USDA offers zero down financing in designated rural areas to households under certain incomes. In rural King County neighborhoods, like Carnation or Duvall, the income limit for a 1-4 family household is $92,600.
Similar to an FHA or VA insured mortgage, USDA has an upfront "funding fee" which is technically called a "guarantee fee". Typically this cost is added to the loan amount and financed. For 2012, the upfront USDA guarantee fee for purchases is 2% and effective December 7, 2011 and through 2012, refinances are 1.5% of the loan amount.
USDA has supplemented this with an annual fee which is paid monthly (like FHA). The annual fee is charged with both purchase and refinance transactions at a rate of 0.3%. For example, if you have a loan amount of $300,000, the monthly cost would be $75 (300,000 x 0.3% divided by 12 months).
If you're interested in a zero down USDA loan for a home located anywhere in rural Washington, I'm happy to help!