Home Purchase Loans In Puyallup

Puyallup, Washington, home buyers should expect a competitive market with rising home prices. Home prices are anticipated to climb further, albeit slower than in recent years. If you want to buy a home in Puyallup, you must be prepared to act swiftly and make a reasonable offer.

Purchase Loan Programs in Puyallup

• Conventional Loans

A conventional mortgage loan is neither insured nor guaranteed by a government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). This means that the lender assumes a greater level of risk, so they typically require a higher credit score and a larger down payment than government-backed loans. Conventional loans could either be conforming or non-conforming.

The Federal Housing Finance Agency (FHFA) establishes size and credit score requirements for conforming loans. Two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, purchase conforming loans. In Puyallup, Pierce County, the conforming loan limits for 2023 are $977,500 for a single-family dwelling, $1,251,400 for a duplex, $1,512,650 for a triplex, and $1,879,850 for a quadplex.

A minimum credit score of 620 is required to qualify for a conforming loan in Puyallup, Washington. A minimum down payment of 5% of the home’s purchase price and a maximum debt-to-income ratio of 45%. However, applicants with impeccable credit could get by with a 3% down payment.

• FHA Loans

An FHA home loan in Puyallup, Washington, is a mortgage insured by the Federal Housing Administration (FHA) and intended to assist borrowers with low-to-moderate incomes in qualifying for a mortgage. These loans include a modest 3.5% down payment requirement for borrowers with a credit score of 580 or higher. Mortgage insurance requires an annual MIP paid monthly and an initial UFMIP of 1.75 percent.

In Puyallup, Washington, the loan limits for FHA loans in 2023 are $977,500 for a single-family property, $1,251,400 for a duplex, $1,512,650 for a triplex, and $1,879,850 for a quadplex.

FHA loans require a minimum credit score of 580 for the option with a modest down payment of 3.5% of the purchase price or 500-579 with a 10% down payment. Generally, the Debt-to-Income (DTI) ratio should be less than 43%. The home must be the primary residence for at least a year, and it is permissible to purchase a multi-family home as long as you reside in one of the units. These loans are not intended for second homes or rental properties. Additionally, FHA loans necessitate an FHA-approved appraisal to ensure the property fulfills safety and quality requirements.

• VA Loans

A VA home loan is a mortgage financing guaranteed by the Department of Veterans Affairs (VA) of the United States. Veterans, service members, and their survivors can use VA direct and VA-backed home loans to purchase, build, renovate, or refinance a home. The VA home loan program is designed to assist eligible veterans and service members in obtaining favorable mortgage financing.

To qualify for a VA home loan, you must have good credit, sufficient income, and a valid Certificate of Eligibility (COE) that verifies your eligibility to lenders. The COE is a crucial requirement for VA loans in Washington. This official government document informs mortgage underwriters of your eligibility for a VA-guaranteed home loan. Military personnel can request this document online through the Department of Veterans Affairs website.

The eligibility requirements for a VA home loan differ based on the service period. For instance, if you served during the Gulf War period (August 2, 1990 – to be determined), you meet the minimum active-duty service requirement if you served at least 24 consecutive months or the entire period (at least 90 days) for which you were called or ordered to active duty with an honorable discharge. 

• USDA Home Loans

The USDA home loan program helps low- and very-low-income applicants find good, safe, and sanitary homes in suitable rural areas by providing payment assistance to boost an applicant’s repayment capabilities. The Section 502 Direct Loan program is another name for this form of financing. The US Department of Agriculture (USDA) offers two types of single-family rural housing loans: Single Family Housing Guaranteed Loan Program and Single Family Housing Direct Home Loan.

The property must be located in an eligible rural area to qualify for a USDA home loan. Applicants must be without decent, safe, and sanitary housing; unable to obtain a loan from other sources on terms and conditions that can be reasonably expected to be met; agreeing to occupy the property as their primary residence; having the legal capacity to incur a loan obligation; meeting citizenship or eligible noncitizen requirements; and not suspended or disqualified from participation in federal programs.

• Construction Loans

A construction loan is a short-term financing option for developing or remodeling homes in Puyallup, Washington. Because of the low home inventory in Washington, these loans cover the price of supplies and labor. Several types of construction loans are available, including government-backed USDA, FHA, and Fannie Mae loans with low down payments.

There are various advantages to a one-time close construction financing. To begin with, it combines construction and permanent finance into one loan, lowering closing costs and removing the need for numerous requirements. During the construction phase, the loan works as a credit line, and upon completion, it converts to standard mortgage conditions. Second, the interest rates are fixed, giving borrowers financial predictability. In contrast, traditional two-time close construction loans may have dual appraisals and fluctuating interest rates. 

A one-time close construction loan streamlines the home-building process, from land purchase to construction to permanent financing. This type of loan simplifies the complexities typically associated with obtaining two distinct loans for construction and mortgage, thereby saving the borrower time and potentially money.

• Jumbo Loans

A jumbo home loan in Puyallup, Washington, is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). As of 2023, the jumbo loan limit for high-value properties in Pierce County is $977,500. Freddie Mac and Fannie Mae do not guarantee jumbo loans primarily intended for financing properties exceeding conventional limits.

Unlike conforming loans, jumbo loans have stringent eligibility requirements and generally higher interest rates. Typically, borrowers will need a higher credit score, a larger down payment of 20-30%, and sufficient funds to cover 6-12 months of mortgage payments. A low debt-to-income (DTI) ratio is essential for obtaining a jumbo loan, with a DTI of 45% or less typically required.

To qualify, borrowers must also provide exhaustive financial documentation, such as tax returns, W-2s, and bank statements. Additional home appraisals may be necessary in low-sales areas to align property value with the loan amount and reduce the lender’s risk.

• Non-Qualified Mortgage Loans

Non-QM loans are mortgages that do not satisfy the Consumer Financial Protection Bureau (CFPB) requirements to be considered qualified mortgages. A qualified mortgage complies with the CFPB’s “ability to repay” rule, which mandates that lenders evaluate your financial situation and set loan terms that you are likely to be able to repay. Non-QM loans are helpful for individuals who have discovered their dream property but were denied a mortgage loan due to qualified mortgage requirements. A non-qualified mortgage may serve as a bridge loan until you meet conventional mortgage requirements and can refinance into a traditional loan.

To assist you in qualifying for a non-QM loan, the lender may include one or more of the following characteristics: Interest-only payments, where lenders that offer an interest-only option do not require you to pay any of your loan’s principal balance each month; instead, you pay only the interest accruing on your loan balance. Non-QM lenders offer options to self-employed applicants.

Non-QM loans are not comparable to subprime loans during the previous housing crisis. Lenders must verify your ability to repay the loan in good faith. However, non-QM lenders can establish their own guidelines to demonstrate that borrowers can afford monthly mortgage payments. Note that non-QM loans may have higher interest rates and fees than conventional loans.

Apply for a Puyallup Home Purchase Loan

Capital Home Mortgage offers low interest rates, FHA, USDA, VA, jumbo loans, and customized, local help to buy a home in Puyallup, Washington. Capital Home Mortgage simplifies mortgage loans with fast approvals and flexible terms to simplify homeownership.

Call (253) 528-4417 to speak with a Puyallup Home Loan Specialist.