Tips on buying a home in Seattle, even if you're not rich

What's a balloon mortgage? Should you be wary of discriminatory insurance tactics? What happens if your loan application is denied? We're here to help.

homes and apartments in the Queen Anne neighborhood

Homes and apartments in the Queen Anne neighborhood seen from the Space Needle on May 20. The median home sale price in Seattle, as of July, has increased 7.5% above the previous year, according to Redfin. In Seattle, that median price tag was $860,000, while the median price in the entire state of Washington was much less, $608,700. (Amanda Snyder/ Crosscut)

With  rising mortgage rates and sky-high prices, competition for housing in the Seattle area has cooled in recent weeks. That means that you don’t have to have an all-cash offer way above asking price with no contingencies in order to compete. But it also doesn’t mean home ownership is suddenly affordable again in one of the most expensive real estate markets in the country.

You’ll still need to deal with high mortgage rates and a median home sale price that, as of July, was 7.5% above the previous year, according to Redfin. In Seattle, that median price tag was $860,000, while the median for the entire state of Washington was much less, at $608,700

This story is part of a Crosscut focus on housing: Making Seattle Home

So you may not need to have a dual tech income to afford a home in Seattle. Real estate experts say it helps to be flexible in terms of neighborhoods, parts of the state and even the type of home you’ll go for (i.e., not just single-family detached homes, but also townhouses and condos).

Here’s more helpful advice Crosscut has gathered to help you on the path toward home ownership. If your questions aren’t answered here, or this information makes you think of other questions, please fill out the form below and we’ll do our best to add to this story.


What are the first steps to figure out if you’re ready to try?

After getting your finances in order, which means checking your credit score and making an estimate of your home price range (Zillow has an affordability calculator to help guide these estimates), the first major hurdle is the mortgage. Your goal will be to get a preapproval letter, which states the loan type and amount you could receive. Although this isn’t in any way guaranteed, it can help to solidify the feasibility of home buying for your household. And it’s pretty difficult to start shopping and make offers on homes if you are not pre-qualified to get a loan. 

If you’re declined, the Consumer Financial Protection Bureau recommends asking the lender for specifics about why, including asking to see the credit score that was used.


How do mortgage rates affect  buying power?

This summer, long-term mortgage rates across the U.S. reached the highest they’ve been since 2008. That’s partly due to the Federal Reserve’s effort to fight inflation by increasing short-term interest rates. As of Sept. 8, a 30-year fixed-rate mortgage was averaging 5.89% across the nation, according to Freddie Mac. At the beginning of this year, it was only a little over 3%. 

But that doesn’t inherently mean it’s a bad time to buy. For the first time in nearly a year and a half, the average home in the U.S. sold for less than its asking price, according to Redfin. Of course, prices are relative. Sellers and their agents make their best guess as to what a house can sell for, then buyers tell them if their guess was correct or not.

Homes with a view in the Bryn Mawr-Skyway neighborhood on April 21. (Amanda Snyder/ Crosscut)


What kind of income is required to qualify for a mortgage? 

Your debt-to-income ratio is one important figure in getting approved for a loan. That is the amount you’re spending each month to pay off debts divided by your monthly income.

As of August, the typical home value in Seattle for the bottom third of prices was about $670,000, according to Jeff Tucker, senior economist at Zillow. Let’s say you can afford only a 3% down payment — in this case, about $20,000. Factoring in an interest rate of about 5%, along with other costs such as insurance, Tucker explained that you’d be looking at about $4,700 per month for your mortgage, insurance and taxes. The high end of the recommended debt-to-income ratio is 43%. So you would likely need to earn about $132,000 to qualify for a mortgage to buy a home costing $670,000.  


What are my mortgage choices?

What loan is right for you will depend on everything from your finances to how long you expect to stay in the home. A fixed-rate mortgage maintains the same interest rate throughout the loan period, typically 15- or 30-year loans. The longer the loan, the smaller the payments. The adjustable-rate mortgage usually involves lower monthly payments at first, followed by higher ones down the line. 

After that, things get more complicated. There’s the balloon mortgage, in which you’re initially responsible for small payments, then owe a single large payment at the end of the loan period. There’s also the 2-1 buydown, which, according to Heather Maddox, a Windermere realtor, has been getting a lot of attention recently. This loan starts with a low interest rate, going to a slightly higher rate two years in and paying the full interest rate by the third year.


What does it take to get a loan?

According to the Washington State Department of Financial Institutions, the main things that put homes out of reach include bankruptcy, especially within the past two years, and foreclosure. Most lenders want a three-year waiting period after a foreclosure before they will consider lending to you. Owing a lot of debt, as well as a history of not paying or paying late, can also make it more difficult to get a home. And of course you need to qualify by income, as we covered earlier.


How could discrimination factor into buying a home?

Discrimination in the homebuying process can appear in a variety of forms, according to Adria Buchanan, executive director of the Fair Housing Center of Washington. There’s steering, in which a realtor points their client to an area, or encourages them to avoid others, based on demographics. Then there’s redlining, in which insurance companies offer a rate based on neighborhood demographics, she explained. 

Real estate “love letters” – messages written by a buyer to a seller in an effort to stand out from the competition – can also be vessels for discrimination. “A lot of personal identifying information or proxies for someone’s race or gender or religion, all those things can come through, and those can impact the seller’s decision,” she said. 

Buchanan recommended that anyone who believes they’ve been discriminated against based on any of the protected classes contact the Fair Housing Center of Washington.


What financial help is available for those looking to buy a home?

Several programs in the region can make an important difference for lower-income first-time homebuyers. The Seattle Office of Housing offers help with down payments for first-time homebuyers at or below 80% of the area median income. Up to $55,000 in down payment assistance is available. 

The Washington State Housing Finance Commission also has several programs, including its recently added EnergySpark home loan, which offers a lower interest rate for those buying an energy-efficient home. There are also nonprofit programs such as the low-interest loans offered by HomeSight and the “permanently affordable homes” offered through Homestead Community Land Trust for those who earn below 80% area median income.


What about down payments?

For first-time homebuyers, the average down payment since 2018 was 6% to 7%, according to findings released in 2022 by the National Association of Realtors. Shoshana Godwin, a Redfin agent, said given the state of interest rates, there is a lot more wiggle room when it comes to down payments. “My advice for buyers would be: Take advantage of the lull because I don’t expect it to last,” she said. “Opportunity for lower down payments is now.” 

But lower down payments come with added costs, such as private mortgage insurance, according to the Washington State Department of Financial Institutions. To avoid mortgage insurance, a 20% down payment is usually required. That’s a heavy lift for most buyers.


Are there any other fees I should know about?

There are plenty of fees associated with the homebuying process beyond the main ones —  some obvious, others not so much. Make sure you understand exactly what these additional costs are so you’re not blindsided or overcharged. This is especially true of the loan, which can come with broker, credit report and appraisal fees along with transaction and settlement costs. You’ll likely also want to inspect your new home as a condition of the purchase. The cost for a professional inspection, about $500, is also on you.

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About the Authors & Contributors

Hallie Golden

Hallie Golden

Hallie Golden is a freelance journalist in Seattle. She writes regularly for The Guardian and The New York Times about the environment, Indigenous rights and all things Pacific Northwest.