Washington State Down Payment Assistance. How It Works and How to Qualify

In Washington state, down payment assistance usually takes the form of second-mortgage programs. Most of these programs are provided by the Washington State Housing Finance Commission (WSHFC). In addition, some are provided by cities and counties in Washington. 

Funds from these programs can be used toward your down payment and closing costs. They are paired with a WSHFC first mortgage. A homebuyer can access these programs by working with a WSHFC-trained lender. Loan officers at NW Capital Mortgage have been trained by WSHFC and have the experience to help you use these programs to successfully buy a home.

For homebuyers, the biggest barrier to using these programs is often that the lenders they’re working with are not trained in them and cannot offer them. That’s why it is important to start your homebuying journey with a company like NW Capital Mortgage. If you did not start with NW Capital Mortgage, make the switch as soon as you determine you want to learn more about these programs. NW Capital Mortgage provides personalized home loans and down payment assistance for buyers in Vancouver, Seattle, Olympia, Spokane, and across Washington state.

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What Down Payment Assistance Programs Are Available in Washington State?

Some of the most popular down payment assistance programs in Washington are Home Choice, Home Advantage, Home Advantage Needs-Based, House Key Opportunity, Veterans DPA, ARCH (for East King County), and Bellingham DPA. Other programs that are sometimes used include the Covenant Homeownership program and the Bellingham Restricted program.

Most of these programs can be combined with other programs to maximize their benefits. That said, there are somewhat complex limitations on which programs can be combined with each other.

Most of the programs we discuss here receive funding from WSHFC. You can use only one program that uses WSHFC funds for any one home purchase. The Bellingham Restricted program and the Covenant Homeownership program do not use WSHFC funds and can be combined with one WSHFC program if you meet the criteria. However, you cannot combine the Bellingham DPA with the Bellingham Restricted DPA.

Program Name	WSHFC Funds?	Maximum Amount and Key Benefits	Criteria Summary	Repayment of Second Mortgage
HomeChoice DPA	Yes	Up to $15,000	Disabled homebuyers or disabled family member living with them	$0 monthly; 1% interest; pay in full on sale, transfer, or 30 years
Home Advantage DPA	Yes	3% to 5% of first mortgage; could be over $40,000 in some cases	Income < $215,000	$0 monthly; 0% interest; pay in full on sale, transfer, or 30 years
Home Advantage Needs-Based DPA	Yes	Up to $10,000	Can make sense if buying home < $250,000; lower income limits than Home Advantage	$0 monthly; 1% interest; pay in full on sale, transfer, or 30 years
House Key Opportunity DPA	Yes	Up to $15,000	First-time homebuyer*; income limits from $67,450 to $116,650 depending on county and household size	$0 monthly; 1% interest; pay in full on sale, transfer, or 30 years
Bellingham (Unrestricted) DPA	Yes	Up to $40,000; borrower must contribute the greater of 1% of the price or $2,500	First-time homebuyer*; Bellingham city limits; income limits $66,720 to $125,850 based on household size; price limits	$0 monthly; 1% interest; pay in full on sale, transfer, or 30 years
Veterans DPA	Yes	Up to $10,000	Must be an eligible veteran; income limits, ranging from $126,800 to $164,400, vary by county	$0 monthly; 3% interest; pay in full on sale, transfer, or 30 years
ARCH DPA	Yes	Up to $30,000	Serves most of King County east of Lake Washington; single-unit properties only; income limits $81,700 to $154,000 based on household size; price limits	$0 monthly; 4% interest; pay in full on sale, transfer, or 30 years
Clark County DPA	Yes	Funds no longer available	Funds no longer available	Funds no longer available
Bellingham Restricted DPA	No	Up to $75,000; borrower must contribute greater of 1% of price or $2,500*	Similar to Bellingham DPA. Must buy home in the Community Land Trust.	$0 monthly; 0% interest; pay in full on sale, transfer, or 30 years
Covenant Homeownership	No	Up to 20% of purchase price, plus customary closing costs, not to exceed $150,000	Buyer or direct ancestor of target racial group** in WA before 4/11/1968; first-time homebuyer; income limits that vary by county	$0 monthly; 0% interest; pay in full on sale, transfer, or 30 years

 

Notes:

* First-time homebuyer usually means you cannot have owned a home in the past three years, with some exceptions. Contact us to get details.

        ** Black, Hispanic, Native American, Alaska Native, Native Hawaiian, Pacific Islander, Korean, or Asian Indian.

Can I combine programs?

