Three Ways Washingtonians Buy Before They Sell
Program and regulatory figures verified September 19, 2026. Details change; confirm your scenario with us.
Washington makes the borrowing route cheap and the exit expensive. That inverts which part of the plan needs the most attention.
Carry both payments, then recast
Buy with ordinary financing, carry both payments through the overlap, and when the departing home sells apply the proceeds to principal and ask the servicer to recast, re-amortising over the remaining term at the lower balance.
The Washington caveat is in the second half. The amount applied is net of excise tax, the existing payoff, commissions and closing costs. On a $727,359 sale, excise tax alone is roughly $12,000 with a 0.50% local REET. A recast modelled on gross proceeds overstates how far the balance actually falls.
It is still the structure with the fewest moving parts, and in the faster Puget Sound markets, where Bremerton runs 33 days and Seattle 39, the overlap being carried is short. Detail on the net proceeds page.
Borrow against the equity you already have
Washington places no constitutional limit on borrowing against your home, and unlike Virginia it does not tax the instrument. Real estate excise tax is imposed on sales of real property, and recording a deed of trust is not a sale.
So a bridge loan, a home equity line and a cash-out refinance all carry no state transaction tax here. The choice between them is made on affordability, timeline and loan terms rather than on what the state charges. That is a genuinely simpler decision than in most of the states we work in. See line versus term.
What still requires care is the payoff. Whatever you borrow is repaid from net proceeds, so the sizing exercise runs off the net number even though the borrowing itself is untaxed.
Keep the departing home and rent it
This removes the timing pressure and, in Washington, defers the excise tax until whenever the sale eventually happens.
It also brings you inside a rent-stabilisation regime that did not exist before 2025. HB 1217 caps residential rent increases at 7% plus CPI, or 10%, whichever is less, over any 12-month period, using the June 12-month change in CPI for urban consumers in the Seattle area. The Department of Commerce publishes the allowable figure annually: 10% for 2025, 9.683% for 2026 and 10% for 2027.
Two more operational rules matter for planning. A landlord may not increase the rent for any type of tenancy during the first 12 months after the tenancy begins, and at least 90 days written notice is required before an increase.
Exemptions exist and are defined in RCW 59.18.710. Whether a converted departing residence falls inside or outside them is a question for a Washington attorney, and we say why on the rental conversion page rather than guessing.
Federally, for applications dated on or after November 1, 2026, B3-3.8-05 takes gross market rent times 75%, subtracts that property's PITIA, and treats a positive result as an offset against that property's own payment rather than as qualifying income.
How the choice gets made
| If this is true | Usually points to |
|---|---|
| Income covers both payments, Puget Sound market | Carry both and recast, modelled on net proceeds |
| Income close, strong equity, sale reasonably near | Financing against the departing home, untaxed here |
| Eastern or coastal Washington, long expected carry | Lowest sustainable monthly obligation |
| Departing home covers its payment and you want to defer the exit | Rental conversion, with the rent cap understood |
| Thin equity once excise tax and payoff are deducted | Selling first, and we will tell you that |
Start with the Washington guide, or check the regional numbers on the market page.
Your real estate agent handles the purchase itself and your closing agent calculates the excise tax on the actual transaction. We handle the financing: what you qualify for, how the equity gets used, and what the payment looks like on both houses.
Frequently asked questions
Does Washington tax a bridge loan or home equity line?
No. Real estate excise tax applies to sales of real property, and recording a deed of trust is not a sale. Borrowing against a departing residence carries no Washington state transaction tax, which makes the product choice here a question of affordability and terms rather than tax.
How much can a Washington landlord raise the rent?
Under HB 1217, by no more than 7% plus CPI or 10%, whichever is less, over any 12-month period. The Department of Commerce publishes the figure annually: 10% for 2025, 9.683% for 2026 and 10% for 2027. No increase is permitted during the first 12 months of a tenancy, and 90 days written notice is required.
Which structure is cheapest in Washington?
Carrying both payments and recasting, where income supports it, since it adds no financing cost. Just model the recast on net proceeds after excise tax rather than on the sale price, because roughly 1.65% of the price is gone before the payoff is calculated.
Does renting the house out avoid the excise tax?
It defers it. Excise tax is triggered by a sale, so postponing the sale postpones the tax, and it applies whenever the sale eventually happens. Converting also brings the property within Washington's rent-increase cap under HB 1217.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Excise tax treatment, rent-cap exemptions, and county relief thresholds change and depend on your facts; your closing agent, your county assessor, your CPA or a Washington attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.