How Many Ways Can You Finance a Home in Washington State? Let Me Count the Ways.

One of the things I enjoy most about my work is showing buyers that there is almost never just one way to finance a home. Depending on your goals, your down payment, your credit, and how competitive the market is, there are often multiple strategies worth considering — and the right combination can make a real difference in your payment, your offer strength, and your long-term financial picture.

Let’s walk through the main financing strategies available to Washington State home buyers today, using a hypothetical $800,000 home as our example.

The Baseline: Conventional Financing

For most buyers, a conventional 30-year fixed mortgage is the starting point. On an $800,000 home:

• 3% down ($24,000) – loan amount of $$776,000, with private mortgage insurance.
• 10% down ($80,000) — loan amount of $720,000, with private mortgage insurance.
• 20% down ($160,000) — loan amount of $640,000, no mortgage insurance required

The larger the down payment, the lower your monthly payment and the better your loan level price adjustments (LLPAs) — which directly affect your interest rate. But putting more down isn’t always the right answer, especially if it depletes your reserves or prevents you from competing effectively.

For buyers with strong credit and stable income, conventional financing is often the cleanest and most flexible option — and in competitive markets like the greater Seattle area, sellers and listing agents tend to view conventional offers favorably.

FHA Financing: Lower Down Payment, More Flexibility

For buyers who want to put less down or have credit that doesn’t quite meet conventional standards, FHA financing offers a compelling alternative:

• Minimum 3.5% down payment — on an $800,000 home that’s $28,000
• More flexible credit score requirements than conventional
• Higher debt-to-income ratios often allowed

The trade-off is mortgage insurance. FHA requires both an upfront MIP (financed into the loan) and an annual MIP that, for most buyers putting less than 10% down, lasts for the life of the loan. For buyers who plan to stay long-term or whose credit profile makes conventional difficult, FHA is often the right call. For buyers who expect to build equity quickly, it may make sense to start with FHA and refinance into conventional once they hit 20% equity.

Note: on an $800,000 purchase, FHA loan limits apply and vary by county. In King, Pierce, and Snohomish Counties, high-balance FHA limits accommodate higher purchase prices. Check current FHA loan limits for Washington State here.

VA Financing: Zero Down for Eligible Veterans

If the buyer is an eligible veteran or active-duty service member, VA financing is almost always the strongest option available:

• No down payment required
• No monthly mortgage insurance
• Competitive interest rates
• No loan limits for eligible borrowers with full entitlement

VA loans are sometimes misunderstood by sellers and listing agents as being slower or more difficult to close — this is largely a myth when you’re working with an experienced lender. A well-presented VA offer from a fully approved buyer is a strong offer. I work closely with listing agents to make sure VA offers are understood and taken seriously.

The 2-1 Temporary Buydown: Lower Your Rate for the First Two Years

A temporary rate buydown is a strategy that has become increasingly popular — and it’s one that many buyers don’t know about.

Here’s how a 2-1 buydown works:

• Year 1: your interest rate is reduced by 2% below the note rate
• Year 2: your interest rate is reduced by 1% below the note rate
• Year 3 onward: your rate is the full note rate

The cost of the buydown is paid upfront — typically by the seller as a concession, though buyers can pay for it as well. The buydown funds are held in an escrow account and applied to subsidize your payment during years one and two.

An important feature: if you refinance before the buydown period ends, the remaining funds in the escrow account are applied to your principal balance — they’re not lost.

On an $800,000 home, a 2-1 buydown might cost approximately $15,000–$20,000 depending on the loan amount and rate. In a market where sellers are negotiating, asking the seller to contribute toward a buydown can be more valuable than negotiating a lower sales price.

A 3-2-1 buydown is also available — the reduction is 3% in year one, 2% in year two, and 1% in year three — though the cost is higher.

Another option to consider is a seller paid permanent rate buydown. Be sure to review all potential options with your mortgage professional.

The Cash Buyer Program: Present a Cash Offer with Financing

In competitive markets, cash offers win. But most buyers aren’t sitting on $800,000 in liquid assets. That’s where a cash buyer program comes in.

Here’s how it works:

• A third-party company purchases the home with cash on your behalf
• You then purchase the home from them using your own mortgage financing
• The seller sees a clean, no-financing-contingency cash offer

Think of it like having a well-capitalized friend who buys the home for you, then sells it to you at the same price once your financing is in place. The program does have costs and conditions worth understanding — but in a multiple-offer situation, the ability to present a cash offer can be the difference between getting the home and losing it. Unlike a bridge loan, you don’t have to have a departing residence to use this program!

This program is available with conventional and VA financing. Not every lender offers it — ask your loan officer upfront if it’s available for your scenario.

The Bridge Loan: Buy Before You Sell

For buyers who already own a home and want to buy their next property before selling, a bridge loan can be a powerful tool.

A bridge loan allows you to access the equity in your current home to use as a down payment on your next home — without having to sell first. This means:

• You can make a non-contingent offer on your next home
• You don’t have to rush the sale of your current home
• You can move on your own timeline rather than trying to coordinate two closings

Bridge loans are short-term by nature — typically 6 to 12 months — and are paid off when your existing home sells. The interest rate is typically higher than a standard mortgage, but the strategic advantage of a clean offer often outweighs the short-term cost.

Planning for a Future Refinance

One of the most important things I tell buyers in today’s market is this: the rate you get today is not the rate you’ll have forever.

If rates are higher than you’d like when you buy, you can always refinance when rates improve — and historically, Washington State home values have appreciated consistently, meaning your equity position improves over time regardless of rate movements.

When I work with buyers, I often model a future refinance scenario alongside the purchase scenario so they can see what their payment might look like in two to three years if rates improve. This helps put today’s rate in perspective and gives buyers a longer-term view of their investment.

The old saying applies: marry the home, date the rate. Inventory in desirable neighborhoods is limited. Waiting for a lower rate means potentially missing the home — and rates can always be refinanced, but you can’t go back and buy the house you missed. With that said, you do need to be prepared to potentially be “dating” the rate potentially longer than expected – in other words, you may be stuck for a while until rates come down and you need to be prepared to act quickly with a refinance when the opportunity is present.

Which Strategy Is Right for You?

The right financing strategy depends on your specific situation — your credit, your down payment, whether you already own a home, how competitive the market is, and what your long-term plans are. There is no single right answer, and the best loan officers run multiple scenarios before recommending an approach.

If you’re thinking about buying a home in Washington State — whether that’s in the next few weeks or the next year — I’d love to walk through the options with you and help you find the strategy that gives you the best combination of payment comfort, qualifying strength, and offer competitiveness.