Whether you’re moving to Washington or just finally ready to buy your first home, it’s easy to feel overwhelmed by the process of buying a home in the Evergreen State. Between competitive real estate markets with bidding wars and high home prices that mean large down payments, it can feel like an uphill battle.
The good news? The state has excellent programs for down payment assistance and flexible loans that make buying a house in Washington more affordable.
Ready to get started with buying property in Washington State? Here’s everything you want to know with a step-by-step guide, tips on where to buy a house, and a look at down payment assistance programs.
How to Buy a House in Washington State
The process of buying a house isn’t as challenging as it may seem. Here’s how to buy a home for the first time, step by step.
Step #1. Set a Realistic Budget – How Much Does it Cost to Buy a House in Washington?
As you prepare for buying a house in Washington, the first step you’ll want to take is setting a realistic budget. To determine how much you can afford to borrow, you can use the 28/36 rule, or debt-to-income ratio. This is what lenders will use to make sure you can afford mortgage payments.
- Total housing cost should not exceed 28% of your gross income
- Total debt payments should not exceed 36% of your income.
Remember: your total housing cost includes your PITI payment (principal, interest, property taxes, and insurance) plus HOA dues, if any.
If you can stay within these guidelines, you’ll be able to qualify for any mortgage program – when it comes to your debt-to-income ratio, anyway.
How much money do you need to buy a house in Washington State?
The average home price in WA is $550,000, up almost 17% year-over-year in 2021. Home prices have soared in most cities. These WA metro areas have seen sales prices soar by 35-45% year-over-year.
- Sudden-Valley, WA
- Mill Creek East, WA
- Liberty Lake, WA
- Kingsgate, WA
- Silver Firs, WA
- Buckley, WA
- North Lynnwood, WA
You can also look at median home prices by city to help you understand how much you need to pay when buying a house in Washington State.
- Bellevue: $1.1 million ($620/sq ft)
- Seattle: $767,000 ($540/sq ft)
- Everett: $590,000
- Kent: $579,000
- Tacoma: $495,000 ($300/sq ft)
- Vancouver: $445,000
- Spokane: $378,000 ($192/sq ft)
In Seattle, the average mortgage payment is $2,541. That’s just principal and interest – property taxes and insurance aren’t included. That’s 113% above the national average of $1,193!
Hidden Homeownership Costs When You Buy a House in WA
Principal, interest, property taxes, homeowners’ insurance, HOA dues… You’ve already considered these monthly costs when buying a home in Washington State, but have you also factored in other costs of owning a home?
The average homeowner in the U.S. pays $9,500 per year in hidden or overlooked expenses. In Seattle, the hidden costs of homeownership are almost $13,000 per year. This includes utilities, insurance, and taxes plus home maintenance, repairs, cleaning, and lawn care. These last four items alone account for about $3,600 per year.
Homeowners’ insurance is one of the few areas where Washington is more affordable than most states. Expect to pay about $900 to $1,000 per year for home insurance.
In terms of property taxes, the state overall has lower property tax rates than the national average, but it depends where you live. The median property tax rate in Washington State is 1.01% of the assessed value. However, the Seattle property tax is one of the country’s highest. A King County home with a median home value pays about $7,000 in property taxes per year.
As you prepare to buy a home in Washington State, make sure you have a reasonable budget in mind that includes these overlooked costs.
Step #2. Get Pre-Approved for a Mortgage
Before Washington State house hunting, you’ll want to get pre-approved for a home loan. This process gives you a letter from a lender that states you are pre-approved to borrow a certain amount. It requires submitting a loan application and providing extensive paperwork verifying your debts, assets, employment, credit, and more.
What Is Needed to Buy a House in Washington?
Here are the basic requirements to buy a house in Washington State and get a mortgage.
- Stable employment with the same employer for 1-2+ years.
- Ability to repay with a debt-to-income ratio of 36% or less.
- Cash reserves to pay for closing costs and other expenses.
- Satisfactory credit score. You usually need a credit score of at least 620 to get a mortgage.
- Proof of rent paid on time for the last 12 months (if renting)
- Down payment. The amount you need depends on the mortgage program and it’s a percentage of the purchase price of the home. Aim for a 20% down payment to avoid expensive private mortgage insurance (PMI).
- Gift letter if you will use a gifted down payment.
Choose the Right Mortgage Program
There are many types of mortgages. The right home loan depends on your credit, expected changes to your financial situation, how long you will remain in your home, and more.
There are five broad types of mortgages:
- Conventional home loans are not backed by the government. They typically have the best interest rates and lowest costs, but they have stricter requirements than government-backed mortgages like FHA and VA loans.
- FHA mortgages are very popular with first time homebuyers in Washington. They require at least 3.5% down, but they tend to be expensive with upfront and annual mortgage insurance premiums.
- VA home loans are the best option for veterans, military members, and qualifying family members. They have low funding fees, no down payment requirement, and no mortgage insurance.
- USDA mortgages are only allowed for homes in designated rural areas. They are often considered the best mortgage product because they do not require a down payment. Click here to see if you’re buying a home in Washington State in an area eligible for a USDA loan.
