Coming up with a down payment can be difficult. Luckily, there are mortgage options available to Washington homebuyers that require as little as zero down.
Home buyers in Washington State seeking zero-down mortgage options may find they have limited choices. Most mortgage programs require an upfront investment from the borrower in the form of a down payment.
However, there are a couple of special programs out there specifically designed to help, and the VA home loan is one of them. Here’s what you should know about zero-down mortgage loans in Washington State.
A zero-down home mortgage can cover 100% of the purchase price. This means the buyer can come to the closing table without a down payment of any kind. The entire purchase can be financed.
Zero-down mortgages are rare in Washington State, with a couple of notable exceptions. That’s because most home loan programs require a down payment investment from the buyer.
However, there are a couple of mortgage financing programs available in Washington State that allow for zero down payment. Two popular options are the USDA rural loan program, and the VA mortgage program for veterans and members of the armed forces.
Even with a zero-down mortgage, home buyers may still need to bring money to closing. That’s because a zero-down loan refers to the down payment requirement, while other upfront expenses can still affect the total cash-to-close amount.
Buyers should review their estimated closing costs carefully so they understand the difference between financing the full purchase price and the total funds needed to complete the transaction.
There are still ways to buy a home in Washington State with a zero-down mortgage. The USDA Rural Development loan program is available to borrowers in rural areas who meet certain income criteria. The VA loan program offers 100% financing for eligible veterans and members of the military.
In addition to borrower eligibility, the property itself must also meet USDA program requirements. In Washington, this means buyers need to make sure the home is located in an area that qualifies for USDA financing. Because property eligibility is a key part of the program, it’s important to confirm that a specific address is eligible before moving forward with a USDA zero-down mortgage strategy.
While the VA program offers a no-down-payment benefit, eligible borrowers should also be aware of the VA funding fee. This is a program-related cost that can affect the overall expense of using a VA loan. When comparing mortgage options, it helps to look beyond the down payment requirement and consider all costs associated with the loan.
One of the great things about VA loans is that loan limits have been eliminated. Before the start of the year, borrowers must stay under a certain loan limit in order to take advantage of the zero-down payment option. But now, borrowers can still benefit from no money down, regardless of the price of the home. (The exception is for those who already have more than one VA loan or have defaulted on one in the past).
One alternative to a zero-down mortgage is gift money from a family member or other approved donor. This is known as a down payment gift. These days, many mortgage programs allow for gift money from approved third-party donors. This applies to both FHA and conventional home loans. Learn more about using gifts.
It’s not truly a zero-down mortgage option, because the upfront investment is still required. However, with this strategy, the down payment doesn’t come out of your pocket. Gifting can reduce, or even eliminate the up front, out-of-pocket expense of buying a home in Washington State.
In addition to these zero-down mortgage options for Washington home buyers, there are certain types of home loans that offer a low down payment. We’ve covered some of the most popular options here.
Will you be buying a home in Washington sometime soon? Do you need mortgage financing to make it happen? We can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been offering multiple mortgage programs with flexible qualification criteria to borrowers across the Pacific Northwest, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, contact us if you’re ready to get pre-approved for a mortgage.
A zero-down mortgage loan finances 100% of the home’s purchase price, so the buyer does not have to make a down payment at closing.
Yes. The main zero-down mortgage options in Washington State are USDA loans for eligible rural properties and VA loans for eligible military borrowers.
No. FHA loans require a minimum down payment, typically 3.5% of the purchase price or appraised value, whichever is less.
Yes. Conventional loans usually require a down payment, often starting around 3% to 5% for qualified borrowers.
USDA loans are generally for low- to moderate-income borrowers purchasing homes in eligible rural areas of Washington State.
VA loans are available to eligible veterans, active-duty service members, and certain other qualified military borrowers.
No. Eligible borrowers can use a VA loan to finance up to 100% of the home’s purchase price without a down payment.
VA loan limits have been eliminated for many eligible borrowers with full entitlement, which can allow zero-down financing without a set loan cap in many cases.
Yes. Gift funds from an approved donor can often be used with certain mortgage programs to cover some or all of the required down payment and reduce out-of-pocket costs.
A low-down-payment loan or approved gift funds may help make homeownership more affordable if a zero-down option is not available.
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