Home Purchase Loans In Vancouver

The Vancouver, Washington, housing market outlook contains positive and negative factors for homebuyers. The median listing price in Vancouver’s housing market increased by 2.1% annually. However, the average home value has decreased by 1.0% over the past year. This suggests that despite the market’s positive general trend, fluctuations may be occurring.

Even though the Vancouver market is a seller’s market with high demand, properties sell in 40 days on average and much faster in competitive neighborhoods (5 days on average). The Vancouver real estate market is competitive, with homes receiving many offers and frequently selling within six days.

Vancouver Home Loan Programs 

Vancouver home buyers have many home loan programs to choose from, depending on their circumstances and requirements. Among them are the following:

• Conventional Loans

Conventional mortgages in Vancouver, Washington, are offered by private lenders without government funding. Unless a 20% down payment is made, private mortgage insurance (PMI) is typically required for these loans. Fixed-rate and adjustable-rate options are available, and the terms are typically 15 or 30 years, with the 15-year option offering lower interest rates but higher monthly payments.

Conventional loans typically necessitate a credit score of at least 620 and financial documentation. A 3% down payment is acceptable, but a 20% down payment eliminates the need for PMI.

Conforming and non-conforming loans are both forms of conventional loans, but they adhere to distinct sets of guidelines and are appropriate for various borrowers and properties. They are widely utilized in the housing industry, including Vancouver, Washington.

• Conforming Loans

Conforming loans follow Fannie Mae and Freddie Mac’s criteria, which include loan limits, down payments, debt-to-income (DTI) ratios, and credit scores. 

A FICO® credit score of at least 620, a decent debt-to-income ratio (typically under 25%), and a down payment of 5% are often required for conforming loans. Conforming loans are desirable to the secondary market due to lower fees and standardized underwriting.

The Federal Housing Finance Agency (FHFA) sets conforming loan restrictions based on median property values. The 2023 conforming loan limit for Vancouver, Clark County, is $726,200 for a single-unit property, $929,850 for a duplex, $1,123,900 for a triplex, and $1,396,800 for a quadplex, respectively.

• Non-Conforming Loans

Non-conforming loans, on the other hand, do not adhere to these guidelines and are typically reserved for borrowers with exceptional circumstances or properties that exceed conforming loan limits. A lower credit score may cause non-conformity, a smaller down payment, a higher DTI, or a more significant loan amount than Fannie Mae and Freddie Mac stipulate. These loans can accommodate various requirements, including financing for pricier homes, borrowers with poor credit, and properties with unique characteristics. Non-conforming loans include jumbo loans, which exceed county limits, and other government-backed loans (FHA, USDA, VA). However, they typically carry higher interest rates and may require larger down payments and higher credit scores than conforming loans.

• FHA Loans

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). FHA loans are government-backed and have less stringent credit standards than conventional home loans. They allow borrowers to finance homes with as little as 3.5% down. FHA loans are prevalent among first-time homeowners who may have yet to save enough for a significant down payment.

The eligibility requirements of an FHA loan include a 3.5% down payment for borrowers with a 580 credit score, a debt-to-income ratio of less than 45%, and a two-year verifiable employment history. They must occupy the property as a primary residence. No second homes nor investment properties are allowed.

For 2023, the FHA loan limit for Vancouver, Clark County, is $672,750 for a one-unit property, $861,250 for a duplex, $1,041,050 for a triplex, and $1,293,750 for a four-plex, respectively.

• VA Loans

A VA home loan is a mortgage loan guaranteed by the Veterans Affairs (VA) Department of the United States. VA loans are available to veterans, active-duty members, and certain military dependents. The loans were created in 1944 to assist returning veterans with inadequate credit or down payments to afford homes.

Loans guaranteed by the Veterans Administration (VA) are provided by commercial lenders but backed by the federal government. They are protected from loss even if you go into default. VA loans, on average, come with cheaper interest rates than most other mortgages. In addition, the restrictions for credit, down payments, and the debt-to-income ratio are more flexible than conventional loans. Mortgage insurance is not required with VA loans but is necessary with FHA loans.

• USDA Loans

A USDA home loan is a mortgage program offered by the United States Department of Agriculture (USDA) to encourage homeownership in rural areas. USDA loans are also referred to as “Rural Development Loans.”

USDA loans provide 100% financing for qualified rural homes. They have no down payment or qualifying assets requirements, no loan ceiling, and can be utilized for new and existing properties. 

The USDA guarantees your mortgage to your lender, ensuring minimal risk and allowing lenders to offer low-interest rates and no down payment to lower-income buyers. USDA loans are optimal for low-income borrowers who wish to purchase a home in a rural area.

USDA-eligible properties are typically located outside city limits, in the suburbs, or in the countryside. The USDA Guaranteed Loan is not intended to finance farms but rather the typical single-family residence.

• Non-Qualified Mortgage Loans

Non-qualified mortgage (Non-QM) loans do not satisfy the criteria for a qualified mortgage. Non-QM loans are intended for borrowers who need help to meet the stringent requirements of a qualifying mortgage, such as those who are self-employed or lack the required documentation. Non-QM loans use alternative income verification methods, such as bank statements or the use of assets as income, to assist applicants in obtaining a mortgage. 

Non-QM loans are not guaranteed or endorsed by the Federal Housing Administration, the Veterans Administration, Fannie Mae, or Freddie Mac. They may also include mortgages with terms exceeding 30 years. Non-QM loans can be advantageous for borrowers who do not qualify for a conventional mortgage but can be costly and risky.

Apply for a Home Purchase Loan in Vancouver

As a direct Washington mortgage lender and servicer, Capital Home Mortgage Washington has options for every mortgage need. Our knowledgeable mortgage team can help you choose the right loan program to meet your budget and needs. As no two loans are alike, our loan officers offer the resources, assistance, and flexibility for their consumers to choose the right mortgage program. 

Call (360) 474-5656 to speak with our Vancouver Home Loan Specialists for a home purchase loan in Vancouver.