Home Purchase Loans In Burien Washington

Burien is a medium-sized seaside city with a significant population. Housing costs in Burien are among the highest in the country, yet they do not compare to real estate prices in Washington’s most expensive areas. Burien is characterized as a seller housing market, indicating that property values generally exhibit an upward trend and homes are sold at a faster pace. 

Purchase Loan Programs in Burien

Home buyers in Burien have plenty of home loan programs to choose from. The most common among them are the following:

• Construction Loans

A construction loan is a short-term, high-interest loan used to finance the construction of a new residence. Typically, these loans finance the required land, labor, materials, and permits for construction. The disbursement of funds depends on the project’s progress, and creditors typically make interest-only payments during the construction period. There are numerous varieties of construction loans, including construction-only loans, construction-to-permanent loans, and final loans, each of which serves a distinct set of needs and financial circumstances.

The benefits of a one-time close construction loan are its convenience and potential cost savings, particularly in Burien, Washington, where there is a low housing supply and high demand for homes. It integrates the construction loan and mortgage into a single transaction, reducing the complexity and potential for additional closing costs. Typically, interest-only installments are made during construction, and the loan can be converted to a fixed-rate mortgage upon completion. In addition, such loans may offer extended rate agreements, which could protect against future interest rate increases.

A one-time close construction loan differs from conventional construction loans, eliminating the need for multiple loan applications and closing dates. A one-time close loan simplifies the transition from the construction loan to the mortgage, saving you time and money.

• Conventional Loans

A conventional loan is a mortgage loan that private lenders rather than the government guarantee. These loans are classified as conforming or non-conforming based on whether they correspond to Fannie Mae and Freddie Mac requirements. A conforming loan, in particular, adheres to Fannie Mae and Freddie Mac rules and is limited by the Federal Housing Finance Agency (FHFA). Conforming loans offer competitive interest rates and a faster approval process than government-backed choices.

Burien, King County, conforming loan limitations in 2023 are $977,500 for a single-family home, $1,251,400 for a two-family, $1,512,650 for a three-unit, and $1,879,850 for a four-unit.

Borrowers typically require a credit score of 620 or above, a solid income, and a down payment of at least 3-5% to qualify for a conventional conforming loan. Generally, the debt-to-income (DTI) ratio should be less than 43%. Additional criteria, such as property valuations, are required. 

• FHA Loans

FHA loans are mortgages issued by FHA-approved lenders and insured by the Federal Housing Administration (FHA). FHA home loans assist low-to-moderate-income applicants with lower credit scores and smaller down payments. 

FHA loans offer numerous benefits over conventional loans. Most lenders, however, require a minimum credit score of 580. They also have reduced minimum down payment requirements, as low as 3.5% of the purchase price. In addition, FHA loans may provide competitive interest rates and access to down payment assistance programs.

Some criteria must be met before applying for an FHA loan. You must use an FHA-approved appraiser to get a loan for your principal house. A two-year earning history and established credit are additional prerequisites. The loan size and debt-to-income ratio may also affect your eligibility. A minimum credit score of 580 is required to qualify for a 3.5% down payment.

In 2023, the FHA loan limits in Burien, King County, are $977,500 for a single-family home, $1,251,400 for a two-family home, $1,512,650 for a three-unit home, and $1,879,850 for a four-unit home.

• VA Loans

A VA home loan in Burien, Washington, is a mortgage designed to assist veterans, service members, and certain members of the National Guard with purchasing or refinancing a home. These loans, provided by private lenders but guaranteed by the U.S. Department of Veterans Affairs, are available for various housing types and frequently have advantageous terms. There are also specialized mortgage lenders in Burien, such as Capital Home Mortgage, that offer a variety of home loan programs, including VA loans, and appeal to the area’s diverse housing market.

