Saving money for a down payment to buy a house in Seattle, WA is a big deal. It’s expensive to live here, and getting more so by the day.
Whether you’re saving 5%, 10%, or 20% down, this is not something that is going to happen overnight by digging spare change out of the couch.
The key to accumulating the money you need for a down payment is getting serious about it.
Your options are:
1) Slow and Steady… Save a certain amount a month, like $1,000 by auto-drafting it out of your bank account on payday and putting it in a designated savings account. If a starter home in the Seattle area was $500,000; saving 10% down ($50,000 will take you 4+ years. Likely home prices will have gone up by then, too, making $50,000 no longer enough to work with, and pushing your savings window further out. In fast-climbing markets, it can be hard and time-consuming to save your way into a large payment.
2) Take advantage of no-money-down programs. In Washington State, you can combine the First-Time Home Buyer’s Grant (up to 4% of the Purchase Price of the home) with the FHA loan program (allowing a down payment as small as 3.5% of the purchase price) to reduce the amount of cash needed for a down payment. With the VA Loan (for Veterans) you can get a 0% Down government-backed loan. However, remember you’ll still need to be responsible for closing costs which can run about 2% of the value of the home and are not considered “down payment” but do contribute to cash-at-closing needed.
3) Sell another property. Unless you’re a mega-high income earner (Facebook employees, we’re looking at you!) you may not get 6-figure checks in the mail every year that you can set aside to save for your house. In this case, you may feel you’ll never be able to afford the house of your dreams here in the Puget Sound area.
Well, my friend, you are not alone.
The way that many people have been able to afford these newer, larger houses is by getting into a smaller, older house (not their dream house) that they had to “settle” for at the outset because it was “what they could afford.” You could also start with a condo – even less expensive and you’ll get your foot in the door and start building equity.
4) Consider a “House Hack” on small multi-family property. Use your low-money-down programs (like FHA or VA) to buy a multi-family property. You will be controlling a million-dollar asset and benefiting from the appreciation that provides while getting some additional income to help offset the mortgage payment. In addition, multi-family apartments provide an opportunity for “forced appreciation” by fixing up the units and raising the rents.
5) Invest in property out-of-state. If you don’t own property (or can’t afford it) here in the state where you live, you can keep your living expenses down by renting here, while continuing to build equity (for a someday down payment in Seattle). That equity can grow in a less-expensive cash flowing property out of state. By buying a $200,000 home in the midwest, let’s say, you can benefit from appreciation, rent growth, debt paydown, and more, without having to fork over a huge amount for a down payment. If you time it right (and get a little lucky) you could see your equity grow very quickly. Right now, some markets are appreciating at 10-20% per year. When that home has enough equity – sell it and buy something you want to live in here in Seattle, WA.
6) Take on a roommate. While not glamourous, this is an age-old technique for reducing your cost of living. Whether renting or buying a condo and renting out the rooms, you can reduce your cost of living with roommates. Earning an extra $1000 or $2,000 per month can definitely help you save for a downpayment on your Seattle condo or house.
7) Move in with your parents. I know you said you’d never do it. I know you’re independent and can make it on your own.
In our society, there’s a bit of a stigma involved with living with our parents, but in some ways, it’s very nice. The key is to contribute to the household – do chores, pay for utilities, keep mom and dad company, don’t just smoke pot in the basement. You’ll both benefit from the increased social interaction. They’ll feel good about helping you get ahead financially, and you’ll feel good about spending time with them prior to their eventual demise.
Yes – You Can Buy Into A House In Seattle, WA
So, while you CAN eventually buy a house in Seattle, WA – depending on where you’re starting from – in terms of income and assets – the path may not be as short or straightforward as you would like. Nevertheless, even if it takes 5-10 years to get into the house of your dreams, you might as well get started on the journey now. In ten years, you’ll be older anyway, you might as well be older, richer, and a homeowner. Crank up the intensity, borrow one or more of these tips, and implement! You can do it!