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Fixed-rate. ARM. Conventional. FHA. You have a lot of options when it comes to choosing a home loan in Washington State. But which type of mortgage loan is right for you? This guide will walk you through the different types of home loans available in Washington State and explains the key features of each one.
Homebuyers often feel overwhelmed by the many choices they have to make regarding their mortgage loans. Here’s the good news. When it comes to the different types of home loans, most of those choices can be boiled down to two questions:
Answering these questions will narrow the field and make it easier to choose the right type of loan. So let’s look at these options in more detail.
| FHA Loans | Government‑backed mortgages designed to help home buyers with smaller down payments or lower credit scores. |
| VA Loans | Home loans offered to eligible veterans and active military members with no down payment required. |
| USDA Home Loans | Mortgages for rural and suburban buyers that feature low interest rates and no down payment. |
| Fixed-Rate Mortgages | Loans with an interest rate that stays the same throughout the repayment term. Common options include 15-year and 30-year mortgages. |
| Adjustable-Rate Mortgages (ARMs) | Mortgages with interest rates that change periodically after an initial fixed period. |
| Conforming Loans | Loans that meet Fannie Mae and Freddie Mac guidelines for size and standards. |
| Jumbo Mortgage Loans | Mortgages that exceed conforming loan limits, often used for high‑value properties. |
| Bridge Loans | Short‑term financing that covers costs between buying a new home and selling the old one. |
| Self-Employed Mortgages | Loans tailored for borrowers who prove income through business records instead of pay stubs. |
| 1099-Only Mortgage Loans | Mortgages for independent contractors who qualify using 1099 forms as proof of income. |
| Non-QM Investor Loans | Flexible mortgages for real estate investors that don’t follow qualified mortgage rules. |
| DSCR Loans | Investor loans approved based on a property’s debt service coverage ratio rather than personal income. |
| Long- and Short-Term Rental Loans | Financing options for properties intended as vacation rentals or long‑term leases. |
| Bank Statement Loans | Mortgages where income is verified using bank statements instead of tax returns. |
| ITIN Loans | Mortgages allowing applicants to qualify with an Individual Taxpayer Identification Number instead of an SSN. |
| Asset-Based Loans | Loans approved based on the value of assets rather than traditional income documentation. |
| Interest-Only Loans | Mortgages where borrowers pay only interest for a set period before repaying principal. |
| Second Home Loans | Mortgages used to purchase an additional property beyond the primary residence. |
There are three main types of government-backed mortgage loans available in Washington State — FHA, VA, and USDA. Here’s what you should know about them.
FHA loans are provided by a mortgage lender but are insured by the federal government. This government insurance makes them unique from conventional or “regular” home loans.
There are two primary advantages to this program:
VA loans are available to military service members and their families. If you’re a military member in Washington State, it’s hard to beat this type of loan. This program allows eligible borrowers to purchase a home with no money down, and sometimes without mortgage insurance. Read our related article about VA loan limits in Washington State.
Are available to residents of rural areas who meet certain income guidelines. They are also referred to as Rural Development (RD) loans. This program is primarily intended for borrowers with low to moderate incomes. To learn more about this type of mortgage, visit USDA.gov.
Conventional loans are not insured or guaranteed by the federal government. This distinguishes it from the three types of Washington State home loans above (FHA, VA, and USDA). This type of mortgage can have either a fixed or an adjustable rate of interest, as we will discuss below.
When selecting a type of home loan in Washington State, you’ll also be able to choose between a fixed and adjustable mortgage rate.
The fixed-rate mortgage carries the same interest rate for the entire term or “life” of the loan. Predictability and stability are the primary advantages with this type of loan. Because the rate stays the same, the monthly payments will remain fixed as well.
Fixed-rate mortgage loans are available in different lengths, with 15-year fixed-rate mortgages and 30-year fixed-rate mortgages being the most common. The 30-year FRM is by far the most popular type of home loan in Washington State.
The adjustable-rate mortgage has a rate that can change over time. The rate usually adjusts annually in relation to a certain index, such as the London Interbank Offered Rate (LIBOR). Most ARM loans today are “hybrids” that start off with a fixed rate for an initial period of time, usually 3, 5 or 7 years.
During this initial phase, the rate does not change. After that phase, however, the rate will begin to change at a predetermined interval, usually once per year. The benefit to using an ARM is that you could secure a lower rate for the first few years, when compared to a fixed-rate mortgage.
Size is another important consideration when choosing a type of home loan in Washington State. All loan programs have limits associated with them. When you exceed these limits, you end up in “jumbo” mortgage territory, where you might encounter stricter eligibility requirements.
Here’s the difference between jumbo and conforming loans:
Conforming loans meet the guidelines set forth by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that buy and sell home loans. A conforming loan is one that meets the size restrictions used by the two GSEs.
The single-family conforming loan limit for most counties in Washington State for 2026 is $832,750. In the Seattle metro area, it is set at $1,063,750.
Jumbo loans exceed the conforming loan limits mentioned above. Jumbo mortgage products often require larger down payments and higher credit scores, due to the higher level of risk they bring.
