Buying a house is a big commitment and can seem like a scary process. There are a lot of questions that come with purchasing a home, and many of them have to do with finances. How will you afford a home? When can you afford a home? What is a down payment? And so many more! With the Pierce County Real Estate Market being one of the hottest in the country, these money questions hold even more weight when deciding on whether you should buy a home or not. I can say that becoming a homeowner is very beneficial and can offer you more financially overtime than renting ever will.
Even though buying a house in Pierce County seems like the scariest decision of your life, there are loans to help you with the process and take a lot of the fear away! Two of the most helpful are the Home Advantage and House Key Opportunity programs. Each program has different requirements that must be met in order to qualify for down payment assistance and I will go over them both briefly below.
The Home Advantage loan offered through the WSHFC is for anyone looking to buy a home. It has been rumored that you must be a “first-time home buyer” but that is not correct, as long as you fit the requirements to qualify for the loan, the home you are trying to purchase can be your first or fifth!
The requirements for the Home Advantage loan are:
- $145,000 income limit statewide
- 620 minimum credit score
- Homebuyer Education Certificate
The $145,000 income limit has recently been raised to account for more expensive cost of living and capture more homebuyers who would benefit. The cost of living in Washington State is not cheap and the WSHFC recognizes that. Having a minimum credit score of 620 will allow you to qualify for the loan, and it is important to know that having a credit score higher than 620 does not put you in a better position to qualify for the loan, 800 and 620 credit scores are looked at all the same. Obtaining a Homebuyer Education Certificate requires the potential home buyer to attend a 5-hour class, taught by both a loan officer and Licensed Real Estate Agent. After you complete the 5-hour class, you will be given a paper certificate as proof of completion and will then begin to work with a loan office and Real Estate Agent of your choice in the home buying process – yay!
Once you have satisfied all three requirements per the Home Advantage requirements, you will receive down payment assistance on the purchase of your home. As a borrower, you can receive anywhere between 3-5% depending on the loan program.
- FHA loan offering 3.5% of the down payment and 0.5% of the closing costs
- Conventional loan offering 3% of the down payment and 1% of the closing costs
- Conventional loan offering 5% of the down payment and 0% of the closing costs
When you borrow money through the Home Advantage program, it is financed as a 2nd mortgage at a zero percent interest rate. (Yes – you heard correct, zero percent interest rate!) You are responsible for repayment after 30-years, when you refinance the home or when you sell the home … whichever one comes first.
HOUSE KEY OPPORTUNITY:
To qualify for the House Key Opportunity loan, you must meet the income limit of $90k a year when living in a one-two person household in King County and $85k a year when living in a one-two person household in Pierce County. There will be a “recapture tax” applied if you use the House Key Opportunity loan and sell or otherwise dispose of the home within nine-years of the purchase date. The House Key Opportunity loan is given to applicants that are a part of one or more of the Down Payment Assistance programs here:
- ARCH East King County
- Tacoma (currently out of funds)
- Pierce County
- HUD 184 Indian Home Loan
Three of the above programs that I feel are most useful for my client base and area are the Tacoma, Pierce County, and HUD 184 Indian Home Loan Guarantee. Unfortunately, as of now the Tacoma program has run out of funding and is no longer available (until funds are restored). With the Pierce County program, borrowers must purchase a home within the Pierce County limits outside of the City of Tacoma, Lakewood, Bonney Lake, Auburn, and Pacific city limits. This program is trying to promote a more rural area living for their borrowers. The borrower is allowed up to $24,900 in down payment assistance and the payments are deferred for 30-years at a 3% simple interest rate.
*To avoid unethical housing displacement, federal guidelines require that the home that the borrower is trying to purchase has not been occupied by a tenant within the last 90-days of purchase and sale agreement.
The HUD 184 Indian Home Loan is for borrowers who are Alaskan Native or Native American. The funds from this loan can be for either a purchase, rehabilitation or construction of a home. With the HUD 184 Indian Home Loan Guarantee program you can receive a down payment as low as 1.25% of the purchase price and there are also long term fixed rate financing with loan to value ratios as high as 100%. Qualifying for this program is easy and you can use non traditional methods to demonstrate your credit and income as the borrower; however there are no income limits for the borrower.
Yes, buying a home is a big first step but no, you aren’t in it alone! With the help of these loans and programs offered by the WSHFC and a good Loan Officer-Realtor team, buying a home can be easier than you imagined.