Home Purchase Loans In Edmonds

The Edmonds housing market is currently a seller’s market, but there are some indications that it may be cooling. Buyers should be prepared for the current market’s problems, but they should also be optimistic that they will be able to find a property that matches their criteria.

Home Purchase Loan Programs in Edmonds

• Conventional – Conforming Loan

A conventional home loan in Edmonds, Washington, is a mortgage that the government does not guarantee. These are private-sector loans, as opposed to FHA or VA loans. The conforming loan limit for a single-family home in Edmonds, Snohomish County, is $977,500, $1,251,400 for a duplex, $1,512,650 for a triplex, and $1,879,850 for a quadplex.

The significant characteristics of a conventional conforming loan in this area include rate flexibility, the ability for 3-5% down payments, and faster processing. Mortgage insurance (MI) may be required based on the loan-to-home value ratio; however, a down payment of 20% or more can eliminate the need for MI.

In general, eligibility requirements include a credit score of at least 620, a stable income, and a debt-to-income ratio that conforms to lender standards.

• FHA Home Loan

FHA home loans are mortgages insured by the Federal Housing Administration (FHA) and are popular among first-time homeowners. Home buyers in Washington State with decent credit, acceptable debt, and a 3.5% down payment may be qualified for an FHA-insured loan. The minimal property criteria established by the FHA cover three requirements: safety, security, and soundness.

A low down payment (minimum of 3.5%), flexible credit score standards (minimum of 500), and the opportunity to finance certain closing costs are some of the primary advantages of an FHA home loan. To qualify for an FHA loan, the property must be your principal residence, and you must demonstrate consistent job and income.

Aside from the qualifications listed above, other restrictions exist on the type of property that can be acquired with an FHA loan. FHA loans, for example, cannot be utilized for Edmonds real estate investments. Furthermore, the loan amount cannot exceed the residence’s purchase price. 

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

• Native American Home Loan

The Section 184 Indian Home Loan Guarantee Program is intended to promote American Indian and Alaska Native families, tribes, and housing entities to become homeowners. While the program is not limited to Edmonds, Washington, it is offered nationwide, including on tribal trust grounds. Low down payments, fixed-rate loans for single-family homes (up to 4 units), a maximum loan duration of 30 years, and flexible underwriting are among the program’s key characteristics. This program does not apply to commercial properties or adjustable-rate mortgages.

American Indians and Alaska Natives from federally recognized tribes, tribally designated housing bodies, and Indian Housing Authorities are the primary beneficiaries of the Section 184 program. Borrowers must apply through a Section 184 lender recognized by HUD. Enrollment in a federally recognized tribe and purchasing a principal house are both required for eligibility. Down payments for loans above $50,000 can be as low as 2.25%, and the program offers market-based interest rates.

It is recommended, but optional, for applicants to complete homebuyer education courses. The program does not permit interest rate buydown plans and does not accept specific collateral, such as personal property or currency. Finally, the program’s loans are assumable, which means they can be transferred to another qualified person.

• VA Home Loan

A VA home loan is a mortgage loan guaranteed by the United States Department of Veterans Affairs (VA) in the United States. The VA home loan was created to provide long-term financing to qualified American veterans or their surviving spouses. Veterans who have served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or 181 continuous days during peacetime are eligible for a VA home loan.

A VA home loan has several advantages, including no down payment, no private mortgage insurance (PMI), reasonable interest rates, and the possibility to finance the VA funding fee. The VA home loan can be used to purchase a home, build a home, enhance a home by making energy-efficient modifications, purchase a manufactured home and lot, and refinance an existing VA-guaranteed or direct loan for a cheaper interest rate.

To qualify for a VA home loan, you must have good credit, a steady income, and a current Certificate of Eligibility (COE). The COE confirms to lenders that you are eligible for the VA home loan benefit based on your service history and current duty status. You must also guarantee that you will live in the house and use it as your primary residence. There are other restrictions on the type of property that can be purchased with a VA loan in addition to these requirements.

• USDA Home Loan

In Edmonds, Washington, the USDA housing loan program offers two primary loan types: Single Family Housing Direct Home Loans and Single Family Housing Guaranteed Loans. These loans are designed for rural residents with low to moderate incomes. The Direct Home Loan Program offers income-based payment assistance, interest rates as low as 1% with payment assistance, and payback terms of up to 38 years to applicants with meager incomes. Guaranteed Loans offer individuals with low to moderate incomes 100 percent financing with a 90 percent loan note guarantee.

These USDA loans have income restrictions, residence requirements, and citizenship requirements. For Direct Loans, additional requirements include the capacity to repay the loan, specific property value limits, and the property cannot be used to generate income. Guaranteed Loans emphasize primary residence occupancy and have income eligibility requirements of less than or equal to 115% of the median income for the area.

These USDA programs have several advantageous characteristics, including no down payment, competitive interest rates, and the possibility of payment assistance. Direct Loans provide extremely low-income families with interest rates as low as 1% and repayment terms of up to 38 years. Guaranteed Loans offer 100 percent financing and are supported by a 90 percent loan note guarantee, emphasizing debt management instead of credit score requirements.

• Jumbo Home Loan

A jumbo mortgage loan is a type of housing loan that exceeds the Federal Housing Finance Agency’s (FHFA) conforming loan limits. The conforming loan limit in Edmonds, Washington, is $977,500, so a jumbo loan exceeds that amount. Commonly available jumbo loan amounts range between $2 and $3 million. Non-conforming loans are so-called because they exceed conforming loan limits.

Lenders in Washington typically require the following to qualify you for a jumbo loan: a credit score of 680 or higher, a debt-to-income ratio of less than 43 percent, a stable employment history, and sufficient liquid assets for the down payment and closing costs. Due to the higher risk for lenders, jumbo loans have more stringent requirements than standard loans. A high credit score, a low debt-to-income (DTI) ratio and adequate cash reserves are three primary requirements for jumbo loans.

Jumbo loans are versatile and may be used to acquire primary residences, second homes, and investment properties. Each mortgage lender, however, will have its own jumbo loan limit. 

• Non-Qualified Mortgage Loan

In Edmonds, Washington, a non-qualified mortgage loan (non-QM) is a type of mortgage that allows applicants to qualify through means other than the standard income verification processes. In contrast to qualified mortgages, which adhere to Consumer Financial Protection Bureau (CFPB) standards, non-QMs may offer longer terms and only sometimes comply with standard documentation requirements. No-Document, DSCR, Interest-Only, and Bank Statement loans are examples of non-QM loan types in Edmonds.

Non-QM loans are distinguished by the ability to make interest-only payments for a specified period, variable interest rates, and larger down payments. These loans frequently cater to the diverse requirements of borrowers, including real estate investors, self-employed people, and gig workers. Bank Statement Loans, for instance, consider bank statements or assets as income.

Applicants for non-QM loans are typically required to provide bank statements, assets, or 1099s as proof of income. In some instances, foreign nationals with at least three years of permanent U.S. residency and a spotless criminal record may be eligible. Due to the higher risk associated with these loans, their interest rates are typically higher. Additionally, it is crucial to consult mortgage professionals for the best terms and to educate oneself on the numerous loan options. 

Apply for an Edmonds Home Purchase Loan

Capital Home Mortgage provides low interest rates, FHA, USDA, VA, jumbo loans, and tailored local assistance when purchasing a house in Edmonds. Capital Home Mortgage makes mortgage loans easier to understand by offering quick approvals and flexible terms.

Call (425) 324-9505 to speak with an Edmonds Home Loan Specialist.