment. The down payment assistance programs can allow buyers to purchase a house with little or no funds available to cover closing costs and the down payment.
Each DPA program has its own income criteria and other requirements, such as location.
Statewide WSHFC DPA programs include:
- Home Advantage DPA: From 3% to 5% of the first mortgage total or gross loan amount for borrowers using the Home Advantage loan programs.
- Home Advantage DPA Needs Based Option: Up to $10,000, for borrowers under certain income limits.
- Opportunity DPA: Up to $15,000 for borrowers using the House Key Opportunity loan.
- Veterans: Up to $10,000 for military veterans who have served our country.
- HomeChoice: Up to $15,000 for homebuyers with a disability or disabled family member living with them.
DPA programs for specific geographic areas:
- Seattle: Up to $55,000 for homebuyers within the Seattle city limits.
- ARCH East King County: Up to $30,000 for buyers within the ARCH member area of east King County.
- Bellingham: Up to $40,000 for people buying within Bellingham city limits.
The primary benefit of the WSHFC Downpayment Assistance programs is that they offer a competitive interest rate and flexible repayment terms. The loan is a second mortgage, which means it is subordinate to the first mortgage and does not usually require additional monthly payments beyond your principal mortgage. Instead, the loan is repaid when the home is sold, refinanced, or paid off.
The WSHFC Downpayment Assistance programs are an excellent resource for homebuyers who need help affording a down payment. By providing a loan to cover this cost, the program makes it easier for buyers to achieve the dream of homeownership and build equity for their future.
Homebuyer Assistance Program
To participate in the WSHFC Downpayment Assistance programs, you must find a participating lender, like First Fed. First Fed is approved by the WSHFC and the mortgage team is familiar with the program's requirements and application process. Once you have been pre-approved for a mortgage, First Fed’s mortgage experts can determine your program eligibility and find the best lending option for you.
If you use a DPA program to finance your purchase, the funds will be disbursed at the time of closing. The DPA loan is available with maximum loan amounts determined by the specific DPA program. The exact amount you are eligible for will depend on your income, purchase price, and other factors.
The WSHFC Downpayment Assistance programs are an excellent resource for homebuyers who need assistance with a down payment and/or closing costs. By providing a loan to cover these costs, the program makes it possible for buyers to achieve the dream of homeownership and build equity for their future. If you are interested in the program, we encourage you to speak with a participating lender like First Fed to explore your options.
Additional Programs for Low Down Payments
In addition to the WSHFC Downpayment Assistance programs, there are also lending options such as USDA, VA, Home Possible, and Home One, that provide options for 0% or low downpayment (3%) home purchases.
First Fed’s experienced mortgage team will review all your down payment options based on your eligibility to help you achieve your goal of buying a home.