Tacoma Down Payment Assistance Program

Tacoma Down Payment Assistance Program: A First-Time Buyer’s Roadmap to $10,000 in Help

Searching for a starter home in Tacoma can feel like chasing Mount Rainier’s shadow—majestic, yet tough to pin down. Enter the Tacoma Down Payment Assistance Program, a city-backed initiative that places up to $10,000 directly into eligible buyers’ hands. In the next twelve minutes you’ll learn how the program works, whether you qualify, and how to stack this aid with other Washington resources to finally unlock your front door.

Why Down Payment Assistance Matters in Tacoma’s Rising Market

Tacoma home prices climbed roughly 5% last year, according to regional MLS data. That translates into a down payment that can balloon faster than a Puget Sound kite in spring winds. A $400,000 starter home often requires $12,000–$20,000 upfront—cash many renters simply don’t have. The city’s solution: a forgivable loan of up to ten grand, intended to slash that initial hurdle without burying buyers in long-term debt.

Think of the assistance as a bridge. It doesn’t replace your own savings or mortgage qualification, yet it fills the gap long enough for you to cross into homeownership. For families who’ve watched rents spike 30% in under five years, that bridge can mean the difference between staying or being priced out.

How the Tacoma Down Payment Assistance Program Works

The Tacoma Down Payment Assistance Program (sometimes called the Tacoma DPA program) is funded through federal HOME dollars administered by the City of Tacoma’s Community & Economic Development Department. It provides:

• Financial Aid: Up to $10,000 toward down payment and eligible closing costs.
• Zero Interest: The loan accrues 0% interest for the first five years.
• Forgiveness Schedule: Serve a five-year owner-occupancy period and the balance is forgiven dollar-for-dollar.
• Flexible Pairing: Works with FHA, VA, USDA, and conventional mortgages.

Unlike many statewide offerings, Tacoma’s assistance is hyper-local, meaning funds revolve back into the program as earlier borrowers refinance or sell. Acting early in the calendar year—when allocations are fullest—can significantly boost your approval odds.

Eligibility Requirements at a Glance

• First-Time Buyer Status: No ownership interest in a primary residence during the last three years.
• Income Limits: Up to 80% of Area Median Income (AMI). For a two-person household in 2024, that’s roughly $64,250.
• Minimum Contribution: You must inject at least $500 of your own funds—skin in the game matters.
• Homebuyer Education: Completion of a HUD-approved class before loan closing.

Property Requirements You Can’t Ignore

• Located within Tacoma city limits—Zip codes like 98402, 98408, and 98422 qualify.
• One-unit properties only: condos, town-homes, detached homes, and certain manufactured homes with land.
• Purchase price cap aligns with FHA limits (currently $498,257 for Pierce County single-family homes).
• Home must pass a city health & safety inspection before closing.

Bonus tip: Buyers often overlook energy-efficiency rebates that pair nicely with the Tacoma Down Payment Assistance Program. For example, Tacoma Public Utilities offers up to $1,200 for a heat pump upgrade—a sneaky way to boost equity while lowering bills.

Is the Tacoma Down Payment Assistance Program Only for First-Time Buyers?

Yes, with one quirky caveat. “First-time buyer” is defined federally, not colloquially. If you have not owned a primary residence during the last three years, you’re back to rookie status in the government’s eyes. That means a divorced homeowner who sold in 2021 could still claim first-time eligibility in 2024. Lease-option residents and owners of investment property (never occupied as a primary residence) may also qualify under certain conditions—though you’ll need to document everything.

The city cross-checks tax returns against county property records, so misstatements rarely slip through. When in doubt, speak with a HUD-certified counselor before submitting your application folder. Five minutes of clarity beats months of disappointment.

Do I Have to Repay Tacoma’s Down Payment Loan?

The short answer? Not if you stay put for five years. The assistance is structured as a deferred second mortgage with a five-year forgiveness term. For every 12 months you occupy the home, 20% of the balance evaporates—like mist on the Commencement Bay shoreline. Sell, refinance with cash-out, or convert the house into a rental before the clock hits sixty months, and you’ll owe the remaining prorated balance.

