Home Purchase Loans In Auburn Washington

Homebuyers in Auburn, Washington, who want to buy a home in today’s market should know many critical trends and conditions. The Auburn real estate market is highly competitive, with homes receiving an average of four offers and selling in around seven days. Even though Auburn’s housing market has had excellent appreciation rates over the last decade, recent patterns predict a decline.

Purchase Loan Programs in Auburn

Auburn home buyers have a plethora of home loan programs to choose from, depending on their needs and requirements. 

• FHA Loans

A Federal Housing Administration (FHA) loan is a mortgage insured by the Federal Housing Administration (FHA), which has promoted homeownership since 1934. It is intended to assist individuals, particularly first-time homebuyers, in purchasing a property on favorable terms. Here is a comprehensive breakdown of FHA loans, their benefits, and eligibility requirements based on the information provided:

FHA loans in Auburn apply to 1 to 4-unit properties. The 2023 FHA loan limits in Auburn, King County, are $977,500 for a single-family residence, $1,251,400 for a 2-unit home, $1,512,650 for a 3-unit home, and $1,879,850 for a 4-unit home, respectively.

Eligibility for FHA loans in Auburn is highly reliant on a solid job, consistent income, a good credit history, and the capacity to handle mortgage payments.

Applicants must provide specific information, including addresses from the past two years, employer information, W2 forms, current salary, Social Security Number, bank information, details about owned real estate, and employment verification. Self-employed applicants must submit tax returns and business financials. 

• VA Loans

The Department of Veterans Affairs (VA) guarantees the VA home loan, which private lenders offer. These loans assist eligible Veterans, Servicemembers, and surviving spouses in purchasing a property. They provide advantageous features such as no down payment, competitive interest rates, limited closing costs, and the absence of PMI. There are numerous varieties of VA Home Loans, including purchase, cash-out refinance, interest reduction, and housing grants, in addition to specific resources such as foreclosure avoidance and educational podcasts.

Eligibility for a VA home loan is contingent upon obtaining a Certificate of Eligibility (COE), meeting specific service duration requirements, and adhering to credit and income requirements. Service periods range from 90 days of active duty for conflicts such as World War II, the Korean War, the Vietnam War, and the Gulf War to varying conditions for National Guard and Reserve members. In certain circumstances, veterans’ spouses may also be eligible. Additional requirements include a good FICO score, a favorable debt-to-income ratio, and specific credit and income requirements established by individual lenders.

Prequalification is necessary before obtaining a loan, during which lenders evaluate eligibility, estimate potential loan amounts, and collect the required documentation. The no-money-down feature is especially advantageous for homebuyers in Auburn, Washington, and throughout the state. Since 2020, full VA loan entitlement holders in Washington are no longer subject to VA loan limit restrictions, and property tax exemptions are available for disabled veterans or those with less than 80% disability. Relevant to Auburn, Washington residents are particular property tax rates, local lenders, and state-specific resources.

• USDA-Guaranteed Home Loans

A USDA-guaranteed mortgage in Auburn, Washington, is part of the USDA Section 502 Guaranteed Loan Program, which facilitates approved lenders in assisting low- and moderate-income households to own suitable, modest, and secure primary residences in eligible rural areas. This program offers 100% financing with a 90% loan note guarantee to mitigate risk for lenders, allowing qualified individuals to purchase a home without a down payment. 

The advantages of a USDA-guaranteed home loan include no down payment, competitive interest rates, reduced insurance costs, and complete financing for purchasing, building, renovating, enhancing, or relocating homes in eligible rural areas. The program offers eligible debtors financial assistance for site purchases, repairs, rehabilitation, and refinancing, with a standard 30-year fixed-rate structure. It is adaptable to various housing needs and seeks to encourage homeownership among rural households with modest incomes, thereby fostering community prosperity and enhancing the quality of life.

The USDA-guaranteed mortgage loan eligibility requirements include income limits (up to 115% of the median household income), a minimum credit score of 640, a clean credit history, stable income, and debt-to-income ratios of less than 41%. The property must be in a sparsely populated area, as the USDA defines. The program also includes mortgage insurance fees of 1.00% upfront (which may be financed into the loan balance) and 0.35% annually. Legal permanent residents who are not U.S. citizens are also eligible.

• Conventional – Conforming Loans

A conventional conforming loan in Auburn, Washington, adheres to federal government guidelines and limits and Fannie Mae or Freddie Mac regulations. Conforming loans are typically preferable to non-conforming loans for borrowers with excellent credit, as they offer advantages such as lower interest rates and easier qualification. In addition, they require down payments of less than 20 percent, which may necessitate mortgage insurance, and are frequently packaged into Mortgage-Backed Securities (MBS), thereby establishing a secondary mortgage market. In addition, these loans are suitable for first-time buyers with modest down payments, and their easy packaging and sale by lenders make them an attractive option for many borrowers.

The 2023 conforming loan limits in Auburn, King County, are $977,500 for a single-unit home, $1,251,400 for a duplex, $1,512,650 for a triplex, and $1,879,850 for a four-plex, respectively.

• Native American Home Loans

The HUD Section 184 Indian Home Loan Guarantee Program serves American Indian and Alaska Native families, tribes, and housing entities. Established in 1992, it offers benefits such as low down payments, flexible underwriting, and various housing requirements, including new construction, rehabilitation, and refinancing, to Native American communities. The Office of Loan Guarantee administers the program within HUD’s Office of Native American Programs and seeks to increase financial stability and home appreciation in Native communities.

The eligibility requirements for the Section 184 program include membership in a federally recognized tribe, designation as a housing entity, or affiliation with the Indian Housing Authority. The program’s scope extends beyond tribal trust land. Working with HUD-approved lenders and submitting the necessary documentation are required for the application process. The applicant or their family must be recognized as Indian/Alaska Native by a tribe, the federal government, or a state to purchase a primary residence. Loan terms may include fixed-rate financing within market rates, a maximum period of 30 years, and monthly payments, with a maximum loan amount of 150% of FHA lending limits.

• Jumbo Home Loans

A jumbo home loan is a type of mortgage that exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. Jumbo home loans are typically used for opulent properties or in high-cost areas. In Auburn, Washington, the limits for conventional loans in 2023 range between $977,500 and $1,879,850; any quantity exceeding this limit would be classified as a jumbo loan. King County (which encompasses Auburn) has a limit of $977,500 on single-family homes for jumbo loans in Washington.

Apply for an Auburn Home Purchase Loan

Prospective purchasers in Auburn should be prepared for a competitive market where speed and decisiveness are crucial, given the present state of the market. Strategies to consider include ensuring mortgage pre-approval and understanding local market trends.

Call (253) 528-4417 to speak with our Auburn Home Loan Specialists about your home loan options.