Kitsap County First-Time Homebuyer Guide: Loan Options, Assistance, and Next Steps

The three-year definition is used by Fannie Mae, Freddie Mac, HUD, and many state housing finance agencies. Some programs have exceptions, such as for displaced homemakers or single parents who previously owned only with a former spouse. If you are a veteran, VA financing doesn't depend on first-time status at all; see the Kitsap County VA loan guide.

First-time status matters because some programs, including some down payment assistance, are limited to first-time buyers, and some conventional programs offer pricing or mortgage insurance benefits tied to income.

A brief comparison:

• FHA loans are insured by HUD and are more forgiving of lower credit scores and past credit problems. FHA requires a minimum down payment of 3.5% for borrowers with credit scores of 580 or higher, and charges upfront and annual mortgage insurance that, in most cases, lasts for the life of the loan unless you refinance.
• Conventional loans can allow low down payments for first-time buyers. Private mortgage insurance applies with less than 20% down and can be canceled once you reach enough equity.
• HomeReady and Home Possible are Fannie Mae and Freddie Mac programs for borrowers at or below area income limits, with reduced mortgage insurance coverage and flexibility on income sources.
• VA loans offer no down payment for eligible borrowers with full entitlement.
• USDA guaranteed loans allow no down payment for eligible borrowers in eligible rural areas within income limits.

A broker can price several of these for the same home so you can compare total cost, not just the rate.

WSHFC programs are delivered through participating lenders and typically pair a first mortgage with a second loan for down payment and closing cost assistance. Many have deferred payments that come due when you sell, refinance, or pay off the first mortgage. Income limits, purchase price limits, and program terms change, so check the current details on the WSHFC homebuyer page (opens in a new tab).

Things to know about assistance:

• It reduces the cash you need upfront but adds a second loan, so read the repayment terms.
• The first-mortgage rate on assistance programs can be higher than a standalone loan. Compare the total cost both ways.
• The required education seminar is useful on its own and often available online.

Ask Frank whether a given program is available through a lender in his network for your scenario.

Cash needed beyond the down payment:

• Earnest money, which is credited back to you at closing.
• Inspection and appraisal, usually paid before closing.
• Closing costs such as lender fees, title insurance, escrow, and recording.
• Prepaids: homeowners insurance for the first year and an initial deposit into your escrow account for taxes and insurance.
• Reserves: some programs require savings left after closing.

Sellers can sometimes pay part of your closing costs, within limits set by each program. Gift funds from family are allowed on most programs with documentation. Use our affordability calculator to estimate your budget; results are estimates only, not a commitment to lend.

Before applying:

• Check your reports for free at AnnualCreditReport.com and dispute errors.
• Pay revolving balances down below roughly 30% of their limits where possible; high utilization drags scores.
• Avoid opening new credit or financing large purchases while your loan is in process.
• Keep paying everything on time. A single recent late payment can matter more than older history.

If your credit isn't ready, a loan officer can often tell you which specific changes would move your score the most.

In order:

• Pre-approval. Submit income, asset, and credit information so a lender can tell you what you may qualify for.
• House hunting and offer. Your agent writes an offer that includes financing and inspection contingencies.
• Loan Estimate and rate lock. Compare offers using the Loan Estimate, then lock.
• Inspection and appraisal. The inspection is for you; the appraisal is for the lender.
• Underwriting. Expect requests for updated statements or explanations. Respond quickly.
• Closing Disclosure. You receive it at least three business days before closing. Compare it to your Loan Estimate.
• Closing. Sign, fund, and record, then get your keys.

The CFPB's buying a house guide (opens in a new tab) is an excellent companion. When you're ready, schedule a call or see live rates.