• You can use only one program that uses WSHFC funds (shown in yellow in the chart).
• If you are eligible for Bellingham Restricted DPA, you can combine that program with any one of the WSHFC funded programs you are eligible for EXCEPT the Bellingham DPA.
• If you are eligible for the Covenant Homeownership program, you can combine that program with any one of the WSHFC funded programs you are eligible for.

Home Advantage DPA

More homebuyers use this program than any other. It has the highest income limits of any of the programs, and you don’t need to be a first-time homebuyer. Also, with 0% interest and $0 monthly payment on the second mortgage, it is very cost-effective. Finally, homebuyers can choose up to 5% of the first mortgage amount for the second mortgage. This means they can get up to $40,000 for down payment and closing costs. This program is available anywhere in Washington state.

House Key Opportunity DPA 

This is a great choice for first-time homebuyers in Washington state if they meet the income limits. The biggest benefit of House Key Opportunity vs. Home Advantage is that House Key has a significantly lower interest rate on the first mortgage, so first-time homebuyers can afford a larger home with the same payment. While the maximum down payment assistance amount is not as high as that of Home Advantage, it is often enough for a starter home.

Veterans, HomeChoice, and needs-based options

These programs can be valuable if you qualify; however, many homebuyers who qualify for these programs choose to use the House Key or Home Advantage DPA programs instead. We will help you understand the pros and cons of each course of action. Please note that the HomeChoice program can be used if the borrower is disabled, or if there is a qualifying household member who is disabled.

Covenant Homeownership Program 

This program requires that you or a parent, grandparent, or great-grandparent lived in Washington state on or before April 11, 1968, and that person was or is a member of a target demographic group (Black, Hispanic, Native American, Alaska Native, Native Hawaiian, Pacific Islander, Korean, or Asian Indian). If this applies to you, you may be able to get the largest amount of down payment assistance available in the state of Washington. You may be able to get up to 20% of the purchase price, plus customary closing costs, up to a limit of $150.000.

Covenant Example: If you qualify for this program and are buying a $600,000 home, you may be able to get $120,000 for the down payment and $12,000 for closing costs (assuming this is customary in your area). That is a total of $132,000.

The Covenant second mortgage has a $0 monthly payment and may be forgiven after five years if your income is below 80% of the annual median income (AMI) for the county where you purchase your home. Lenders are prohibited from predicting whether your loan will be forgiven. But here are some of the relevant factors:

• The borrower’s income needs to be below the Covenant DPA loan forgiveness threshold at the time of the loan purchase by the loan servicer.
• The commission and its servicer must retain the loan for a minimum of five years and one month after closing. (Neither you nor your lender can guarantee this.)
• The borrower who met the Covenant program eligibility requirements must occupy the home as their primary residence at the time of loan forgiveness.
• The first mortgage must be in good standing.

Covenant Program Approval Alert: Effective April 20, 2026, the loan approval process has changed. If you want to use the Covenant Homeownership Program, you must work with your lender to get a pre-reservation for program funds before you make an offer on a home using Covenant funds. Once you are placed on the pre-reservation list and funding becomes available, you will have 30 days to get a home under contract and have your lender reserve Covenant funds in the Commission’s online system.

ARCH DPA serves the following cities in King County and their surrounding areas: Beaux Arts, Bellevue, Bothell, Clyde Hill, Hunts Point, Issaquah, Kenmore, Kirkland, Medina, Mercer Island, Newcastle, Redmond, Sammamish, Woodinville and Yarrow Point. Note that Carnation, Duvall, Snoqualmie, Tanner, and North Bend are not eligible areas.

 

How Do I Apply for Down Payment Assistance in Washington State?

There is no direct application with the Washington State Housing Finance Commission for Washington state down payment assistance programs. You must find a WSHFC-trained lender, like NW Capital Mortgage, and apply through us.

While this may initially seem strange, it can often work to your advantage because the best lenders will have many different programs to choose from. At NW Capital Mortgage, we pride ourselves on matching our clients with the program we offer that best meets their needs. Many times, this is a Washington state down payment assistance program. Other times, this might be another program we have that other lenders don’t offer.

