Low-Down-Payment Mortgage Options for Washington Home Buyers

February 2, 2017
Last updated:
November 24, 2021
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Summary: Home buyers in Washington State sometimes consider down payments to be an obstacle to homeownership. The truth is, there are several low-down-payment mortgage options for Washington State buyers with limited funds, and this article covers some of the most popular strategies.

Coming up with a sizable down payment can be a real challenge, especially when you consider how expensive homes are these days. Before we get to the financing options, let’s dispel a common misconception regarding down payments.

A 20% Down Payment Isn’t Always Needed

Some home buyers choose to make a down payment of 20% (or more) when buying a house with a mortgage loan.

They do this for two primary reasons:

  • Putting at least 20% down allows borrowers to avoid the extra cost of mortgage insurance, which is typically required when a loan accounts for more than 80% of the home’s market value.
  • A down payment of 20% or more also reduces the size of the monthly payments, because a larger amount is being paid up front.

But here’s the important thing to take away from this. In Washington State, a down payment of 20% is not required in all scenarios. In fact, borrowers today can often qualify for conventional home loans with down payments as low as 3%.

The Federal Housing Administration (FHA) loan program allows borrowers to make down payments as low as 3.5% down. And then there’s the VA program for military members, which offers 100% financing for eligible borrowers.

Let’s take a closer look at these low-down-payment mortgage loans for Washington State home buyers.

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Low Down Payment Mortgage Loans in Washington State

As mentioned above, a large down payment is not always needed when purchasing a home. Here are some examples of mortgage programs that offer low down payments and other forms of flexibility.

Low Down Payment FHA Loan: 3.5%

The FHA mortgage insurance program has been helping home buyers in the U.S. since the 1930s. Among other advantages, this type of loan offers a relatively low down payment option.

Borrowers who use this program to purchase a house in Washington State could have a down payment as low as 3.5%. Specifically, that’s 3.5% of the appraised value or the purchase price, whichever is less. As a result, FHA loans are especially popular among first-time home buyers with limited funds saved up (though they’re not limited to first-time buyers).

Related: FHA requirements in Washington State

Low Down Payments for Conventional Home Loans

The HomeReady loan is another low-down-payment home loan option for Washington State borrowers. This product was created by Fannie Mae, which is one of the two government-sponsored corporations that buy and sell mortgage loans (Freddie Mac is the other).

According to Fannie Mae, HomeReady is a “low down payment mortgage product designed for creditworthy low- to moderate-income borrowers, with expanded eligibility for financing homes in low-income communities.”

Borrowers who use this type of loan can finance up to 97% of the home’s value, for a down payment as low as 3%. That’s even lower than the FHA program mentioned above.

As an added benefit, there is no minimum contribution from the borrower’s own funds. This means you could get the minimum 3% investment from a family member, a friend, or some other approved donor. Learn more about down payment gifts.

The “Conventional 97” Home Loan: 3%

Fannie Mae supports another mortgage loan that offers 97% financing. Through this program, commonly referred to as the “conventional 97,” Washington State home buyers can get a loan with a low down payment of 3%. So in that regard, it’s similar to the HomeReady option mentioned above. But there are fewer income restrictions for borrowers.

These are certainly not the only low-down-payment mortgages for Washington State borrowers. But they are some of the most widely used programs. The point is, you might have more options than you even realize, and that’s why it’s important to talk to a knowledgeable loan officer about what’s available.

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Let’s Explore Your Options

Planning to buy a home in Washington sometime soon? Do you have questions about your down payment options? We can help!

Sammamish Mortgage has been serving borrowers across the state of Washington since 1992. We offer a variety of mortgage programs, some with flexible criteria and low down payments. We can help you explore your financing options to make an informed choice. Please contact our knowledgeable staff today.

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