Home Purchase Loans In Federal Way

The housing market in Federal Way is competitive, with homes receiving an average of four offers, and it is expected to remain relatively robust. However, rising mortgage interest rates could impede the rise in prices.

Federal Way Purchase Loan Programs

Capital Home Mortgage has been a direct lender and servicer of mortgages for years. We have various loan options to help you buy a house that is more accessible and with less trouble than usual. We offer the following types of loans for buying a home in Federal Way:

• Conventional Loans

A conventional home loan in Federal Way, Washington, refers to a mortgage loan that lacks insurance or guarantee from a government body, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). In contrast, conventional loans are provided and supported by private lenders, banks, credit unions, or mortgage firms.

A conventional loan could be either be conforming or non-conforming. 

Conforming loans are mortgage loans that satisfy the guidelines and criteria established by government-sponsored entities such as Fannie Mae and Freddie Mac. Typically, these guidelines include loan size, down payment requirements, credit score standards, debt-to-income ratio standards, and property appraisal standards. Because they adhere to these standardized criteria, conforming loans are designed to be more marketable on the secondary mortgage market. Conforming loans typically offer more favorable terms and interest rates than non-conforming loans.

The Federal Housing Finance Agency (FHFA) determines conforming loan limits based on median local property values. These restrictions differ by location and are updated annually to reflect changes in property values.

A non-conforming loan does not satisfy the requirements established by government-sponsored entities such as Fannie Mae and Freddie Mac. These loans are over the conforming loan limits. Non-conforming loans are typically used for higher-priced properties or borrowers requiring more significant loan amounts. Non-conforming loans may have higher interest rates and less favorable terms than conforming because they must adhere to standardized guidelines.

The 2023 conforming loan limits for Federal Way, King County, are $977,500 for a single-unit home, $1,251,400 for a duplex, $1,52,650 for a triplex, and $1,879,850 for a quadplex.

• FHA Loans

An FHA home loan in Federal Way, Washington, is a mortgage loan that receives insurance coverage from the Federal Housing Administration (FHA), an entity operating under the U.S. Department of Housing and Urban Development (HUD). FHA loans are specifically structured to enhance the accessibility of homeownership for persons who may face challenges in meeting the eligibility criteria for conventional loans, often due to factors like low credit scores, restricted availability of funds for down payments, or other financial limitations.

The 2023 FHA loan limits for Federal Way are $977,500 for a 1-unit home, $1,251,400 for a 2-unit home, $1,52,650 for a 3-unit home, and $1,879,850 for a 4-unit home.

The FHA eligibility requirements include a minimum credit score of 580 to avail of the 3.5% down payment advantage, a debt-to-income ratio of less than 45%, a two-year employment and residence history, and the ability to provide the necessary documentation.

• VA Loans

A VA home loan in Federal Way is a mortgage loan program offered by the United States Department of Veterans Affairs to eligible veterans, active-duty service members, National Guard members, reservists, and select surviving spouses. It is intended to assist these folks in purchasing, refinancing, or improving their houses. The VA home loan program has various advantages, including competitive interest rates, no down payment requirement (in most situations), and low closing expenses.

The VA doesn’t have a maximum income cap, but they require that borrowers have a certain amount of residual income to make sure they can pay their monthly bills. While the VA does not mandate a minimum credit score, lenders may have their requirements. A credit score of 620 or higher is typically regarded as favorable.

You must acquire a Certificate of Eligibility from the VA to demonstrate your eligibility. This document verifies your military service and eligibility status.

• Native American Home Loans

The HUD Section 184 Loan Program is a Federal loan program designed to provide eligible Native American individuals and families, as well as federally recognized tribes, with access to home financing options. The program seeks to increase Native Americans’ access to homeownership by providing loans with reduced down payment requirements and competitive interest rates.

Those enrolled in federally recognized tribes, Alaska Natives, or Native Hawaiians, as well as tribal housing organizations, are eligible borrowers. Additionally, the property must be situated in an approved tribal jurisdiction.

The program allows minimal down payments, as little as 2.25% of the loan amount, making homeownership more accessible to qualified applicants.

• Jumbo Loans

A jumbo loan is a home loan that exceeds the Federal Housing Finance Agency’s (FHFA) conforming loan restrictions. Federal Way’s conforming loan limit of $977,500 is the maximum loan amount supported by government-sponsored companies such as Fannie Mae and Freddie Mac. Any loan over that amount is classified as a jumbo loan.

To be eligible for a jumbo loan, it is necessary to satisfy specific criteria, including a credit score of 700 or higher, a debt-to-income ratio of less than 43%, a down payment of 10 – 20%, and cash reserves equal to 6 – 19 months of monthly mortgage payments.

• Non-Qualified Mortgage Loans

Non-Qualified Mortgage (Non-QM) loans are home loans that do not satisfy the stringent requirements established by the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage (QM) rule, which was introduced as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The QM rule was intended to make mortgage products safer and more stable by establishing specific lending criteria to assure borrowers’ ability to repay loans.

Non-QM loans are less stringent underwriting and are often tailored to borrowers who need to meet the regular QM standards. These loans are frequently made available to borrowers with unusual financial circumstances or who need to fit traditional lending criteria.

While non-QM loans provide greater flexibility, they also carry higher interest rates and potentially more significant risk for both the borrower and the lender. 

Apply for a Federal Way Home Purchase Loan

Capital Home Mortgage is an excellent choice for Federal Way borrowers. Capital Home Mortgage is well-known for providing a variety of home loan alternatives that provide consumers with flexibility and customized solutions. Homebuyers in Federal Way who choose Capital Home Mortgage can take advantage of these incentives and receive help throughout home-buying, making homeownership more accessible and affordable.

Call (253) 528-4417 to speak with our Federal Way mortgage specialists about your home purchase loan needs.