Home Purchase Loans In Bothell Washington

Bothell, Washington’s real estate market is highly competitive, with properties selling quickly, frequently in less than a week, and many receiving multiple offers. Demand continues to exceed supply, creating a seller’s market.

Purchase Loan Programs in Bothell

Bothell home buyers have various home loan options to finance the purchase of a home. The most common among them are the following:

• Construction Loans

A construction loan is a short-term loan designed to cover the costs of building a house or other real estate developments. These loans typically have distinct disbursement stages and necessitate regular inspections to ensure the construction proceeds as anticipated. The borrower must meet specific criteria, including having stable finances, a minimum 20% down payment, and a credit score of 680 or above.

One-time close construction loans and two-time close construction loans are the two primary types of construction loans. A one-time close construction loan is a loan that combines the construction loan and the permanent mortgage into a single loan with fixed terms, payments, and draws. After the construction is completed, it will be converted to a permanent loan. On the other hand, a two-time close construction loan consists of two independent loans: one for construction and one for permanent finance. This type necessitates greater underwriting and additional closing costs.

A one-time close construction loan has various advantages. It streamlines the financing process by consolidating both loans into one application, minimizing paperwork, and saving money on closing expenses. Second, it enables borrowers to lock in interest rates, ensuring financial security during construction and beyond. Finally, because only one approval process is required, it avoids the risks of qualifying for multiple loans and adjustable-rate interim loans.

• FHA Loans

An FHA loan in Bothell, Washington, is a government-insured mortgage that makes homeownership more accessible by having more flexible eligibility requirements than conventional loans. The minimum down payment for a Bothell FHA loan is 3.5 percent for borrowers with a credit score of at least 580 and 10 percent for borrowers with scores below 580. Generally, the Debt-to-Income (DTI) ratio should be below 43%; however, compensating factors may warrant exceptions. In addition, a Mortgage Insurance Premium (MIP) must be paid upfront and on a recurring basis. The purchased property must be the buyer’s principal residence and comply with specific hazard-free standards.

The advantages of an FHA loan in Bothell include more straightforward qualifications due to reduced credit score criteria and the ability to have a higher DTI ratio. Furthermore, FHA loans are available to both first-time and repeat buyers, and they provide a variety of refinancing choices. Seller contributions and gift funds are also permitted. 

To be eligible for an FHA loan in Bothell, you must have a minimum credit score of 500, proof of consistent income, and keep the home your principal residence. Applicants must also go through an appraisal procedure, and loan limitations may vary depending on the property type and typical home value in the area.

The 2023 FHA loan limits in Bothell are $977,500 for a single-family residence, $1,251,400 for a duplex, $1,512,650 for a triplex, and $1,879,850 for a quadplex.

• Conventional Loans

A conventional loan is a mortgage that is neither federally guaranteed nor insured. Private lenders such as banks, credit unions, and mortgage companies typically provide it. In Bothell, Washington, conventional conforming loans meet the Fannie Mae and Freddie Mac loan limit requirements. 

The 2023 loan limits for Bothell are $977,500 for homes with one living unit, $1,251,500 for homes with two living units, $1,512,650 for homes with three living units, and $1,879,850 for homes with four living units.

A fixed interest rate or an adjustable-rate mortgage (ARM), a down payment of at least 3%, and a maximum debt-to-income ratio of 43% are the basic components of a Bothell conventional conforming loan. A conventional loan offers lower interest rates than government-backed loans such as FHA and VA loans. Furthermore, conventional loans do not require mortgage insurance if the borrower puts down at least 20%.

To qualify for a conventional loan in Bothell, you must have a decent credit score (typically 620 or higher), a stable employment history, and adequate income to repay the loan. You must also provide documentation such as tax returns, bank statements, and paycheck stubs to verify your income and assets.

• VA Loans

A VA home loan in Bothell, Washington, is a mortgage loan program for eligible veterans, service members, and surviving spouses. Guaranteed by the U.S. Department of Veterans Affairs, the loans are provided by private lenders such as banks and mortgage companies. This government guarantee reduces the risk for the individual lender, allowing them to issue the loan with numerous benefits and cost reductions typically associated with zero-down loan programs.

There are no down payment requirements, competitively low interest rates, limited closing costs, and no requirement for Private Mortgage Insurance (PMI) with a Bothell VA loan. The maximum VA-guaranteed loan amount in Bothell for 2023 has been set at $977,500.

To be eligible for a VA Loan, you must be on active duty, a reservist, a member of the National Guard, a veteran with an honorable discharge, or a surviving spouse who has not remarried. VA Loans are available for both property purchase and refinancing.

• Jumbo Loans

A jumbo home loan in Bothell, Washington, is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). The conforming loan limit for 2023 is $977,500. Any loan that exceeds that amount is considered a Jumbo loan. In competitive markets such as Bothell, jumbo loans are frequently used to finance residences valued at $1 million or more and sometimes up to $3 million. Due to the higher risk involved, the interest rates are marginally higher.

The key characteristics of jumbo loans include flexible down payment options, various property types (primary residences, second homes, and investment properties), and generally more stringent eligibility requirements than conventional loans. These loans offer fixed or variable interest rates and can be tailored to the borrower’s specific needs.

To qualify for a jumbo loan in Bothell, WA, one typically requires a credit score of 700 or higher, a debt-to-income (DTI) ratio of less than 45%, and a sizable down payment, which can range from 5% to 20% depending on the lender and property type. Frequently, stable employment and adequate financial reserves are additional requirements. Due to the size of the loans being sought, it is customary for the application process to entail extensive documentation and scrutiny.

• Non-Qualified Mortgage Loans

A non-qualified mortgage loan, or Non-QM loan, in Bothell, Washington, is a form of mortgage loan that allows borrowers to qualify based on alternative methods rather than the traditional income verification required for most loans. 

Important characteristics of a Non-QM loan include qualifying using alternative methods, such as bank statements or using assets as income. No-Doc loans require no documentation of your income. DSCR mortgage loans, another no-income-verification loan, require the subject property’s market rent to fund the mortgage payment and housing expenses (PITI).

Typically, applicants must have a non-traditional source of income to qualify for a Non-QM loan. This can be advantageous for self-employed borrowers, business proprietors, high-net-worth individuals, and foreign investors in real estate. It is essential to note that eligibility requirements may vary by issuer and non-QM loan program.

Apply for a Bothell Home Purchase Loan

Capital Home Mortgage Bothell can help you buy a home in Bothell, Washington, by giving you low-interest rates, various mortgage options like FHA, USDA, VA, and jumbo loans, and personalized, local help. Capital Home Mortgage makes mortgage lending easier by giving quick approvals and flexible terms tailored to your financial needs. This makes the process of becoming a homeowner smooth and easy.

Call (425) 324-9505 to discuss your options with a Bothell Home Purchase Loan Specialist.