What is a FHA loan in WA?
The FHA or Federal Housing Administration is a federally insured loan program. These loans are commonly used for single and multi-family homes and are great for first time home buyers. The FHA loan was created in 1934 and is the world’s largest insurer of residential mortgages.
FHA loans limits are based on local home values in WA
Are there any FHA loan requirements in WA?
FHA loans in WA are easily obtainable and are great for first time home buyers. FHA home loans have low requirements and allow a buyer with a credit score of 580 and above to purchase a home with as little as 3.5% down.
FHA loans are very popular in WA because they allow flexibility in payment ratios to household incomes. There is no income limit, however your monthly mortgage payment must be between 31%-43% of your monthly income to assure you have a reasonable payment.
FHA loan limits are higher in bigger cities like Seattle and Tacoma.
What are the benefits to the Washington FHA loan?
FHA loans in WA are federally insured, so lenders are more lenient. This insurance protects the lender from losses if the borrower files for bankruptcy or has to foreclose the house, however this is not the same as hazard insurance. Even if you have filed bankruptcy in the past years you can meet other requirements to qualify.
Washington FHA loans have low interest rates and a low down payment as little as 3.5% where as many other loans require as much as 20% down.
The FHA loan program in Washington allows the seller or lending to pay some of the closing costs including, title and appraisal expenses. There is also a program associated with the FHA loans, called 203K, which allow the buyer to get extra money for repairs, so instead of looking at the upfront appraisal, lenders look at the projected cost after repairs. If the loan is assumable then the buyer can pick up right where you left off leaving them with lower interest rates because you have already paid the higher rates.
Overall the Washington FHA loan program offers many benefits and it great for first time home buyers or buyers with lower credit scores!