The 20% Down Myth That’s Keeping Buyers Out of the Market

Do You Really Need 20% Down to Buy a Home in Washington State?

One of the most common things I hear from buyers—especially in Seattle, Bellevue, and the surrounding Eastside, is:

“I think I need more time before I can buy because I don’t have 20% down.”

This belief stops more buyers than interest rates, credit scores, or even home prices.

The truth:
Most buyers today are not putting 20% down. Many successful homeowners in Washington purchased with 3.5% down—or less—using FHA loans and state-backed down payment assistance programs.

If you can afford the monthly payment but feel stuck saving upfront cash, there may be legitimate options available right now.

Why the 20% Down Payment Myth Persists

In high-cost markets like Seattle and Bellevue, saving 20% can mean waiting years—while rents rise and home prices continue to move.

Most buyers aren’t blocked by affordability.
They’re blocked by access to upfront cash.

That’s exactly why FHA loans and Washington State Housing Finance Commission (WSHFC) programs exist.

These are government-backed, well-regulated programs designed to help qualified buyers purchase responsibly, not risky loans and not shortcuts.

The Two Most Common Ways Buyers Purchase Homes in Washington State

When clients ask how people are actually buying homes today, the conversation almost always comes down to two realistic paths:

1. A standard FHA loan

2. An FHA loan paired with Washington State down payment assistance through WSHFC

Both are widely used, well-regulated, and backed by government agencies.

FHA Loan vs. FHA + Washington State Assistance

At-a-Glance Example (Based on a $450,000 Purchase -Example Only)

Disclaimer: The figures in this article are examples only and provided for educational purposes. They are not loan quotes, financial advice, or guaranteed terms. Buyers should always consult directly with a licensed mortgage lender for personalized and accurate information.

Option 1: FHA Loans (Low Down Payment Mortgage Option)

FHA loans are insured by the U.S. Department of Housing and Urban Development (HUD) and are one of the most commonly used loan programs in Washington State.

Why buyers choose FHA:

• Minimum down payment of 3.5%

• More flexible credit requirements

• Available to first-time and repeat buyers

• Accepted by sellers throughout Washington

Example (Educational Only):

• Purchase price: $450,000

• Down payment (3.5%): $15,750

• Estimated total cash to close: ~$18,000–$22,000

This option works well for buyers who have savings available and want fewer long-term program requirements.

Option 2: FHA Loans + Washington State Down Payment Assistance

For many buyers, this is the option that changes everything.

Washington State offers down payment assistance programs through the Washington State Housing Finance Commission (WSHFC). These programs are designed for buyers who can afford the monthly payment but don’t want—or aren’t able—to drain their savings just to get into a home.

What surprises most buyers:

• Assistance may cover some or all of the down payment

• Typically structured as a second loan with no monthly payment

• Repayment usually happens when the home is sold, refinanced, or paid off

• Monthly payment is often very similar to a standard FHA loan

Example (Educational Only):

• FHA required down payment: $15,750

• State assistance available: $10,000–$30,000

• Buyer cash toward down payment: $0–$750

• Estimated cash to close: ~$5,000–$8,000

The biggest difference here isn’t affordability—it’s access.

What Monthly Payments Often Look Like (Example Only)

Because state assistance typically does not add a monthly obligation, payments are often comparable to standard FHA loans.

Sample monthly breakdown:

• Principal & Interest: ~$2,800

• FHA mortgage insurance: ~$300

• Property taxes: ~$375

• Homeowners insurance: ~$100

Estimated total: ~$3,575/month

(These numbers are examples only and will vary.)

Why Buyers Choose Washington State Assistance Programs

Many buyers use WSHFC programs by choice, not because they have no other option.

Common reasons include:

• Preserving emergency savings

• Entering the housing market sooner

• Building equity earlier instead of waiting

• Using programs designed specifically for Washington buyers

For long-term homeowners, buying earlier with the right structure often creates more financial stability than waiting years to save a full 20%.

Who Typically Qualifies

Washington State down payment assistance programs are designed for buyers who:

• Plan to occupy the home as their primary residence

• Fall within county income limits

• Have stable income and realistic budgets

They are especially helpful for first-time buyers, growing families, and professionals navigating today’s cost of living.

Important Disclaimer

The figures in this article are examples only and provided for educational purposes. They are not loan quotes, financial advice, or guaranteed terms.

Actual loan programs, interest rates, assistance amounts, taxes, insurance, and cash-to-close figures vary by buyer, lender, property, and market conditions.

Buyers should always consult directly with a licensed mortgage lender for personalized and accurate information.

How I Help Buyers Navigate This

I work with FHA buyers, Washington State assisted buyers, conventional buyers, and people who simply want clarity before making a decision.

My role is to:

• Explain options clearly

• Connect you with trusted local lenders

• Help you decide what truly fits your life, not just what sounds good online

If you’d like to see what may be possible for you, you can get connected to a lender [here].

RaeAnne Marcum REAL BROKER: Team Lead 📍 Seattle | Bellevue | Kirkland 509.521.5323 raeannemarcum.com