The primary advantages of a VA home loan are the absence of a down payment requirement, low interest rates, low closing costs, and the absence of private mortgage insurance (PMI). In addition, VA home loans have flexible credit scores and debt-to-income ratio eligibility requirements. There are programs such as the Native American Direct Loan and Adapted Housing Grants to meet specific requirements, such as assisting Native American veterans or assisting disabled veterans. Lifelong access to multiple VA loan benefits is possible, including Purchase Loans, Cash-Out Refinance Loans, and Interest Rate Reduction Refinance Loans (IRRRL).

To qualify for a VA home loan, an applicant must satisfy specific service requirements, which may vary based on whether they are a veteran, active-duty service member, or member of the National Guard. Obtaining a Certificate of Eligibility (COE), which can be requested online, through a lender, or by mail, is essential for applying for a VA loan. The COE will display your service record and current duty status. Credit and income requirements must also be met, but they are typically less stringent than those for other forms of home loans.

• USDA-Guaranteed Home Loans

A USDA-guaranteed home loan is a mortgage issued by an approved lender and backed by the United States Department of Agriculture (USDA). The program, also known as the Section 502 Guaranteed Loan Program, assists approved lenders in providing low- and moderate-income households in eligible rural areas with the opportunity to own adequate, modest, decent, secure, and sanitary primary residences. 

USDA-guaranteed home loans include 100% financing with no down payment for those who qualify, a 90% loan note guarantee to approved lenders to reduce the risk of extending 100% loans to eligible rural homebuyers, and the ability to purchase, build, rehabilitate, improve, or relocate a dwelling in an eligible rural area1. In addition, the program may provide competitive interest rates and access to down payment assistance programs.

To qualify for a USDA-guaranteed mortgage loan, applicants must satisfy several criteria. In addition, they must be a U.S. citizen, U.S. national, or Qualified Alien. Additionally, the property must be situated in an eligible rural area as defined by the USDA.

• Jumbo Loans

A jumbo loan refers to a type of mortgage beyond the predetermined lending restrictions established by the Federal Housing Finance Agency (FHFA). The conforming loan ceiling in Burien is set at $977,500. A loan above these specified limits is classified as a jumbo loan.

Jumbo loans have higher loan ceilings, allowing borrowers to finance larger home purchases with just one loan. However, qualifying for a jumbo loan can be more challenging because of stricter underwriting standards, such as higher credit score requirements, lower debt-to-income ratios, and the demand for sufficient liquid assets for a down payment and closing fees.

One notable benefit of jumbo loans is their capacity to offer increased financial resources for acquiring residential properties, a particularly advantageous feature in regions with elevated housing costs. This distinction can determine one’s ability to purchase a property of superior quality. Furthermore, jumbo loans may present reduced down payment prerequisites compared to other lending options.

• Non-Qualified Mortgage Loans

Non-Qualified Mortgages (Non-QMs) are loans that do not satisfy the criteria outlined in the Qualified Mortgage rules. Non-QM loans offer more flexible terms and are geared toward borrowers with unorthodox income streams or credit histories, unlike conventional loans, which adhere to precise income, credit, and financial stability guidelines. These loans can include asset qualifier, bank statement, 1099, foreign national, and jumbo loan types.

The primary advantage of Non-QM loans over conventional loans is their adaptability. These loans are ideal for self-employed debtors, those with unique or variable income, and those with recent credit problems. They offer a variety of alternative income verification methods, such as bank statements and asset-based qualifications, which makes them more accessible to individuals who may not qualify for conventional loans.

However, it is essential to note that this flexibility comes at a price. Due to the increased risk associated with their less stringent qualification requirements, non-QM loans typically carry higher interest rates and fees than conventional loans. Therefore, those who cannot qualify for a traditional loan should consider them cautiously and only as a last resort.

Apply for a Burien Home Purchase Loan

Capital Home Mortgage is a direct mortgage lender that offers various home loan programs to suit every home buyer’s needs. From government-backed FHA, VA, and USDA home loans to Jumbo and Non-Qualified mortgage loans, we have the loan program to suit your requirements.

Call (206) 590-2280 to discuss your home purchase loan questions with our Burien Home Loan Specialists.