Home Equity Agreements in Seattle and Your Mortgage

A home equity agreement in Seattle gives you cash today in exchange for a share of your home's future value. You make no monthly payment. Instead you settle the agreement when you sell, when the term ends, or when you buy the company out. It also puts a deed of trust on your house, and that changes what you can do with your mortgage until it is settled.

You will see these sold as home equity investments, shared-equity agreements, or home equity sharing agreements. Washington's Department of Financial Institutions uses the last name, shortened to HESA. I do not originate them, and Movement Mortgage does not offer them. I write about them because they show up on title reports when an owner in Eastlake, Capitol Hill, or Wallingford comes to me to refinance or to sell and buy again. The people who signed one rarely knew how it would affect that next step.

For this page I read the Department of Financial Institutions' 2024 inquiry report, its open rulemaking file, the Legislature's bill records, and Fannie Mae's subordinate financing section, on October 14, 2026. I do not name providers or quote their pricing. Terms vary by company and by contract, and the contract you are offered is the only one that counts.

How a Home Equity Agreement in Seattle Works

The company pays you a lump sum at closing, which it calls the initial payment. In return you give it a right to a percentage of your home's value, or of its growth in value, at a future date. The agreement runs for a set term. In the department's 2024 inquiry, providers described terms of 10 to 30 years, with earlier settlement if you sell, buy the agreement out, or breach the contract.

Three details shape what you owe at the end, and each one is in the contract rather than in the ad.

• The starting value. Some providers reduce the appraised value of your home by a risk adjustment before the agreement begins. The department found that this lower starting value is not credited back at settlement, so the company's share of growth is measured from a figure below what your home was actually worth.
• The percentage. The share you give up is not proportional to the cash you receive. The department gave the example of a provider that would pay up to 15 percent of the starting value in exchange for a 60 percent future interest.
• The cap. Most providers in the inquiry put a cap on what they can collect. One reported no cap at all, and the formulas for the others varied.

Applying for one looks like applying for a mortgage. The department found that providers check credit, review income and debt-to-income, look at your current mortgage and liens, order an appraisal or valuation, and close through title or escrow. Origination fees and closing costs are usually taken out of the initial payment, so the cash you receive is less than the headline amount.

What a Home Equity Agreement Records Against Your Seattle Home

This is the part that matters most to your mortgage. Every one of the seven providers that answered the department said its agreement is secured by a deed of trust on the home. Most called it a "performance deed," because it does not state a repayment obligation the way a mortgage deed of trust does. It does bind you to keep the home insured and maintained and to follow the occupancy and use rules, and the department noted that the deed lets the provider foreclose against the whole property, not only against its share.

The contracts the department reviewed also commonly required the following.

• Insurance naming the provider. Your homeowners policy has to list the company, and most contracts let it force-place coverage if it decides you are underinsured. My homeowners insurance guide covers what your mortgage lender already requires.
• Limits on renting. Five of the seven providers allowed renting all or part of the home only with their approval. If you plan to rent a basement unit or an ADU, read that clause first. My ADU rental income guide explains how that income is treated when you qualify for a loan.
• A covenant that survives you. The agreements bind your heirs and your estate. My guide to inheriting a home with a mortgage covers what heirs face with the mortgage itself; the agreement is a second set of terms on top of that.

Seattle is where much of this activity is. Providers reported roughly 2,466 Washington agreements to the department, and King County accounted for 30 percent of them, the most of any county.

Is a Home Equity Agreement a Loan in Washington?

The answer is not settled, and I would rather tell you that plainly than state a rule that does not exist yet.

Most provider contracts say the agreement is not a loan, and the providers told the department that because the contract does not require you to repay the initial payment, it is an option to buy part of your home rather than a debt. The department sees it differently. Its rulemaking on home equity sharing agreements opened with a preproposal statement filed in March 2025, which says these products "meet the definition of 'residential mortgage loan'" under Washington's Consumer Loan Act. When it launched its inquiry in 2024, the department also noted that what a homeowner pays at settlement may exceed the interest rate cap that the Consumer Loan Act allows.

As of October 14, 2026, that rulemaking is listed as open and no final rule has been adopted. The Legislature has not settled it either. A 2024 Senate bill to regulate these agreements under the Consumer Loan Act passed the Senate but not the House, and House Bill 1464, concerning home equity sharing agreements, has not passed either chamber. In practice that means the protections that apply to a Washington mortgage may or may not reach a given agreement, and a contract signed today is governed by what it says. The department also publishes its 2024 inquiry report, which is worth reading before you sign.

