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Compare mortgage rates in Washington.
Key Points
• Mortgage rates in Washington have trended slightly below national averages.
• Mortgage rates are influenced by various factors, including unemployment rates, inflation, and the Federal Reserve’s monetary policy.
• A higher interest rate means that borrowers will pay more in interest over the life of the loan, making the home less affordable.
• There are several different types of mortgages available in Washington, each with its own unique features and benefits.
• Although Washington is one of the country’s more expensive states to purchase a home in due to its cost of living, there are some areas that are relatively affordable.
Introduction to Mortgage Interest Rates
Securing a competitive mortgage rate is crucial for saving money over the life of your home loan. Mortgage interest rates drive the amount a lender charges for borrowing money to purchase a home. In Washington state, mortgage rates are influenced by various economic factors and consumer characteristics. This comprehensive guide provides an in-depth look at mortgage rates in Washington, including historical trends, factors affecting rates, type of mortgage loans available, and strategies for securing a competitive rate.
Where Mortgage Rates Come From
The Federal Reserve, also known as the Fed, plays a pivotal role in determining mortgage rates. The Fed sets the short-term interest rates that banks use as a benchmark for setting their own rates. Although home loan rates are not directly tied to Fed rates, they generally follow the same economic trends. When the Fed raises interest rates, mortgage rates generally rise, and when the Fed lowers rates, mortgage rates typically decline.
But there are also consumer factors that influence rates, including the homebuyer’s credit score, down payment, income, and assets.
How Interest Rates Affect Home Affordability
Mortgage rates have a significant impact on home affordability, often playing a more substantial role than the purchase price of the home itself. Even small changes in interest rates can significantly affect the monthly mortgage payments and the overall cost of homeownership.
For instance, a $300,000 loan with a 30-year term and an interest rate of 4.00% would result in monthly payments of $1,432. If the interest rate increases by just 1 percentage point to 5.00%, the monthly payments would jump to $1,610, adding up to a difference of over $64,000 in total interest paid over the life of the loan.
Should Homebuyers Wait for Interest Rates to Drop?
Many homebuyers, especially novices buying a first home, face the dilemma of whether to purchase a home immediately or wait for interest rates to drop. While it is impossible to predict the future of interest rates with certainty, reading the news about the Fed’s potential action on its rates can help homebuyers make an informed decision.
But ultimately, whether to buy or wait may depend on your personal situation. A lease ending or a baby coming can press the issue. And in some markets, home prices may be rising, which could outweigh any savings on a minor interest rate drop.
Homebuyers who are concerned about rising interest rates may consider locking in a rate now and refinancing later if rates decrease. Most lenders offer a rate lock option, which allows borrowers to secure a specific interest rate for a certain period of time, typically ranging from 30 to 90 days. This can provide peace of mind and protect against potential rate increases during the homebuying process.
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Washington Mortgage Rate Trends
Understanding historical mortgage rate trends can provide perspective on current rates. Below is a look at almost two decades of Washington rates (the Federal Housing Finance Agency stopped tracking states in 2018). As you can see, Washington’s average rate tends to be a little lower than the U.S. average. This is impressive when you consider that the overall cost of living in Washington is above the national average.
| Year | Washington Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.59 | 8.14 |
| 2001 | 6.85 | 7.03 |
| 2002 | 6.31 | 6.62 |
| 2003 | 5.50 | 5.83 |
| 2004 | 5.55 | 5.95 |
| 2005 | 5.71 | 6.00 |
| 2006 | 6.46 | 6.60 |
| 2007 | 6.40 | 6.44 |
| 2008 | 5.97 | 6.09 |
| 2009 | 5.00 | 5.06 |
| 2010 | 4.77 | 4.84 |
| 2011 | 4.44 | 4.66 |
| 2012 | 3.63 | 3.74 |
| 2013 | 3.78 | 3.92 |
| 2014 | 4.07 | 4.24 |
| 2015 | 3.81 | 3.91 |
| 2016 | 3.61 | 3.72 |
| 2017 | 3.95 | 4.03 |
| 2018 | 4.46 | 4.57 |
Historical U.S. Mortgage Rates
Looking at the U.S. average rate over a few decades offers further insight. Mortgage rates in Washington state are still below the historical highs experienced in the early 1980s, when rates reached over 18%.
Factors Affecting Mortgage Rates in Washington
Numerous factors influence mortgage rates in Washington and nationwide. Rates are determined by a complex combination of factors that can be broadly categorized into two buckets: the state of the economy and the borrower’s financial status. Let’s examine each in more detail:
Economic Factors
Economic factors that affect mortgage rates include the federal funds rate, inflation, and unemployment rate.
• The Fed: As mentioned earlier, the federal funds rate set by the Federal Reserve is a key determinant of mortgage rates. When the Fed raises the federal funds rate, banks typically increase their interest rates, including those for mortgages. Conversely, when the Fed lowers the federal funds rate, mortgage rates tend to decrease.