Step-by-step process to buy a home using down payment assistance in Washington state

1. Apply to get pre-approved with a WSHFC-trained loan officer.
2. Work with your loan officer to determine which DPA programs you qualify for, and which ones are most beneficial for you to use.
3. Complete the pre-approval process so you know how much you can afford.
4. Complete any necessary education and counseling requirements. We recommend doing this after you know which program(s) you are most likely to use so that you complete the correct course(s).
5. If you are using the Covenant Homeownership program, make sure your loan officer submits your pre-registration request.
6. When ready, work with a realtor who understands these programs to find a home and get it under contract. If using Covenant funds, you must wait to make an offer until you have been informed that your funds are available.
7. Deposit your earnest money, get a home inspection, and work with your realtor to negotiate any repairs or price concessions.
8. Now your lender will order your home appraisal to make sure it is worth what you are paying for it.
9. If your DPA funds have not already been reserved, now is a good time for your lender to do that.
10. Once your lender’s underwriting is complete, sign your final documents at the title company. 
11. Congratulations on your new home!

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How Can I Qualify for Washington State Down Payment Assistance?

Qualification depends on the down payment assistance program, the first mortgage you’re using, and your overall financial profile. Credit, income, debt-to-income ratio, available funds, and program-specific requirements can all affect which options are available.

 

What credit score is needed for Washington state down payment assistance?

There is not one credit score requirement that applies to every Washington down payment assistance program. NW Capital Mortgage is typically able to get buyers pre-approved with a credit score of 620 or higher, and in some cases buyers with scores as low as 580 may be approved.

With a lower credit score, other qualification factors become increasingly important, including your debt-to-income ratio, combined loan-to-value, and cash reserves after closing.

There are two debt-to-income (DTI) ratios that are considered: the home debt-to-income and the total debt-to-income. Total includes the home payment and all other monthly obligations that you would typically see on a credit report, such as car, credit card, and student loan payments.

With very good credit, we may see DTI ratios of up to 49%/49% (home/total) get pre-approved on a DPA loan with a conventional first mortgage. Likewise, we may see DTI ratios of up to 45%/56% (home/total) get pre-approved on a DPA loan with an FHA first mortgage. The DTI ratios that we can get approval with decrease with lower credit scores or a lack of reserves.

Reserves are funds that you have remaining after all the down payment and closing costs have been paid. Having these “left over” funds in your asset accounts can help you get pre-approved for a higher priced home in some cases.

Reserves Example: Joe is buying a home. His down payment and some of his closing costs are being paid with his down payment assistance. His realtor also arranged for the seller to pay most of his closing costs. At closing, Joe needs to bring in only $1,000. If Joe has $ 7,000 in documented funds in his bank account, he will have $6,000 left after closing. This $6,000 is considered “reserve funds.”

Insider tips for homebuyers

• Most programs that say they have a first-time homebuyer requirement actually only require that you have not owned a home in the past three years.
• Owning a manufactured home in a park often does not count as owning a home in the past three years.
• There are often exceptions to the first-time homebuyer requirement for veterans, single parents, displaced homemakers, and those buying in a targeted area.
• Due to income and home price limits, many programs are not typically feasible in much of Seattle and other high-cost areas. That said, the Home Advantage program has an income limit of $215,000, so it can work for many homebuyers.

 

What Are the Income Limits for Down Payment Assistance in Washington State?

The income limits for down payment assistance in the state of Washington vary by the program, household size, and county. The Home Advantage program has the highest income limit at $215,000 for qualifying borrowers. So if your household income is less than $215,000 or you can qualify for a home with fewer borrowers on the loan to keep your qualifying income below $215,000, you may qualify. The income limits for most of these programs are updated annually.

It is important to understand that some programs consider the “total household income” (the income of everyone living in the home) while other programs consider only the “qualifying income” (income from only those on the loan). We will help you understand which program is best for your situation.

Pro Tip: NW Capital Mortgage offers a proprietary down payment assistance program with no income limit.

Contact us, and we will help you understand the best strategy to achieve your dream of homeownership.

 

Are There Forgivable Down Payment Options for WA Homebuyers?

Most of the Washington down payment assistance programs are not forgivable. They are a second mortgage that often does not have a monthly payment but must eventually be repaid. The loans typically come due if you sell the home, refinance your loan, go into default, or, in some cases, if you no longer occupy the home as your primary residence.

When you pay off the loan, you pay all the outstanding principal and interest. This is another point that makes the Home Advantage program an excellent choice, as it offers 0% interest.

Key Point: Homebuyers need to know that the down payment assistance second mortgage will typically be paid out of your home’s equity when you sell your home. If your home declines in value (or does not appreciate enough to cover the costs of selling it), you may owe more money than your home is worth.

The Covenant Homeownership DPA program can be forgivable in some cases. But it is critical to understand this is not guaranteed. Some of the criteria are not within the homeowner’s or the lender’s control. In fact, the WSHFC prohibits lenders from predicting if the loan will be forgiven to avoid mis-setting expectations.

