Purchase Loans
FHA
Lower credit score or smaller down payment? FHA is built for you.
FHA loans are backed by the Federal Housing Administration and built for buyers who need more flexibility — whether that's a lower credit score, a smaller down payment, or a higher debt-to-income ratio. They've helped millions of Americans become first-time homeowners since 1934, and they're still one of the most-used loan programs in Washington.
Key Features
- • Down payments as low as 3.5% (580+ credit)
- • Credit scores as low as 580 (500 with 10% down)
- • DTI up to 56.9% with compensating factors
- • Gift funds allowed for 100% of down payment
- • Government-backed — competitive rates regardless of credit
- • Pairs with WA down payment assistance programs
How FHA works
The Federal Housing Administration doesn't lend money — it insures the loan against default, which lets banks and brokers offer easier terms. In exchange, you pay mortgage insurance (UFMIP up front, MIP monthly) that protects the lender. The trade-off: easier approval and lower down payment in exchange for higher long-term insurance cost. For most buyers under 680 credit, the math still favors FHA on day one.
What this looks like in Washington
Washington's first-time-buyer market leans heavily on FHA — especially in Tacoma, Spokane, Vancouver, and Snohomish County where prices are friendlier and DPA programs are common. The biggest local catch is the FHA appraisal: a lot of WA homes are 50+ years old with quirks that need addressing before the deal funds. I work this in early so you don't lose earnest money over a flaking eave.
Pros
- • Easiest credit standards of any major program
- • Just 3.5% down — gifts allowed
- • Sellers can contribute up to 6% to closing
- • Pairs with WSHFC DPA for $0 out of pocket
Cons
- • Mortgage insurance stays for life under 10% down
- • Stricter property condition standards
- • Primary residence only
- • One FHA loan at a time (with exceptions)
Best for: First-time WA buyers, anyone rebuilding credit, or buyers who need DPA to get through the door. We'll plan the refinance to conventional from day one.
Common Questions
Related Loan Types
Popular WA markets for FHA
FHA shines in WA's first-time-buyer markets where prices and DPA programs line up perfectly.