- Jumbo mortgages are loans that exceed the conforming limit to sell to Fannie Mae and Freddie Mac. In Washington State, mortgages exceeding $548,250 are jumbo loans. This limit is $776,250 in King County, WA.
Step #3. Choose a Washington Real Estate Agent
Pre-approved and ready to start the fun part? The next step of buying a home in Washington State is choosing a real estate agent. The good news is you typically do not need to pay anything for a buyer’s agent – the seller pays their commission.
Your agent can help you find homes that fit your needs, explore neighborhoods, submit an offer on a home, negotiate with the seller, and more. They will make sure your best interests are protected.
Step #4. Begin House Hunting in Washington State
Next is the really exciting part you’ve been waiting for: house hunting! Before you get carried away and fall in love with a home, take the time to make a list of your needs and wants. What do you absolutely need in a home, such as the location, commute to work, safety, good schools, or number of bedrooms? What are things you would really like to have, such as hardwood floors, a large lot, or a ground-floor laundry room?
Location is perhaps the most important thing to look for because it can’t be changed later. Work with your real estate agent to find the best areas to buy a home in Washington based on things that matter to you like:
- Type of home
- Street noise
- Nearby zoning or construction
- Nearby amenities (parks, shopping, recreation, etc)
- New home or resale in an established neighborhood
Where to Buy a House in Washington
Maybe you’ve already narrowed down where you want to live to a city or metro area. Maybe you’re simply interested in the region and quality of life in Washington State, or you want to make the smartest investment when buying property. What is the best place to buy a house in Washington State?
There are a few ways to look at this question. You may want to start here with a look at the largest cities in Washington then consider the average home price and cost of living in each.
Seattle’s home prices have been skyrocketing for years even though the median doesn’t approach the affluent city of Bellevue. The tech market has been the driving factor behind the hot Seattle real estate market which is finally showing signs of cooling. Still, it’s common to see homes selling for $100,000 or more over list price. Year-over-year, home prices are up 22% to 32% across King County. Despite a cooldown, Seattle still isn’t even approaching affordable.
The central Puget Sound region has the hottest market in Washington State, but it isn’t limited to Seattle. The demand for homes in Seattle has pushed prices and demand into areas far out of the city.
Tacoma, just 34 miles south of Seattle, is a far more affordable place to buy a home and popular with first time homebuyers in Washington State. If you’re considering buying in the area, you can see an in-depth breakdown of Tacoma vs Seattle here.
Looking for the best places to buy a house near Seattle? Along with Tacoma, you can try communities like North Redmond, the Sammamish Valley, and Sammamish Plateau, all ranked among the best places to buy a home in the Seattle area.
Step #5. Submit an Offer
Found a home that crosses off the biggest items on your needs list? It’s time to make an offer! You’ll want to be quick in a seller’s market with homes selling quickly. Your agent will help you create a purchase offer after reviewing comparable home sales and discussing contingencies you need to include.
After you submit your offer, the seller has a limited amount of time to review it. They can reject your offer outright, but this is rare except when there are multiple offers. The seller may accept your offer as-is or they may give you a counteroffer. Your agent will help you negotiate with the seller who may ask for a higher price, lower seller assistance, or something else.
Be patient and be prepared to be outbid. Fortunately, the cooling real estate market in Seattle means you probably won’t need to pay $150k over list price or spend months making offers and losing homes. Still, many cities in Washington, particularly the Seattle area, see homes go pending within days of being listed.
Step #6. Close on Your New House
When your offer is accepted, you are under contract. You can expect to officially close on your new home after about 60 days. During this time, many things happen including finalizing your mortgage, completing the home inspection, having the home appraised, conducting a title search, and meeting any contingencies.
Just before closing, you will be able to do a final walkthrough of the home. You will meet to sign the paperwork and receive the keys to your new home!
First Time Homebuyer Programs in Washington State
You’re usually considered a first-time homebuyer if you have not owned a home in the last three years. You can qualify for first time homebuyer grants in Washington as well as loans that help make homeownership within reach. The Washington State Housing Finance Commission (WSHFC) is the primary source for down payment assistance and first time homebuyer loan programs.
WSHFC Down Payment Assistance
WSHFC offers a huge range of statewide and county/city programs with down payment assistance for first time buyers in WA. Examples include:
- HomeChoice (up to $15,000 for buyers with a disability)
- Veterans (up to $10,000 for veterans)
- Opportunity DPA (up to $15,000 with the House Key Opportunity loan)
- Seattle down payment assistance of up to $55,000
- ARCH East King County DPA of up to $35,000
- Tacoma down payment assistance up to $20,000
- Pierce County DPA of up to $24,900
- Bellingham down payment assistance of up to $40,000
To take advantage of their down payment assistance, you must use one of their many loan programs.
Other Programs for First Time Homebuyers in WA
Some cities and counties have first time homebuyer grants and loans of their own. You can also check with credit unions in your city. The Boeing Employees’ Credit Union (BECU) offers grants of up to $7,500 for members to buy a home. The Washington State Employees Credit Union (WSECU) offers very unique loan options. They have a zero down mortgage with 100% financing – a rarity outside VA and USDA loans!
Now you know how to buy a home in Washington State and you’re ready to find the home of your dreams. Once you’ve made an offer on a home, give us a call at All Ready Moving so we can help you the final step of the way!