As real estate professionals in Washington, we are all aware of the escalating home prices in our communities and the impact this can have on clients looking for an affordable place to call home. The combination of low inventory, historically low interest rates and evolving homeownership trends (partially due to the pandemic) have kicked the market into overdrive, making it difficult for buyers to realize their dreams and even more so for those of modest means or credit challenges.
To address this issue, some real estate brokers and mortgage professionals are working together to deliver Homebuyer Education classes to help people understand the ins and outs of buying a home and teach them about programs that may help them qualify for a loan through the Washington State Housing Finance Commission (the Commission). To learn more about the mechanics of the Commission’s programs, read the “Program Overview” section below.
Hopeful homebuyers can access these programs after completing a required Homebuyer Education class. These are offered by trained professionals, like Marcus Williams of Windermere Real Estate Mount Baker and Leanne Truong of Movement Mortgage, who have teamed up to empower resource-challenged buyers through educational seminars. Their seminars – and those of other trainers from within the real estate and mortgage professions – are posted on the Commission’s website. These classes may be hosted in a variety of languages, so the website conveniently provides a language filter.
After hopeful buyers complete the seminar and decide they will continue toward purchasing a home under one of the Commission’s programs, they can partner with a Commission-trained real estate broker who can help them navigate the process.
If providing this knowledge and service to hopeful buyers is something that you find compelling, you can register for Commission Home Loan Programs and Homebuyer Education Instructor Training here. Marcus and Leanne did this and have had success helping their clients find housing opportunity they might not otherwise have had.
Program Overview
There are two loan programs offered by the Commission that home buyers can use to obtain their “first” mortgage – the Home Advantage and the House Key Opportunity. (By the Commission’s standards, a first-time homebuyer is someone who has not owned and occupied a primary residence in the past 3 years.) Each loan has specific eligibility requirements regarding income, credit score, and assets that, in combination, determine whether a borrower qualifies for one of the programs and the amount that they qualify for. These two programs have credit score requirements that are lower than those required for conventional loans (as low as 620, but ideally 640), making homeownership attainable for more people. The minimum down payment is between 3% and 5% for a conventional loan and 3.5% for an FHA loan, again making home ownership more attainable for a broader range of income brackets.
Additional benefits include down payment assistance (DPA) and closing cost assistance “second mortgage” programs that can be used to cover all or part of the down payment and closing costs.
Depending on the loan program that a home buyer is using (Home Advantage or House Key Opportunity), the buyer may be able to obtain a second mortgage at 0% interest or very low interest that is deferred. If used, this second mortgage is wrapped into the loan payment so that the buyer only makes one payment per month. While the House Key Opportunity loan program offers lower interest rates than the Home Advantage program, its “not to exceed” income limits are lower (and are also dependent on county of residence) and it is only available to homebuyers who are also using specific down payment assistance loan programs to buy their homes (see list on the WSHFC website). For example, a single person residing in King county with a combined household income of less than $87,600 who also needs to borrow all or some of their down payment and closing costs would be a candidate for the House Key Opportunity program.
Buyers whose incomes exceed the limits of the House Key Opportunity program limits but who need DPA may be able to qualify for the Home Advantage First Mortgage program. While they will pay a higher interest rate, the ability to tap into the DPA funds can be the difference between continuing to rent and starting to build wealth through homeownership. Home Advantage First Mortgage borrowers can use the Home Advantage DPA or the Home Advantage – Needs Based second mortgage program or other DPA program that they are eligible for based on location or other factors. Income limits are as high as $160K (depending on the county of residence) for the Home Advantage program. Buyers who don’t need the down payment assistance would typically not use the Home Advantage program as the interest rates are higher than an FHA loan provided directly through Fannie Mae or Freddie Mac.
Success Stories
There are many success stories of clients who have been able to buy homes using the Commission’s programs. Here are just a few:
- A young couple looking to buy their first home found out about the first-time homebuyer seminar from a friend. After attending, they spent over a year saving money and working to improve their credit. They ultimately qualified for an FHA loan and DPA, which allowed them to purchase their first home together.
- Another prospective buyer wasn’t confident he’d be able to purchase a home in our region, but then he attended a first-time homebuyer’s class of Marcus and Leanne’s, where he learned about the Commission’s programs. A few months later, he and his wife started the loan application process and home search. Remarkably, they were able to find a home and had their offer accepted after just two weeks. The Commission’s programs made it possible for them to bring only $5,500 to the closing table for the purchase of a $420,000 home, which the client noted was what they would normally pay in rent for their prior rental home.
- One hopeful buyer realized he didn’t need to have a 20% down payment after attending one of the seminars. He was able to bring just $6,000 of his own funds to the transaction. He used an FHA loan paired with DPA — this helped him refine and solidify his budget. The process moved quickly: he bought his home just two months after taking the class. He looked at 10–15 homes, made two offers and was successful on the second one.
Buyers whose incomes exceed the limits of the House Key Opportunity program limits but who need DPA may be able to qualify for the Home Advantage First Mortgage program. While they will pay a higher interest rate, the ability to tap into the DPA funds can be the difference between continuing to rent and starting to build wealth through homeownership. Home Advantage First Mortgage borrowers can use the Home Advantage DPA or the Home Advantage – Needs Based second mortgage program or other DPA program that they are eligible for based on location or other factors. Income limits are as high as $160K (depending on the county of residence) for the Home Advantage program. Buyers who don’t need the down payment assistance would typically not use the Home Advantage program as the interest rates are higher than an FHA loan provided directly through Fannie Mae or Freddie Mac.
Resources for Real Estate Professionals
The Commission and Down Payment Resources (DPR) are collaborating to raise awareness and educate Northwest MLS members on how to connect more homebuyers to Commission programs through a new tool. DPR’s national databank of 2,500 local and state homebuyer programs, including 80-plus programs in Washington state, is now integrated into the listing database for the Northwest MLS. The screenshot below depicts how this information appears on individual listings on the NWMLS.
With a basic understanding of how the Commission’s programs work, you can join hundreds of other brokers in helping first-time buyers achieve their homeownership dreams. Check out the page on their website dedicated to NWMLS member-Realtors here, which includes instructions for creating personal lead-generation landing pages where prospective clients can search and apply for homeownership assistance programs and be directly connected to you.
About the Commission
The Commission is dedicated to increasing housing affordability across our state through its loan programs and those of its partners. In 2019 (the latest year for which data is available), the Commission provided home loans for 7,862 households totaling $2.026 billion. An additional $76.98 million was provided in the form of down payment and closing-cost assistance loans to 7,316 homebuyers. The Commission is also committed to dismantling institutional racism by taking long-overdue steps to align its work with anti-racist values. It partners with real estate brokers and mortgage brokers who deliver the education required for homebuyers to access its programs.
