How FHA Down Payment Help Works in Washington

If you are buying a home in Washington with an FHA loan, part of the planning is the cash due at closing, including your down payment, closing costs and prepaid items. Our team offers FHA down payment assistance to eligible homebuyers anywhere in the state. Full program details are on our FHA down payment assistance page. Call our team at (206) 316-8453.

How the assistance works with an FHA loan

The Federal Housing Administration insures FHA loans. On most FHA purchases, the borrower must make a minimum investment based on the lower of the sales price or the appraised value. FHA lets that money come from a few allowable places, such as your savings, an eligible gift, or eligible secondary financing from a governmental entity or nonprofit, as FHA rules allow.

The assistance our team offers is a second mortgage that sits behind an FHA fixed-rate purchase loan, and both loans close together. You can apply it to your down payment, closing costs, prepaid items or any combination. Assistance does not remove FHA mortgage insurance, and you still have to qualify for the full payment on your FHA first mortgage. When the assistance covers the cash needed under program and underwriting rules, you may not need to bring any funds of your own. You can also add your own money on top, and gifts or other eligible assistance can be layered in as long as this assistance stays in second position.

Assistance is subject to program eligibility and funding availability, and terms can change or the program can be discontinued at any time, so your loan officer will confirm the current details for your purchase.

The down payment assistance is offered through a third-party program. It is not provided, insured or endorsed by HUD, FHA or the Washington State Housing Finance Commission. FHA insures only the first mortgage. The second mortgage is funded and serviced by a separate program provider, not CentralBanc Mortgage Corporation. Your loan documents will identify it.

The two options our team offers

Our team pairs the assistance with an FHA fixed-rate purchase loan. Each option is sized based on the lower of the home's price or its appraised value.

Forgivable assistance is deferred and forgivable; your loan officer will review the interest rate, APR and payment terms with you. It can be forgiven, at your request, after 36 consecutive on-time payments on your FHA first mortgage. A late payment restarts the count, and refinancing the first mortgage during those first 36 payments permanently ends forgiveness. Until it is forgiven, the balance is a lien on your home. Once you meet the conditions, you ask for forgiveness and cover the cost of releasing the lien.

Repayable assistance is a separate second loan. The fixed interest rate is higher than your first mortgage rate, and your loan officer will review the interest rate, APR and payment terms with you. Before closing, the borrower watches a short informational video about the second loan.

Who may be eligible

The assistance is for home purchases only; refinances do not qualify. The first mortgage must be an FHA 203(b) fixed-rate loan. The home has to be owner-occupied, with one or two units, and at least one borrower must live in it as a primary residence. FHA-eligible single-family homes, townhomes, PUDs, condos, modular homes and two-unit properties can work, and manufactured homes may qualify with added requirements.

The program does not cap income, although pricing can be adjusted for incomes well above the area median. You do not need to be a first-time buyer; prior homeowners are welcome. The assistance itself does not require a class, although FHA or underwriting rules can require counseling in some cases. You need a qualifying credit score that meets the program minimum, and our team can review your credit with you. Non-occupant co-borrowers who are family members may be allowed under FHA rules. The assistance is available for eligible purchases anywhere in Washington.

What to have ready

You can start with a call to our team while you are still shopping or after you have a home in mind. Be ready to say whether you are buying, rather than refinancing, and whether you plan to live in the home. If you have a property in mind, share the type of home and where it is located so our team can confirm it is in Washington and can work with an FHA 203(b) loan.

Be prepared to review your credit, because a qualifying credit score that meets the program minimum is required. Mention any family member who may sign as a non-occupant co-borrower. If you choose the repayable option, plan time before closing to watch the short informational video. Your loan officer will review the interest rate, APR and payment terms with you, and will tell you which documents they need. Because terms can change or the program can be discontinued at any time, confirm the current rules on your purchase.

Common questions

Can the assistance pay my entire FHA minimum investment?

It can. The forgivable option is sized based on the lower of the home's price or appraised value. Whether you also need some of your own money depends on your closing costs, the price and underwriting.

Is this only for first-time buyers, and is there an income limit?

No. The assistance our team offers is open to prior homeowners, and it has no income cap.

Will the second loan add a monthly payment?

The forgivable option is deferred and forgivable; your loan officer will review the interest rate, APR and payment terms with you. The repayable option is a separate second loan; the fixed interest rate is higher than your first mortgage rate, and your loan officer will review the interest rate, APR and payment terms with you. Your Loan Estimate and Closing Disclosure will show how your loans are set up.

What if I sell, move or refinance before the second loan is forgiven or paid off?

Second loans can come due if you sell, transfer the home, stop living in it or refinance before the program's conditions are met, and refinancing the first mortgage during those first 36 payments permanently ends forgiveness on the forgivable option. Your second-mortgage documents spell out the exact terms.

Talk with our team

Our team can help you compare the options, estimate the cash you would need at closing, and pair the assistance with an FHA loan for your purchase. Read the full details on our FHA down payment assistance page, or call our team at (206) 316-8453. We work with homebuyers statewide in Washington.

Down payment assistance is subject to program eligibility and funding availability, and terms can change or the program can be discontinued at any time. Amounts, eligibility rules and forgiveness conditions are set by each program. This post is general information for Washington homebuyers and is not a commitment to lend or a guarantee of eligibility. All loans are subject to credit, income, property, occupancy and underwriting approval and to program rules.

CentralBanc Mortgage Corporation NMLS #55244 | Johnny W. Delaney, Jr. NMLS #1588947 | Equal Housing Lender. Licensed in Washington.