Can a VA Loan Cover the Full Home Price in WA State?

Published:
April 15, 2024
Last updated:
April 22, 2024
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Home buyers seeking a VA loan in Washington often have questions regarding the amount they can finance versus the amount they have to put down. Today, we will address one of those common questions:

Can a VA loan cover the entire home purchase price in Washington?

The short answer is yes. In fact, that’s precisely what this program was designed to do. It helps military members and veterans achieve the dream of homeownership by allowing them to finance up to 100% of the home purchase price.

How the VA Loan Program Works

The rest of this article will make more sense once you understand how VA loan programs work in WA State. So let’s start with what makes it unique.

There are three main parties involved with a VA loan transaction in Washington:

  • First, we have the borrower. In a standard purchase scenario, this is the person who needs money to buy a home.
  • Secondly, we have the mortgage lender that provides the actual funds needed to facilitate the home purchase.
  • Last, but certainly not least, we have the U.S. Department of Veterans Affairs. The VA does not lend money directly to borrowers. But they do provide mortgage lenders with a guarantee that reduces their risk and allows them to offer 100% financing.

This government backing distinguishes VA loans from what we refer to as conventional or “regular” mortgage loans. It also allows home buyers in Washington to cover the full purchase price with their loan, avoiding the need for a down payment.

So let’s talk about that next.

VA Loans Can Cover the Full Purchase Price

In its official guide for home buyers, the Department of Veterans Affairs explains the primary benefit offered by the VA loan program:

No down payment as long as the sales price isn’t higher than the home’s appraised value (the value set for the home after an expert reviews the property).”

This means a VA loan could cover the full purchase price for a home in the state of Washington. Here’s an example scenario of how that might play out:

Let’s assume a person wants to buy a home that’s listed at $450,000. They make an offer and negotiate with the seller to bring the price down to $442,000. Next, the buyer’s mortgage lender has the home appraised to determine its market value, which the appraiser estimates to be $452,000.

In this scenario, the final sale price will end up being lower than the appraised value of the home. So the VA loan could cover the full purchase price of $442,000, completely eliminating the need for a down payment.

Removing a Hurdle for Washington Home Buyers

Over the past 10 years or so, the median home value in the state of Washington rose from around $250,000 to nearly $560,000. But during that same timeframe, average incomes and wages across the state rose at a much slower pace.

Because of these trends, home buyers in Washington often seek ways to minimize the upfront expense associated with a home purchase.

The VA loan program gives eligible military members and veterans in Washington a way to accomplish this goal. In doing so, it removes what is often the biggest obstacle along the path to homeownership: the down payment.

Let’s plug in some numbers to see how beneficial this can be:

As of spring 2024, the median home price in the state of Washington was around $576,000. (It’s a lot higher in pricier real estate markets like Seattle, but we’ll use the statewide median for this example.)

Conventional home loans that are not backed by the federal government typically require a down payment of at least 3% to 5%. For a median-priced home in Washington, this would mean making a down payment in the range of $17,280 to $29,000.

That’s a lot of money to come up with out-of-pocket, especially for a first-time buyer who doesn’t have proceeds from a previous home sale. For a typical first-time buyer in Washington, it could take years to save up for this kind of down payment.

This is the primary benefit offered by a VA loan. By covering the entire purchase price, a VA loan allows you to buy a home much sooner.

Two Important Requirements for Borrowers

VA loans remove a major hurdle for home buyers in Washington. But you’ll still need to check a couple of boxes to enjoy this benefit.

In its official guide for home buyers, the Department of Veterans Affairs states:

“Of course, you must be able to afford the home and the property must appraise for at least the purchase price, otherwise you may have to make a small down payment.”

When you apply for a VA loan in WA State, your mortgage lender will assess your ability to repay the loan. They want to make sure you have the income needed to comfortably afford your monthly payments, along with all other recurring debts.

Additionally, a VA-approved home appraiser must determine that the house is worth at least the amount you’ve agreed to pay for it. That’s one of the key requirements for this program.

Borrowers who can meet these two VA loan requirements could cover the full purchase price with a VA-backed mortgage loan.

Five Things to Take Away From This

We’ve covered a lot of information in this guide, and it’s all important. So let’s wrap up by summarizing some of the key points:

  1. VA loans can finance the entire purchase price. This means no down payment is required for eligible borrowers in Washington.
  2. These loans are backed by the U.S. Department of Veterans Affairs. This guarantee encourages lenders to offer more favorable terms, such as the 100% financing option.
  3. By covering the entire home purchase price, VA loans enable buyers to purchase homes sooner, without having to spend years saving up for a down payment.
  4. The home price must not exceed the appraised value.
  5. Applicants must be able to show that they have the income needed to afford the monthly mortgage payments.

So, can a VA loan cover the entire home purchase price in Washington? If you can qualify for a zero down payment VA loan, then yes. You can cover the entire cost of a home purchase in WA Stat with a VA home loan.

Need a VA loan in Washington? Sammamish Mortgage specializes in the VA loan program in WA State and serves borrowers across the state of Washington. Please contact us if you have mortgage questions or would like to start the application process.

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