Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

Down Payments and Assistance Programs

You’ve most likely heard of the golden rule in house buying numerous times by now: Save up for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you acquire favorable rates from lenders. However, there can actually be financial benefits to only putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE UPSIDE
The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE DOWNSIDE
The downsides of a small down payment are well known. You’ll have to pay “Private Mortgage Insurance” for years, and the lower your down payment the more you’ll pay, of course. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search. To be honest, however, less than 20% today is not going to get you a home. With the competitiveness between homebuyers in the market today, it can be a deal breaker for many sellers.

DOWNPAYMENT ASSISTANCE PROGRAMS
What if you don’t have or can’t earn that big amount of money for down payment any time soon? Don’t be discouraged! Check out these down payment assistance programs in Washington State. You may qualify for some help with this predicament. The purpose of these programs is to make funds available to eligible applicants who are interested in purchasing a home but need financial help to pay the upfront costs, which include the down payment, as well as the closing costs and prepaid items required to obtain homeownership.

1.Home Advantage Down Payment Assistance Loan Program
The Washington State Housing Finance Commission offer homebuyers the Home Advantage Down Payment Assistance Loan Program, a second mortgage with a zero percent interest rate and payment deferred for 30 years that combines with the Home Advantage first mortgage.
Requirements:
• Homebuyers must not exceed the set income limits: statewide $97,000.
• Applicants must attend a Commission-sponsored homebuyer seminar

2.HomeChoice Down Payment Assistance Program
HomeChoice is a down payment assistance program offered by the Washington Housing and Finance Commission. It helps qualifiers by offering a payment-deferred, second mortgage, which provides up to $15,000 to be used for down payment and closing costs
Requirements:
• Homebuyers have a disability or have a family member with a disability living with them.
• Must be first-time homebuyers
• Income Limits (as of April 2017)
King/Snohomish: $96,000
Island: $77,300
Kitsap: $77,100
All Other Counties: $76,500

3. Seattle Down Payment Assistance Program
Qualified borrowers purchasing within the city limits of Seattle are allowed up to $45,000 in assistance with payments deferred for 30 years, at 3 % simple interest. Funds may be used for down payment and closing costs.
Requirements:
• There is Shared Appreciation requirement for the first 9 years.
• Borrowers must fall within income limits (1-person household: $48,550)
• Borrowers must be first-time homebuyers and the home being purchased must be their principal residence and owner-occupied.
• All borrowers must attend a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission and receive a certificate.

4. ARCH East King County Down payment Assistance Loan
Qualified borrowers purchasing a home or condominium within an ARCH member city are assisted with up to $30,000 in down payment assistance at 4 % simple interest.
Requirements:
• Applicants do not need to be first-time homebuyers.
• The home being purchased must be the principal residence and owner-occupied.
• Borrowers must fall within income limits

5. Bellingham Down payment Assistance
Residents of Bellingham may receive assistance with up to $40,000 in down payment and closing cost assistance. Payment can be deferred for 30 years at 3% simple interest.
Requirements
• Applicants must be first-time homebuyers
• The property being purchased must serve as the borrower’s principal residence and must be owner-occupied
• Applicants must attend a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission.
• Applicants must also attend a one-on-one pre-purchase counseling session just prior to closing.
• Borrowers must fall within income limits (1 person: $39,150; 2 persons: $44,750)

6. House Key Veterans Program
Washington State qualified veterans who have served our country may receive down payment assistance in the form of a second mortgage loan to. House Key Veterans combines with the Home Advantage first mortgage loan program to offer a second mortgage with a 3 % interest rate and a ten-year loan term. Eligible households may qualify for a maximum loan amount of up to $10,000.
Requirements:
• Any person who has received an honorable discharge or a discharge for medical reasons with an honorable record
• Members and honorably discharged former members of the Washington National Guard and Reserve
• Never remarried spouses and dependent children of deceased Veterans
• Borrowers must be first-time homebuyers or buying in a targeted area*
• Borrowers must qualify for the Home Advantage Program first mortgage loan program
• Borrowers must attend a Commission-sponsored homebuyer seminar Borrowers must fall within income limits
o King/Snohomish $96,000
o Island $77,300
o Kitsap $77,100
o All Other Counties $76,500

7. Opportunity Down payment Assistance Loan Program
This is a second mortgage loan program with a 1 % interest rate, with the payment deferred for 30 years.
Requirements:
• Borrowers must be first-time homebuyers or buying in a targeted area
• Applicants must qualify for the House Key Opportunity first mortgage loan program
• Borrowers must attend a Commission-sponsored homebuyer seminar
• Applicants must fall within the income limits

8. Pierce County Down payment Assistance Program
This program is for qualified borrowers purchasing within the Pierce County limits, outside of the Tacoma, Lakewood, Bonney Lake, Auburn, and Pacific city limits. The loan amount goes up to $24,900, with payments deferred for 30 years, at 4 % simple interest.
Requirements:
• All applicants must contribute a minimum down payment of is $1000
• Borrowers must be a first-time homebuyer.
• The property must serve as the borrower’s primary residence.
• Borrowers must attend a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission and receive a certificate.
• Applicants must fall within the income limits

9. Tacoma Down Payment Assistance Program
Qualified borrowers within Tacoma city limits are allowed up to $20,000 in down payment and closing cost assistance with payments deferred for 30 years, at 4 % simple interest.
Requirements
• All applicants must contribute a minimum down payment of is $500
• Applicants must be first-time homebuyers.
• The home being purchased must be the principal residence and owner-occupied.
• Borrowers must attend and complete a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission. Borrowers must also attend a free one-on-one, pre-purchase counseling session.
• Borrowers must fall within the income limits
There is too much information from these programs to condense into one article, so this is only an overview of each program. If you are interested in learning more about these down payment assistant programs, please visit Washington State Housing Finance Commission and U.S. Department of Housing and Urban Development for more information by clicking on following links. Feel free to reach out to me as well. I may not know all of the answers, but I know the the right people to reach out to who do.

Sources:
https://www.fha.com/fha-grants?state=WA
http://www.wshfc.org/buyers/downpayment.htm
https://www.hud.gov/states/washington/homeownership/buyingprgms

 

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