Here are some of the criteria that determine if your Covenant Homeownership DPA program may be forgivable:

• The income of all borrowers needs to be below the Covenant DPA loan forgiveness threshold at the time of the loan purchase by the loan servicer.
• The commission and its servicer must retain the loan for a minimum of five years and one month after closing. (Neither you nor your lender can guarantee this.)
• The borrower who met the Covenant program eligibility requirements must occupy the home as their primary residence at the time of loan forgiveness.
• The first mortgage must be in good standing.

 

Can I Combine Down Payment Assistance with Other Homebuyer Programs?

Yes, a homebuyer can sometimes combine multiple down payment assistance programs in Washington state. The key is whether there is a local county, city, or tribal program that you qualify for. There can be only one WSHFC down payment assistance program used for a single home purchase.

Example: Let’s assume a homebuyer is entitled to $10,000 down payment assistance from a local tribal council. If they meet all eligibility requirements, they could get Home Advantage DPA funds of up to 5% of their first mortgage amount, and receive the additional $10,000 from the tribal council.

All limits on loan-to-value (LTV) ratios still apply, so we may need to structure the loan so that the two DPA programs result in a slightly larger down payment. For example, we would typically have a conventional first mortgage at 97% of the purchase price. But if we have more funds available than the LTV limits would allow with a 97% loan, we may reduce the loan amount to a 95% or 90% loan.

Most programs do not allow you to get more cash back at closing than you have already put into the home purchase.

Example: Let’s assume that a homebuyer put down a $3,000 earnest money deposit and paid $750 for an appraisal. They could not get more than $3,750 back at closing. If the multiple down payment assistance programs would result in this situation, your loan officer would typically lower the amount of your first mortgage to make sure you can use all the DPA funds available to you.

 

What Documents Are Required to Get Down Payment Assistance?

All programs require standard mortgage loan documentation. This includes:

• Income documentation: Typically, 30 days of pay stubs and two years of W-2’s. If self-employed, two years of tax returns, a balance sheet, and year-to-date profit and loss statement.
• Asset documentation: Typically, the two most recent statements for all asset accounts you want us to consider.
• Divorce decrees, child support orders, and bankruptcy documents as applicable.
• In some cases, a homebuyer’s education certificate.

For more information, go to our documentation page. Keep in mind that there are many unique situations that may require special documentation.

The Covenant Homeownership program has the unique requirement of proving that you, a parent, or a grandparent lived in Washington on or before April 20, 1968. This includes Washington residency documentation and race/ethnicity documentation (sources may include birth/marriage/death records, census records, deeds, yearbooks, military records, and obituaries). While this may sound overwhelming, there are often counselors and WSHFC staff who can help you with this process.

 

Which Washington Down Payment Assistance Program Has the Best Interest Rate?

There is no single winner for everyone. Since each situation can be different, we go through a process that looks like this:

• Answer as many questions as we can before a homebuyer applies.
• Once we have the application and supporting documentation, we determine which programs are available to the homebuyer.
• We review the interest rates and payment structures for each available program and determine the short- and long-term costs.
• We present the relevant options to the homebuyer and discuss which they want to pursue.

The final decision on which program(s) to use is made by the homebuyer, aided by the information we provide. In many cases, the main decision driver is finding the programs that keep the initial cash to acquire the home as low as possible. Typically, the homebuyer then chooses the program that offers the lowest monthly payment among those options.

 

Are There Lenders in Washington State That Specialize in Down Payment Assistance?

Yes. Some Washington mortgage lenders specialize in down payment assistance, and WSHFC programs must be accessed through a WSHFC-trained lender rather than directly through the Washington State Housing Finance Commission. NW Capital Mortgage loan officers are WSHFC-trained and help Washington homebuyers compare the down payment assistance programs available to them.

A lender experienced with Washington down payment assistance can do more than reserve program funds. Your loan officer can help you compare available programs, understand how the assistance works with your first mortgage, identify required homebuyer education, and make sure important program steps happen in the right sequence.

NW Capital Mortgage provides down payment assistance and home loans throughout Washington, including Vancouver, Camas, Ridgefield, Longview, Seattle, Olympia, Tacoma, Spokane, and the Tri-Cities. If you’re considering buying in either Washington or Oregon, we can also help you compare the assistance options available in each state.

In short, we will do everything we can to make you successful in buying a home!

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COMPLIANCE

Rates and terms subject to change and credit approval. Equal Housing Opportunity + NMLS ID. Program terms are set by WSHFC and administering agencies, not the lender.