Those who are looking at buying a home need to think about whether or not they are truly ready for this responsibility. When someone takes out a mortgage, this is frequently the largest loan someone will ever apply for in their life. Furthermore, owning a home also means homeowners insurance, real estate taxes, home maintenance, and home repairs.
Summary: Home buyers in Washington State tend to have a lot of questions about the FHA loan program. In this article, we’ll answer some of the more commonly-asked ones to help you make a more informed decision about which mortgage program to choose.
The FHA home loan program is a popular option that is open to all buyers, but it’s particularly popular among first-time buyers with limited funds saved for a down payment.
Here are answers to five of the most common questions relating to Washington State FHA loans.
1. What is an FHA loan exactly?
An FHA home loan is insured by the government through the Federal Housing Administration. This agency falls under the Department of Housing and Urban Development (HUD). The FHA loan program has been around since the 1930s and has helped thousands of home buyers with low to moderate income purchase a house.
2. What makes it different from a conventional or “regular” mortgage?
Washington State FHA loans are insured by the government. This is the primary distinction that sets them apart from conventional home loans that do not receive government backing.
This insurance coverage gives mortgage lenders an added layer of protection from financial losses in the event of borrower default. But the home buyer benefits from this insurance as well. As a result of the government backing, mortgage lenders are often more flexible with their qualification criteria when extending an FHA loan in Washington State.
3. What are the down-payment requirements for Washington FHA loans?
While the down-payment requirements for a conventional home loan can vary based on several factors, FHA loans are more straightforward.
All borrowers who wish to use an FHA loan to buy a house in Washington State must make a down payment equal to 3.5% of the purchase price or appraised value, whichever is less. That is the minimum down payment requirement when using a Washington State FHA loan.
There are some credit-score requirements that go along with this as well. Generally speaking, a borrower must have a credit score of 580 or higher in order to qualify for the relatively low 3.5% down payment. These and other criteria are established by the Department of Housing and Urban Development, which manages the FHA loan program.
4. What kinds of homes qualify for FHA financing?
In Washington State, you can use an FHA loan to purchase many different types of properties. But the house must serve as your primary residence. The program is not designed to finance second homes and/or vacation properties.
FHA loans can be used to purchase a traditional single-family detached home, a multifamily property such as a duplex or triplex, or an approved condominium unit. To buy a condo with an FHA loan in Washington, you must first ensure that the condominium project has been previously approved by HUD. You can find a list of approved condos in Washington State on the HUD website.
Any home being purchased with an FHA loan must meet certain property requirements and guidelines, as required by HUD. Most of these guidelines relates to the health and safety of the occupant. For example, bedrooms must have some form of secondary egress, such as a window, for fire safety.
The home must be in generally good condition, and all of the installed system such as electrical and plumbing must function properly. Those are the minimum property requirements when using an FHA loan to buy a house in Washington State.
5. How do I start the application process?
Please contact us if you wish to apply for an FHA loan in Washington. We can review your financial situation to determine if you are a good candidate for this program. We can also pre-approve you for an FHA loan, which gives you an advantage in the real estate market.
We can also provide you with a mortgage rate quote and an estimate of what your monthly payments would be. This can be helpful for budgeting and planning purposes.
Have Questions About Mortgages?
If you have questions about mortgages or are ready to apply for one, give Sammamish Mortgage a call. We are a local, family-owned company based in Bellevue, Washington and serve the entire state, as well as Colorado, Idaho, and Idaho. We offer plenty of mortgage programs to borrowers and have been doing so since 1992. Call us today to get started on your home loan application process!