Because the loan carries zero interest, the repayment math is straightforward. Borrow $10,000, stay three years, and move? Expect to repay roughly $4,000 at closing. Many buyers strategically plan remodels or refinances for year six to unlock their full equity without penalty.

Case Study: How Maya and Sam Bought in Central Tacoma With Only $2,300 Out-of-Pocket

Maya, a medical assistant, and Sam, an electrician apprentice, rented a two-bedroom apartment near Wright Park for $1,750 per month. After their landlord announced a 12% rent hike, they calculated that a $350,000 condo payment would be nearly the same if they could scrounge up the down payment.

Here’s the cocktail they mixed:

• $10,000 from the Tacoma Down Payment Assistance Program.
• $2,500 from Washington State’s Home Advantage closing-cost credit.
• $1,200 utility rebate for installing a high-efficiency water heater on day one.

Their total cash to close was $2,300—less than two months’ rent. Five years later, that condo appraised at $435,000, and the entire city loan balance had been forgiven. “It felt like someone handed us cheat codes,” Maya laughs, telling their story at a local homebuyer fair. Their biggest regret? Not applying earlier when interest rates were still in the threes.

How to Apply Without Tripping on Paperwork

1. Complete Homebuyer Education: Choose a HUD-approved online or in-person class. Save your certificate.
2. Select a Participating Lender: Not all loan officers can process the program. Ask explicitly for Tacoma DPA experience.
3. Gather Documents: Two years of tax returns, 60 days of bank statements, pay stubs, and a government ID.
4. Submit the Application Packet: Your lender forwards everything to the City of Tacoma for conditional approval.
5. Schedule a City Inspection: This typically occurs after mutual acceptance but before appraisal.
6. Final Sign-Off & Closing: Once the city issues a funding commitment letter, escrow prepares the second-mortgage note.

Pro tip: Funds are allocated on a first-come, first-served basis, and they can run dry by late summer. Deploy your signed purchase agreement within 45 days of pre-approval to beat the rush.

Can I Combine Tacoma DPA With Other Washington Programs?

Absolutely. The Tacoma Down Payment Assistance Program is stackable with Washington State Housing Finance Commission (WSHFC) initiatives such as the Home Advantage and House Key Opportunity programs. Many borrowers also layer Pierce County’s SHB 2060 grant (up to $2,000) for closing costs.

Here’s a quick layering example for a $375,000 purchase:

• Tacoma DPA: $10,000
• Home Advantage: $4,000 (0% deferred loan)
• House Key: $6,000 (silent second)

Total aid: $20,000—more than 5% of the home price. This strategy can shrink your first mortgage, improve the debt-to-income ratio, and potentially bump you into a better interest rate tier.

Your Timeline: From Rental to Keys in Hand

Below is a typical countdown, assuming you start prep work today:

• Week 1: Enroll in homebuyer class + pull free credit report.
• Week 2–3: Meet with approved lender; secure pre-qualification.
• Week 4: House hunt, submit offers. Most buyers win by offer #2 in Tacoma’s current market.
• Week 5–6: City DPA review, appraisal, inspection.
• Week 7: Final underwriting and city funding letter.
• Week 8: Sign closing papers, pick up keys, snap porch selfie.

That’s 56 days—about the same length as a Mariners’ hot streak—and far faster than many renters imagine.

Additional Questions Homebuyers Ask

Ready to Turn “Someday” Into “Closing Day”?

The window for 2024 funding opened on January 16—and history shows allocations dwindle by Labor Day. If you’ve day-dreamed about a backyard barbecue or building equity instead of paying rent, now is your moment. Connect with a Tacoma-approved lender, schedule your homebuyer workshop, and let the city’s Tacoma Down Payment Assistance Program put real momentum behind your goal.

Need a warm introduction to certified lenders or want to workshop your budget one-on-one? Our team has guided more than 300 Pierce County residents into their first homes since 2018. Click below, and we’ll craft a personalized action plan before this week ends.

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