Washington State consistently ranks as one of the best places to live in the country, so if you’re thinking of relocating and purchasing a house in the “Evergreen State,” you’ve made a great decision.
House hunting can be exciting, but many first-time homebuyers are intimidated by the lending process and worry they may not have an adequate credit score, or sufficient savings for a 20% down payment. With an FHA loan in Washington, buyers’ worries are alleviated. Keep reading to see why so many Washington residents chose an FHA loan.
Why Consider an FHA Loan in Washington
Whether you want to purchase a home in busy Seattle, or a cozy town on the coast, the lending process can be frustrating. Washington has a higher than average cost of living, so thinking about putting 20% down on a house can be scary. This is why many Washington residents are choosing FHA loans, and as of April 2019, the total value of FHA loans in Washington State was over $346 million!
Benefits of FHA Loans in WA
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable
FHA Loan Limits in Washington
Before you begin house hunting, you should have an idea of how much you can borrow. In most of Washington, the baseline limit of $331,760 applies, but in a place like Portland or Seattle the limit is $741,750 due to the relatively high cost of real estate in these areas. Use the link below to see the full list of FHA loan limits in Washington in 2021.
Are You Eligible for an FHA Loan in WA?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30-day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
Learn More About FHA Loan Requirements
What Do You Need to Apply for an FHA Loan in WA?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.