• Inflation: The general increase in prices of goods and services over time may affect mortgage rates. When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, lenders may increase interest rates.
• Unemployment: When the unemployment rate (the percentage of the labor force that is unemployed) is high, the Fed may lower its rates to try to stimulate the labor market.
Consumer Factors
Consumer factors that affect mortgage rates include credit score, down payment, income and assets, and the type of mortgage loan.
• Credit score: This numerical representation of an individual’s credit history and repayment behavior is a key detail lenders examine. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. Individuals with higher credit scores typically qualify for lower mortgage interest rates.
• Down payment: A larger down payment reduces the amount of money that needs to be borrowed, which lowers the risk for the lender. Consequently, borrowers who make a larger down payment often receive lower mortgage interest rates.
• Income and assets: A steady income and sufficient assets provide assurance to lenders that the borrower can meet their financial obligations. Borrowers with stable employment, a history of consistent income, and a healthy financial cushion are more likely to secure favorable mortgage rates.
• Type of mortgage loan: Adjustable-rate mortgages (ARMs) often start with lower initial rates compared to fixed-rate mortgages. Government-backed loans, such as VA loans and FHA loans, may offer lower rates than conventional loans. And shorter loan terms generally come with lower interest rates than longer terms.
Types of Mortgages Available in Washington
Various mortgage types — including fixed-rate, adjustable-rate, FHA, VA, and USDA loans — are available to meet the needs of different homebuyers in Washington. Conventional loans are not insured by the government and are offered by banks and credit unions. They are the most popular type of mortgage loan and can be fixed-rate or adjustable-rate.
Fixed-Rate Mortgage
Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain stable and predictable, which protects against fluctuating mortgage interest rates. These mortgages are available in various terms, commonly ranging from 10 to 30 years. The choice of loan term affects the monthly payment amount and the total interest paid over the life of the loan. Shorter loan terms generally have higher monthly payments but lower total interest paid, while longer loan terms have lower monthly payments but higher total interest paid.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) start with a lower introductory interest rate, typically fixed for a period of 5, 7, or 10 years. After the introductory period, the interest rate can adjust periodically, usually once a year, based on a specified index. This can result in fluctuations in monthly mortgage payments.
The initial lower interest rate of ARMs can be attractive to borrowers who plan to sell their home or undertake a mortgage refinance before the introductory interest-rate period ends. However, it is important to carefully consider the potential for future interest rate increases and the impact they may have on monthly payments.
FHA Loans
Backed by the Federal Housing Administration, FHA loans are designed to make homeownership more accessible to borrowers with lower credit scores and smaller down payments. FHA loans typically have more flexible credit and income requirements compared to conventional loans, making them a good option for people who qualify as a first-time homebuyer or those with less-than-perfect credit.
The FHA insurance program reduces the risk to lenders by guaranteeing a portion of the loan amount. This allows lenders to offer FHA loans with more favorable terms, including lower down payments and more flexible credit requirements. FHA loans require both an upfront and monthly mortgage insurance premium (MIP), an additional cost which can be rolled into the borrower’s monthly payment. Even with this cost, an FHA loan can put homeownership within reach for many who could not otherwise qualify.
VA Loans
VA loans are offered by the U.S. Department of Veterans Affairs (VA) to eligible veterans, active-duty military personnel, Reserve and National Guard members, and surviving spouses. VA loans provide competitive interest rates and do not require a down payment, making them an attractive option for qualified borrowers.
The first step for anyone interested in a VA loan is to obtain a Certificate of Eligibility from the VA.
USDA Loans
USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. Provided by the U.S. Department of Agriculture (USDA), these loans are available to borrowers who fall below a defined income threshold. They offer competitive interest rates and do not require a down payment, making them an attractive option for eligible borrowers in rural communities. The USDA guarantees a portion of USDA loans, reducing the risk to lenders and allowing them to offer favorable terms to eligible borrowers.
Jumbo Loans
In most parts of the U.S., conventional mortgage loans have a cap of $766,550 in 2024 for a single-family home. This cap is set by the Federal Housing Finance Agency (FHFA) and is known as the conforming-loan limit. But sometimes buyers need to borrow more, and that’s where jumbo loans come in. These are also known as non-conforming loans.
Conforming loan levels are set by county, and most counties in Washington have the standard $766,550 limit. But in a few higher-priced housing markets, such as King County (Seattle) and Pierce County (Tacoma), the limit is higher: $977,500.
Popular Places to Get a Mortgage in Washington
Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. Some areas in Washington offer more affordable housing options and a lower cost of living, making them an attractive place to purchase a home.
Least Expensive Locations
Here are some of the least expensive locations in Washington to get a mortgage, based on median home prices and cost of living data, benchmarks used in SoFi’s best affordable places in the U.S. guide. Remember, Washington is costlier than the U.S. average. The average home value in the state is $591,888:
• Port Angeles: The overall cost of living here is 13% below the state average, and the average home value is $447,800.
• Bellingham: This northern city has a below-average cost of living. The average home value here is $653,330.
