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Different types of mortgages, programs, and grants are available to first-time home buyers.
Mortgages are loans used to purchase or refinance a property, such as a house or a condo. The borrower agrees to repay the loan with interest over some time, usually 15 to 30 years. The property serves as collateral for the loan, meaning that if the borrower fails to make the payments, the lender can take possession of the property and sell it to recover the debt.
There are different types of mortgages available for first-time home buyers in Washington state, depending on their income, credit score, down payment, and other factors. Some of the most common ones are:
- Conventional mortgages: These are loans that are not insured or guaranteed by the federal government. They typically require a higher credit score and a larger down payment than other types of mortgages. However, they may offer lower interest rates and more flexibility in terms of loan terms and fees. Conventional mortgages can be either fixed-rate or adjustable-rate, meaning that the interest rate can stay the same or change over time.
- FHA mortgages: These are loans that are insured by the Federal Housing Administration, a part of the U.S. Department of Housing and Urban Development. They are designed to help low- and moderate-income borrowers who may not qualify for conventional mortgages. They require a lower credit score and a smaller down payment than conventional mortgages, usually 3.5% of the purchase price. However, they also charge an upfront mortgage insurance premium and an annual mortgage insurance premium, which increases the cost of the loan. FHA mortgages are usually fixed-rate, but there are some adjustable-rate options.
- VA mortgages: These are loans that are guaranteed by the Department of Veterans Affairs, a federal agency that provides benefits and services to veterans and their families. They are available to eligible veterans, active-duty service members, reservists, National Guard members, and surviving spouses of veterans who died in service or as a result of a service-connected disability. They do not require a down payment or a minimum credit score, and they do not charge any mortgage insurance. However, they do charge a one-time VA funding fee, which can be paid upfront or rolled into the loan. VA mortgages are usually fixed-rate, but there are some adjustable-rate options.
- USDA mortgages: These are loans guaranteed by the U.S. Department of Agriculture, a federal agency supporting rural development and agriculture. They are available to low- and moderate-income borrowers who want to buy a home in a designated rural area, as defined by the USDA. They do not require a down payment or a minimum credit score, and they charge a low-interest rate. However, they also charge an upfront guarantee fee and an annual fee, which increase the cost of the loan. USDA mortgages are usually fixed-rate, but there are some adjustable-rate options.
“Lesley worked with me in purchasing a condo. She was continually detail orientated, proficient, and professional. It was a relief to have her expertise and and knowledge while I navigated through my first time purchasing a place. Lesley did an excellent job.”
Faith – Bought a Condo home in 2020 in Lynden, WA.
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Building energy-efficient homes.
In addition to these types of mortgages, there are also some programs and grants that can help first-time home buyers in Washington state with their home purchase. For example, the Washington State Housing Finance Commission (WSHFC) offers two main mortgage programs: Home Advantage and House Key Opportunity. Both programs may provide first-time home buyers with preferential interest rates and down payment assistance. The WSHFC also offers other programs, such as HomeChoice, which helps borrowers with disabilities or who have a family member with a disability, and EnergySpark, which helps borrowers who buy or build energy-efficient homes.
Bottom Line
When you’re prepared to start the house-buying process, calculate your monthly mortgage payment using a mortgage calculator to discover how different down payments and interest rates would impact it. Next, request tailored rate quotations from three to five mortgage lenders, if possible.
Remember to check beyond the rates that are displayed online. Check the interest rates and fees you are offered and apply for preapproval. That is the only way to ensure you get the best deal on your new home loan.