On April 22, 2025, Governor Bob Ferguson signed Second Substitute House Bill (2SHB) 1696 into law, amending Washington’s Covenant Homeownership Program. This bill expands the program to offer reparations for historically marginalized communities, and it’s set to hit taxpayers hard. Here’s a quick breakdown of this bill as passed and signed into law and why it matters.
Passed by the House (57-39) on March 6, 2025, and the Senate (30-19) on April 14, 2025, 2SHB 1696 builds on the 2023 program that offered down payment and closing cost help to first-time homebuyers tied to pre-1968 discriminatory real estate practices. The new law makes three big changes:
Expanded Eligibility: The income cap for applicants rises from 100% to 120% of the area median income (AMI). That means households earning up to $144,000 in Seattle or $120,000 in Spokane can qualify. The original bill proposed 140% AMI, but the final version scaled it back.
Loan Forgiveness: Borrowers earning 80% or less of AMI when they get their loan can have it fully forgiven after five years. You, the taxpayer, cover the cost. This is a shift from the 2023 rule requiring repayment when the home was sold.
Oversight Committee: Nonprofits on the oversight committee no longer need to specialize in affordable housing, opening the door to broader representation but potentially less expertise.
This law will likely drive-up home prices and closing costs due to increased demand, making it tougher for non-eligible buyers. With no cap on loan amounts, the program’s cost is a major concern.
What do you think of 2SHB 1696? Leave a comment below and let us know.
Our original video on HB 1696
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