Getting a Small Down Payment on a Seattle Home Loan

December 18, 2017
Last updated:
January 27, 2022
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Seattle home prices are very high, so a down payment can be tough to scrounge together when it comes time to secure a mortgage. But there are some strategies you can employ to keep the down payment as low as possible to make buying a home a reality in 2022.

With the median home price in Seattle now clearing over $900,000 right now, more and more buyers are seeking ways to lower their down payments. Here are three financing strategies for those seeking a small down payment on a Seattle home loan in 2022.

RelatedLow down payment purchase options

1. Broaden your search to more affordable areas around Seattle.

Home prices in the Seattle area have risen sharply over the past few years, even though they have cooled somewhat over recent months. The highest prices are generally found within the city itself. If you’re able to expand your search to some of the surrounding areas, you could greatly reduce your housing costs. And a lower purchase price means a smaller down payment on your Seattle home loan.

In addition to buying outside the city, there are other strategies for reducing your upfront costs. For example, some home buyers in the area are now purchasing fixer-upper properties with the intent of making improvements gradually over time. This can result in a lower purchase price and a smaller down payment toward a Seattle home loan.

Seattle Mortgage Rates

2. Choose a mortgage program with a relatively low down payment.

Once upon a time, a 20% down payment was the “gold standard” within the real estate industry. But that’s not the case anymore. These days, there are many Seattle home loan programs that offer down payments well below 20%.

The FHA loan program is one of the most well-known mortgage financing options with a low investment requirement. Borrowers who use an FHA-insured home loan can put down as little as 3.5% of the purchase price or appraised value.

Conventional loans (those that are not backed by the government) are now offering relatively low down payments as well. Some of the conventional mortgage products available today have investment requirements as low as 3%, but most require a minimum of 5%.

This is a common misconception among home buyers in Seattle and nationwide. Many people think they have to make a down payment of 20% or more, but that’s not the case. A recent survey conducted by the National Association of REALTORS® found that roughly 60% of first-time buyers made down payments between 0% and 6%.

The bottom line is that if you’re seeking a small down payment for a Seattle home loan, you have to explore all of your mortgage financing options. Every type of mortgage loan has certain pros and cons associated with it. The key is to find the right option for your situation.

3. Use gift money from a family member or other third party.

Did you know that a family member or other approved donor could contribute money toward your down payment expense? It’s true. This is a little-known but very helpful strategy that can be applied to many different mortgage products. The caveat here is that the money being donated must truly be a gift – it cannot be an interpersonal loan.

These are just three of the ways Seattle home buyers can reduce their out-of-pocket down payment expenses when buying a house in 2020. The key takeaway is that the mortgage industry is a lot more flexible than most people realize. So you don’t necessarily need a large down payment to buy a house in Seattle.

Do your homework. Research your financing options. And contact us with your questions!

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Need a Loan on a Home Purchase in Seattle?

Will you need mortgage financing to buy a home in Seattle? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest since 1992. We offer a wide variety of mortgage programs with flexible qualification criteria to borrowers in WA, OR, ID, and CO. Please contact us today with any financing-related questions you have.

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