FHA, VA or Conventional: Which Is Best for Seattle Home Buyers?

August 17, 2022
Last updated:
August 17, 2022
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FHA, VA and conventional loans are the three most popular financing options among home buyers in the Seattle metro area. They’re not the only mortgage options available, but they do account for the vast majority of loan origination volume.

The big question is, what’s the best type of mortgage loan for a home buyer in the Seattle area? FHA, VA or conventional?

Top 3 Mortgage Options for Seattle Home Buyers

Mortgage industry data have shown that most home buyers within the Seattle metro area use conventional mortgage loans to buy a house. That’s because it’s generally the cheaper option, especially if you can put enough money down to avoid mortgage insurance.

Home buyers with credit issues in the past and/or limited funds for a down payment often turn to the FHA loan program. Most military members and veterans are able to use the VA loan program, which offers major benefits including zero down payment.

Let’s take a closer look at these commonly used mortgage options:

Conventional: The Most Popular Type of Mortgage

As mentioned above, conventional mortgage loans are the most popular type of home loan among home buyers in Seattle (and nationwide). A conventional or “regular” mortgage loan is one that does not receive government insurance or backing.

These loans are especially popular among Seattle home buyers who can afford to make a down payment of 20% or more. If you use a conventional mortgage loan to buy a house, and put down at least 20%, you can avoid the added cost of mortgage insurance.

Generally speaking, private mortgage insurance is required for conventional loans that account for more than 80% of the home’s value. When you put down 20% or more, you keep the loan to value ratio at 80% or below — thereby avoiding mortgage insurance.

But even those home buyers with less money for a down payment can benefit from using a conventional mortgage loan. Sure, you might have to pay for mortgage insurance if you put less money down. But it might be cheaper than the insurance associated with the FHA loan program, which we will talk about next.

FHA: A More “Forgiving” Home Loan Option

Federal Housing Administration (FHA) home loans are popular among Seattle home buyers who have credit-related issues in the past. This program also appeals to buyers with limited funds saved up for a down payment.

Unlike a conventional loan (covered above), an FHA mortgage loan receives insurance backing from the federal government. As a result, the qualification criteria can be a bit more forgiving, when compared to conventional financing.

Seattle home buyers who use an FHA loan can also benefit from the low down payment requirement. This program allows borrowers to put down as little as 3.5% on a home purchase.

The downside to FHA home loans is that they require mortgage insurance. This requirement is handed down from the Department of Housing and Urban Development (HUD). There’s an upfront mortgage insurance premium, along with an annual premium.

Key point: If you use an FHA loan to buy a home in the Seattle area, and you go with the 3.5% down payment option, you’ll probably have to pay mortgage insurance for the life of the loan.

Ultimately, you have to choose the mortgage program that works best for your unique situation — even if that means paying for mortgage insurance.

Some Seattle home buyers find that they are unable to qualify for conventional financing, but they meet the requirements for an FHA loan. So they might be willing to take on the mortgage insurance cost, if it means they can qualify for a loan and buy a house. It’s a trade-off.

VA: A Great Option for Seattle Military Members and Veterans

Conventional mortgage loans are the most popular financing method today, with FHA-insured home loans coming in second. In third place (when measured by total loan volume), we have the VA mortgage loan program.

VA loans are less common in the Seattle area simply because they have stricter eligibility requirements. You have to be a military member, a veteran, or an eligible spouse in order to qualify for the VA home loan program.

If you’re a military member or veteran, there’s a good chance you qualify for the VA loan program. It offers a unique set of benefits, including the option of buying a house with no money down. In fact, it’s one of the only “zero down” mortgage options available for Seattle home buyers.

But that’s not the only advantage of using a VA loan to buy a house in Seattle. This program also allows borrowers to avoid mortgage insurance, even when they don’t put any money down. There’s really no other loan program that offers this combination of benefits for borrowers.

So there you have them, three of the most popular mortgage options for home buyers in the Seattle metro area. If you have questions about these or other financing options, please contact our staff. We offer a range of home loan options for borrowers in the Seattle area, including all of the programs mentioned above.

Today’s Seattle Mortgage Rates

Ready to Apply For a Mortgage in Seattle, WA?

Are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Seattle, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Among our programs includes the Diamond Homebuyer ProgramCash Buyer Program, and Bridge LoansContact us today with any questions you have about mortgages.

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