According to NerdWallet, “the 20% mortgage down payment is dead.” The National Association of Realtors reports that, as of 2016, the average down payment was just 11%. For buyers under 35, the average down payment was 8%.
Another little-known fact: buyers who are not able to save enough to buy a home can apply for zero down loans. Besides the federal USDA and VA loans, the Washington State Housing Finance Commission (WSHFC) offers several zero-down options.
Before you do anything else, reach out to Pickett Street to discuss your options with a professional (info@pickettstreet.com or 425-502-53970). Pickett Street encourages those who are interested to stop waiting and buy now, before interest rates rise higher and before the market kicks into its much more competitive spring mode. Next, read on for five ways you can purchase a home with zero down.
1. Seattle Down Payment Assistance Loan Program
This program provides up to $55,000 toward a down payment, with payments deferred for 30 years at 3% simple interest.
First-time owners buying a home within Seattle city limits whose household income falls below a certain threshold may qualify. For two people, the household income must not exceed $64,200. For one person, the household income must not exceed $56,200. Buyers also need to attend the WSHFC’s Homebuyer Education Seminar, which discusses how to buy and maintain a home.
The WSHFC also offers down payment assistance programs for Tacoma, Pierce County, East King County, and Bellingham.
2. Home Advantage Down Payment Assistance
Offered through the Home Advantage Program, WSHFC’s Home Advantage DPA offers buyers several advantages. Home Advantage has 0% interest and allows buyers to choose 3%, 4%, or 5% down payment assistance. Buyers’ annual income must fall below $145,000.
3. Other WSHFC Programs
The HomeChoice Down Payment Assistance Loan Program provides up to $15,000 for buyers who have a disability or whose family member has a disability. Buyers must first meet with a lender who has received HomeChoice program training.
4. The VA Loan
If you or your spouse are active military members or veterans, you may qualify for this loan. VA loans offer full financing, access to lower mortgage rates, and simplified loan approval standards. As of last week, the 30-year fixed VA mortgage rate was 4.958%, while the conventional 30-year fixed rate was 5.08%.
5. The USDA loan
Another zero down option, this loan applies to those who want to buy a home in rural areas or low-density suburbs. Much more land in the United States qualifies as rural than you might think; the majority of Washington State, for example, is considered rural area.
The loan works in two ways. You can apply for a USDA loan guarantee, in which the USDA guarantees a mortgage issued by a participating local lender, allowing you to access the lowest mortgage rates. Low-income applicants can apply for a USDA direct loan, which allows you to access extremely low mortgage rates—sometimes as low as 1%.
For more information, check out our blog post on how to secure financing to buy a home. And again be sure to reach out to Pickett Street at info@pickettstreet.com or 425-502-53970 to discuss the specific home financing options available to you.