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There are different kinds of down payment help available for home buyers in Seattle, Washington. And with house values rising rapidly across the metro area (more than 10% in the last year alone), a little assistance can go a long way.
Today, we will focus on a little-known but very useful form of down payment help for Seattle home buyers: gift money from family members.
Most home buyers in Seattle use mortgage loans to finance their purchases. If you fall into this category, you will likely encounter some kind of down payment requirement. You’ll have to put a certain amount of money down in order to secure your loan.
For some borrowers, this upfront investment represents the biggest obstacle to homeownership. But there are ways to get down payment help to overcome this hurdle, allowing you to buy house in Seattle.
One way to accomplish this is to obtain money from a third party, such as a parent, a family member, or some other approved “donor.” In mortgage lingo, this is referred to as a down payment gift. Essentially, someone else is giving you money to cover some or all of your required upfront investment.
But a lot of home buyers in Seattle don’t even realize this is an option. That’s why we’re blogging about it today. In fact, a survey conducted by Realtor.com last year found that 35% of respondents thought they had to make a down payment of 15% to 20% when buying a house. That’s just one of the many misconceptions on this topic.
The truth is, it’s possible to make a lower investment while still qualifying for a mortgage loan. On top of that, most mortgage programs today allow for down payment help to be provided from family members and other approved sources.
Related: Seattle ranked #1 for bidding wars
As you can see, there is nothing overly complicated about getting down payment help from family to buy a house in Seattle. And with home prices expected to continue rising steadily in 2020, this kind of assistance is more useful than ever.
Related: Down Payments: an ultimate guide for Seattle home buyers
Seattle home buyers with limited funds saved up for a down payment can combine the gift strategy above with a mortgage loan that requires less money down. This would further reduce the financial burden of making an upfront investment.
These days, borrowers can make a down payment in the 3% range and still qualify for a loan. For example, the FHA loan program requires a minimum investment equaling 3.5% of the purchase price or the appraised value. Conventional loans (which are not insured or guaranteed by the government) allow for down payments as low as 3% in some cases.
The bottom line is that there is a lot of flexibility regarding the upfront investment on a home loan in Seattle. By using a mortgage loan with a relatively low investment requirement, combined with down payment assistance from a family member, home buyers in Seattle could minimize their out-of-pocket expenses.
Will you need mortgage financing to buy a home in Seattle? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest since 1992. We offer a wide variety of mortgage programs and products with flexible qualification criteria. Please contact us today with any financing-related questions you have.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.