A bridge loan is a type of short-term financing that provides temporary funds while you transition between buying a new home and selling your current one. It is typically repaid once long‑term financing is secured or the existing property is sold, making it a useful tool for covering gaps in cash flow.
Sammamish Mortgage offers self-employed loan solutions that consider alternative income verification methods to help entrepreneurs and freelancers secure home financing.
A 1099-only loan is designed for independent contractors and gig workers who receive income through IRS Form 1099 rather than traditional W-2 wages. Instead of requiring tax returns or pay stubs, lenders use recent 1099 forms to verify income, making it easier for self-employed borrowers to qualify.
Non-QM investor loans are designed for real estate investors who may not qualify for traditional mortgages due to unconventional income documentation or credit profiles. These loans often rely on property cash flow—such as rental income—rather than personal income, making them ideal for portfolio expansion and investment flexibility.
Debt-Service Coverage Ratio (DSCR) loans focus on the income-generating potential of a property rather than the borrower’s personal finances. Ideal for real estate investors, these loans simplify the approval process by evaluating rental income against debt obligations.
Short-term rental loans and long-term rental loans are tailored for buyers interested in short-term vacation rentals or long-term income properties. They offer competitive rates and underwriting that considers projected rental income, helping investors maximize returns.
Bank statement loans allow borrowers to qualify using 12–24 months of personal or business bank statements instead of tax returns. This option is especially useful for self-employed individuals with strong cash flow but limited traditional documentation.
ITIN loans are a type of non‑qualified mortgage (non‑QM) that let applicants use an Individual Taxpayer Identification Number in place of a Social Security Number. While these loans fall outside the Consumer Financial Protection Bureau’s standards for qualified mortgages, borrowers must still prove their financial ability to repay through income and credit documentation.
Asset-based loans use a borrower’s liquid assets—such as savings, investments, or retirement accounts—as the basis for qualification. This program is ideal for high-net-worth individuals who prefer not to rely on income documentation.
An interest‑only loan allows borrowers to pay just the interest for a fixed period, typically between 5 and 10 years. After this stage, the loan converts to a traditional repayment plan, requiring payments that cover both principal and interest for the rest of the term.
During the interest‑only stage, monthly payments are much lower than standard loans, though no equity is accumulated in the property. The loan balance does not decrease unless additional payments are made.
When the interest‑only period ends, principal repayment begins, often causing a significant jump in monthly costs. The size of this increase depends on the interest rate and the remaining loan duration.
A second home loan is a mortgage taken out to purchase an additional property, separate from your primary residence, often used as a vacation home or investment. You can use conventional loans, jumbo loans, or the equity from your primary residence to finance a second home purchase.
What are the main types of home loans in Washington State?
The most common loan types include conventional loans, FHA loans, VA loans, USDA loans, and jumbo loans.
What is a conventional loan?
A conventional loan is not backed by the government and typically requires good credit and a down payment of at least 3% to 5%.
What is an FHA loan?
FHA loans are insured by the Federal Housing Administration (FHA) and are ideal for first-time buyers with lower credit scores and smaller down payments.
What is a jumbo loan?
Jumbo loan amounts are higher than conforming loan limits set by Fannie Mae and Freddie Mac. They require strong credit and larger down payments.
What’s the difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
A fixed-rate mortgage has a constant interest rate and monthly payment for the life of the loan. ARMs have interest rates that change periodically based on market conditions, often starting lower than fixed rates.
Which loan is best for first-time homebuyers?
FHA loans and conventional loans with low down payment options are popular among first-time buyers.
Are there loans for self-employed buyers?
Yes, conventional and non-QM loans can accommodate self-employed borrowers with proper documentation.
What is a non-QM loan?
Non-qualified mortgage loans are for borrowers who don’t meet traditional lending criteria, such as freelancers or investors.
What is PMI and when is it required?
Private Mortgage Insurance (PMI) is required on conventional loans with less than 20% down payment.
Can I refinance my home loan in Washington?
Yes, refinancing is available for most loan types to lower interest rates or change loan terms.
Can I use gift funds for a down payment?
Yes, many loan programs allow gift funds from family or approved sources.
What is the difference between pre-qualification and pre-approval?
Pre-qualification provides an estimate, while mortgage pre-approval involves a credit check and verified financials.
Are interest-only loans available?
Yes, but they are less common and typically used for short-term financing or investment properties.
How do I choose the right loan type?
Consider your credit score, income, down payment ability, and long-term goals. A mortgage advisor can help tailor options.
If you are in the market for a loan, we can help. Will you need mortgage financing to buy a home? At Sammamish Mortgage, we offer a wide variety of mortgage programs and tools with flexible qualification criteria, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. We have been serving the entire state since 1992, as well as the broader Pacific Northwest region that includes Washington, Oregon, Idaho, Colorado, and California. Please contact us today with any financing-related questions you have, or visit our website to get an instant rate quote.
Whether you’re buying a home or ready to refinance, our professionals can help.
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