First-time home buyer programs in Washington: assistance, loans and real costs
Washington’s Covenant Homeownership Program is one of the most targeted first-time buyer programs in the country, and its Home Advantage DPA is unusual in using a single statewide income limit with no purchase price cap. That is the one sentence to keep in mind while reading the programs below.
| State housing agency | Washington State Housing Finance Commission (WSHFC) |
|---|---|
| Median home price (approx.) | $600,000 — statewide order of magnitude; metros differ |
| 3.5% / 5% / 20% down | $21,000 / $30,000 / $120,000 on the median |
| Property tax (effective) | about 0.87% — roughly $5,220 a year on the median |
| Mortgage credit certificate | Not consistently offered — ask a lender |
| Transfer tax | Washington’s real estate excise tax (REET) is graduated — 1.1% on the portion of the price up to about $525,000, 1.28% up to about $1.5 million, and higher above — plus a local REET of 0.25% to 0.5%. |
What the state offers in Washington
The Washington State Housing Finance Commission’s Home Advantage program offers FHA, VA, USDA and conventional first mortgages with down payment assistance to first-time and repeat buyers, House Key Opportunity serves lower-income first-time buyers, and the Covenant Homeownership Program (2024) provides deep assistance to buyers from communities harmed by historic racial covenants.
Down payment assistance: how it is structured
Home Advantage DPA provides up to 4% to 5% of the first-mortgage amount as a 0% deferred second due on sale, refinance or payoff; House Key Opportunity and needs-based options provide up to $10,000 to $15,000; the Covenant program provides up to 20% of the price for eligible buyers.
Read the lien type before the dollar figure: grant (no repayment), forgivable second (repaid only if you leave early), deferred second (repaid at sale or refinance), or repayable second (a monthly payment that counts in your debt-to-income ratio). See how down payment assistance programs work.
The MCC: a federal tax credit for the life of the loan
WSHFC has offered a Mortgage Credit Certificate program in the past; ask a Commission-trained lender whether it is currently available.
Income and purchase price limits
Home Advantage uses a statewide income limit (not county-based) and no purchase price limit beyond loan limits; House Key Opportunity has county-based income and price limits; a 620 minimum credit score and the Commission’s free homebuyer education class are required.
Transfer taxes and closing costs in Washington
Washington’s real estate excise tax (REET) is graduated — 1.1% on the portion of the price up to about $525,000, 1.28% up to about $1.5 million, and higher above — plus a local REET of 0.25% to 0.5%. It is paid by the seller.
With REET on the seller, Washington buyer closing costs — escrow, lender’s title policy, lender fees and prepaids — typically total 2% to 3% of the price; escrow companies handle closings. The closing costs guide shows what is negotiable; seller concessions shows how much a seller may contribute on each loan type.
Example: $600,000 home, three ways to finance it
On a home at Washington’s rough median of $600,000, here is what the three standard first-time structures look like at an illustrative 6.5% rate — principal and interest only, before homeowners insurance and any mortgage insurance. The tax column uses the state’s approximate effective rate of 0.87% (about $5,220 a year on this price). Neither number is an offer; both are the right order of magnitude for a budget.
| Structure | Down payment | Loan amount | P&I at 6.5% (30 yr) | Property tax / mo (est.) |
|---|---|---|---|---|
| FHA, 3.5% down | $21,000 | $579,000 | $3,660 | $435 |
| Conventional, 5% down | $30,000 | $570,000 | $3,603 | $435 |
| Conventional, 20% down (no PMI) | $120,000 | $480,000 | $3,034 | $435 |
Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.
Frequently asked questions
Does Washington have down payment assistance for first-time buyers?
Home Advantage DPA provides up to 4% to 5% of the first-mortgage amount as a 0% deferred second due on sale, refinance or payoff; House Key Opportunity and needs-based options provide up to $10,000 to $15,000; the Covenant program provides up to 20% of the price for eligible buyers. The agency publishes the current limits and amounts; a lender approved for the program will know them.
Is there a first-time home buyer tax credit in Washington?
WSHFC has offered a Mortgage Credit Certificate program in the past; ask a Commission-trained lender whether it is currently available. A Mortgage Credit Certificate is a federal income tax credit, claimed each year on your return, not cash at closing.
What are typical closing costs when buying a house in Washington?
With REET on the seller, Washington buyer closing costs — escrow, lender’s title policy, lender fees and prepaids — typically total 2% to 3% of the price; escrow companies handle closings. Washington’s real estate excise tax (REET) is graduated — 1.1% on the portion of the price up to about $525,000, 1.28% up to about $1.5 million, and higher above — plus a local REET of 0.25% to 0.5%.
Related guides
- Closing costs explained: what is negotiable, what is not
- PMI for first-time buyers: what it costs and how to get rid of it
- Gift funds for a down payment: the rules, the letter, the paper trail
- Debt-to-income ratio limits by loan type — and how to lower yours
Same state, other questions: hard money rules in Washington · foreclosure in Washington.