Compare Current Mortgage Rates in Washington

Mortgage rates in Washington will fluctuate, even if you have stellar credit and a hefty down payment. If you’re a first-time homebuyer in Washington, it’s important to understand exactly how these rates are determined and how you can set yourself up to get the best rate possible.

If you ask two neighbors what interest rate they got on their homes, you’ll likely get two different numbers, even if the homes are nearly identical in property size and resale value. That’s because dozens of criteria — from global economics to personal factors — influence interest rates on all Washington properties.

Economic forces impact the financial institutions, such as banks and credit unions, that create mortgage loans. National and local trends like inflation rates, the housing market, and the federal funds rate all influence mortgage interest rates.

The federal funds rate, which is set by the Federal Reserve, is the rate at which a bank can borrow a short-term loan from another bank. Higher costs for financial institutions to borrow money can raise the interest rates they assign to borrowers. 

Lenders pay close attention to those influences, but they also look at several personal factors when determining your eligibility and rate amount, including your:

• Income
• Down payment 
• Credit history and credit score
• Debt-to-income ratio (DTI)
• Savings
• Type of property you want to purchase

There are steps you can take to improve your credit score, DTI, and other criteria such as making payments on time, avoiding making unnecessary purchases, paying off credit card bills, etc., which will make you a more competitive borrower in the eyes of lenders.

The Washington State Housing Finance Commission offers the Home Advantage Program, which can help you secure a low loan rate through preferred lenders. Funding and rates are subject to market conditions. Additionally, all borrowers must:

• Earn a certificate from a free commission-sponsored homebuyer education seminar
• Maintain an income of $180,000 or less
• Meet with a commission-trained loan officer to determine eligibility

Down payment assistance is also available via a second mortgage loan which can be used with the Home Advantage loan and has the same income requirement of $180,000 or less. It comes with a 0% interest rate and a 30-year payment deferment. 

Borrowers opting for the down payment assistance loan must also attend homebuyer education classes and may be able to qualify for 3% to 5% of the first loan’s total amount. 

 While economic factors are beyond your control, you can position yourself to get the best mortgage rates available in Washington. Consider researching the qualification requirements for a mortgage loan before applying so you can see what type of borrower lenders favor. You can also use these tips to improve your borrower profile: 

• Determine the maximum you can afford for a home and save more than 20% for a down payment.
• Check your credit report and remove inaccuracies.
• Pay down existing debts to improve your credit score and debt-to-income ratio.
• Compare loans from online lenders, traditional banks, and credit unions.
• Refrain from opening new lines of credit, and limit expensive purchases when house hunting.
• Negotiate with a lender for better terms or a lower interest rate.
• Apply for loan pre-approval to show a seller how serious you are.
• Ask a parent or family member to cosign on your loan to get a lower interest rate or higher loan limit.

When you meet with a loan officer, they’ll mention a variety of loans that you may be eligible for. Compare some of the most common mortgage loans you can get in Washington to determine which one suits you best. 

Conventional loan

• Traditional loans not backed by the federal government, are available through banks, credit unions, and online lenders.
• Requirements: Down payment and credit score requirements set by lenders.
• Terms: Varies.
• Pros: Down payments as low as 3%.
• Cons: You might have to pay private mortgage insurance if the down payment is less than 20%.

Jumbo loan

• A loan designed for mortgages exceeding $766,550 in specific counties.
• Requirements: Loans must remain below the government maximum limit and above the conventional limit.
• Terms: Varies.
• Pros: Useful for buyers who want an expensive home.
• Cons: Higher down payment and credit score are likely required.

FHA loan

• Federal Housing Administration backs these private loans.
• Requirements: Borrowers must meet lender requirements; lenders must be approved by the U.S. Department of Housing and Urban Development (HUD).
• Terms: 30-year maximum.
• Pros: Minimal credit requirements, low closing costs, and low down payments.
• Cons: Loans are subject to additional government fees and mortgage insurance premiums.

VA loan

• U.S. Department of Veterans Affairs guarantees a portion of this private loan.
• Requirements: For borrowers who are service members, veterans, and eligible surviving spouses.
• Terms: Varies.
• Pros: May have lower requirements for interest rates and credit scores than conventional loans; no down payment required.
• Cons: Most borrowers who aren’t military service members are ineligible.

USDA loan

• Loans specifically for low- and moderate-income buyers in designated rural areas.
• Requirements: Borrowers may qualify if they earn no more than 115% of the median household income.
• Terms: 30 years.
• Pros: No down payment required.
• Cons: Eligibility is limited to certain locations.