• Olympia: The average home price in this city with easy access to both forests and waterfront is $532,406. Its cost-of-living index is slightly below the state average.
• Yakima: With an average home value of $347,826 and a very low cost-of-living index, this is one of the least expensive cities in the entire state.
• Spokane: Its cost of living is 10% below average, and the median home value is $389,697.
Most Expensive Locations
As is often the case, large cities are on the pricier side when it comes to buying a home. Seattle, where the cost of living is the second highest in the state, has an average home value of $851,242 while Redmond, Bellevue, and Bainbridge Island all have home prices well north of $1 million.
Tips for Securing a Competitive Mortgage Rate in Washington
A competitive mortgage rate is crucial for saving money over the life of a loan. As noted above, even a small difference in interest rate can result in thousands of dollars in savings over the life of a mortgage. Here are some ways to securing a competitive mortgage rate in the current environment in Washington:
Compare Interest Rates and Fees
Take the time to compare interest rates and fees from multiple lenders. In addition to the interest rate, it is important to consider any upfront costs or closing fees associated with the loan. These fees can vary between lenders and can add to the overall cost of the mortgage.
Get Preapproved
Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property. Going through the mortgage preapproval process demonstrates to sellers that you are a serious and qualified buyer.
Washington Mortgage Resources
Washington offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. Some programs offer assistance with down payments and closing costs.
First-Time Homebuyer Programs
Washington state offers several programs to assist first-time homebuyers, including:
• Washington State Housing Finance Commission (WSHFC) Covenant Homeownership Program is for eligible first-time homebuyers. Eligibility criteria include: The homebuyer or a parent/grandparent/great-grandparent must have lived in Washington state before April 1968 and be Black, Hispanic, Native American, Alaska Native, Native Hawaiian or other Pacific Islander*, Korean or Asian Indian.
• Home Advantage and House Key Opportunity Programs also help homebuyers, who must take an education course to learn more about the homebuying process before working with the program loan officers.
• USDA, FHA, and VA loans are also available in Washington State.
Down Payment Assistance
In addition to first-time homebuyer programs, Washington state also offers down payment assistance programs to help eligible borrowers:
• WSHFC Down Payment Assistance Program down payment assistance is for homebuyers who use the agency’s Home Advantage or Opportunity programs. If your household income is under the program limits (up to $180,000), your credit score is at least 620, and you’re otherwise qualified for a home loan, you are probably eligible.
Tools & Calculators
The WSHFC website provides a variety of tools and calculators to help homebuyers estimate their monthly mortgage payments, determine their borrowing power, and compare different loan options.
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Washington
The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. For example, there is rarely the need for a new appraisal or full credit check.
VA loan holders may be eligible for an Interest-Rate Reduction Refinance Loan (IRRRL), which allows them to refinance their existing VA loan into a new loan with a lower interest rate without the need for a new appraisal or full credit check.
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Closing Costs, Taxes, and Fees in Washington
Buyers in Washington can expect to pay between 3%-6% of the home’s purchase price in closing costs.
The Takeaway
Mortgage rates in Washington are influenced by a variety of factors, including the Federal Reserve’s monetary policy and each homebuyer’s personal financial profile. Homebuyers should carefully consider their financial situation and the current mortgage rate environment before making a decision about whether or not to purchase a home. Fortunately, there are a number of resources available to help homebuyers in Washington get the best possible mortgage rate.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
What is a mortgage rate?
A mortgage rate is the interest rate that you pay on your mortgage loan. It is expressed as a percentage and is added to the principal amount of the loan to determine your monthly payments.
Will mortgage rates drop in Washington?
It is difficult to predict whether or not mortgage rates will drop in Washington. However, there are a number of factors that could affect mortgage rates, including unemployment, inflation, and the Federal Reserve’s monetary policy.
Will mortgage rates ever go back to normal?
It is difficult to say when or if mortgage rates will ever go back to normal because there isn’t really a “normal” rate. Current mortgage rates are due to a number of factors, each of which can change at any time.
Will Washington home prices ever drop?
It is difficult to predict whether or not Washington home prices will ever drop. However, there are a number of factors that could affect home prices, including the overall economy, the supply of homes on the market, and the demand for homes.
Is it a good time to buy a house in Washington?
Whether or not it is a good time to buy a house in Washington depends on your individual financial situation and goals. There are a number of factors to consider, including the current mortgage rate environment, the cost of homes in your desired area, and your long-term plans.
How do I lock in a mortgage rate?
You can lock in a mortgage rate by getting a mortgage rate lock from a lender. A mortgage rate lock guarantees that you will get a certain interest rate for a specified period of time. This can protect you from rising interest rates.
How do mortgage interest rates work?
Mortgage interest rates are determined by a number of factors, including the Federal Reserve’s monetary policy. When the economy is strong and inflation is low, mortgage rates tend to be lower. Conversely, when the economy is weak and inflation is high, mortgage rates tend to be higher.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process