Refinancing With a Home Equity Agreement on Your Seattle Home

Two sets of rules meet here: the agreement's and the new lender's.

The agreement's rules. All seven contracts the department reviewed limit your ability to refinance or take out a new loan. The restrictions it listed include needing the provider's written consent, keeping a minimum amount of equity, staying under a maximum total debt on the home, and no cash-out refinance unless the cash goes to settle the agreement. Some contracts also bar reverse mortgages, other shared-appreciation products, and private loans.

The new lender's rules. Fannie Mae's subordinate financing section says that, outside its Community Seconds program, "an agreement under which a borrower is obligated to pay a third-party (other than a co-owner of the subject property) a share in any appreciation in the value of the subject property is not permitted." In plain terms, a conventional loan sold to Fannie Mae cannot close with a shared-appreciation agreement left in place. The same section says the lender must count all subordinate liens on the property when it calculates combined loan-to-value. Jumbo and portfolio lenders set their own rules, and I would not assume any of them will leave an agreement standing.

So on most refinances the agreement gets settled as part of the new loan. That changes the math in three ways.

1. The payoff is figured on today's value. The department found that an early buyout requires an appraisal to set the current value, and the provider then issues a settlement statement. A home that has gained value means a larger payoff.
2. An early buyout can cost at least the cash you received. Some contracts require the greater of the formula amount or the original initial payment if you end the agreement early.
3. The new loan is usually larger. Paying off a lien that was not used to buy the home generally makes a refinance a cash-out refinance under Fannie Mae's rules, which is priced and limited differently. I confirm the classification on the actual file. My cash-out refinance guide covers how those loans work.

If refinancing is on your horizon at all, get a payoff estimate from the provider before you apply, and send it to me with the application. It is the number that decides whether the refinance works.

Selling a Seattle Home With a Home Equity Agreement

A sale ends the agreement. The provider calculates what it is owed from the sale price, escrow pays it from your proceeds, and the provider's deed of trust is reconveyed, the same way a paid-off mortgage is released. My guide to how closing works in Washington covers the escrow side.

The department found conditions on sales in the contracts it reviewed. Providers generally required that they approve the sale, that it be an arm's-length sale, and that the price be at least 90 percent of fair market value as set by an appraisal or valuation. That last condition matters for sales to family members below market and for any sale where you want flexibility on price.

It also matters if you plan to buy your next home before this one sells. Your proceeds are smaller by the settlement amount, so the down payment you expect from the sale is smaller too. My buy-before-you-sell guide walks through the bridge options, and they all start from a realistic net-proceeds figure.

Home Equity Agreement vs HELOC or Cash-Out Refinance in Seattle

The appeal of a home equity agreement is clear: cash with no monthly payment and no added debt payment to qualify for. That can matter to an owner whose income would not support a new loan payment. The trade is that the cost is unknown on the day you sign. It depends on what Seattle home values do over the next 10 to 30 years, measured from a starting value that may be below what your home is worth.

A HELOC, a fixed-rate second, or a cash-out refinance works the other way. You know the rate and the payment structure up front, and the cost does not grow with your home's value. My HELOC and cash-out refinance guide compares those two in detail, so I will not repeat it here. Movement also publishes a Fixed Rate Second Lien for owners who want cash and want to keep their current first mortgage rate.

Two other paths come up in the same conversation.

• Owners 62 and older can also compare a reverse mortgage, which has its own federal rules and counseling requirement. My retirement mortgage options guide covers it, and the senior property tax exemption guide covers a cost reduction that does not involve borrowing at all.
• Owners who need cash for a project can look at renovation financing, which lends against the home's value after the work. See my home improvement financing guide.

None of these wins by default. I would put the agreement's settlement at a few plausible future values next to the total cost of a loan over the same years, and decide from that.

Questions to Ask Before You Sign a Home Equity Agreement in Seattle

1. What starting value does the agreement use, and is there a risk adjustment? Compare it with the appraised value.
2. What percentage do I give up, and of what? Total value and appreciation only are very different deals.
3. Is there a cap on what you can collect, and how is it calculated? Ask for the formula in writing, with a worked example.
4. What will I owe if my home rises, stays flat, or falls? Ask for settlement figures at several values and several years.
5. What comes out of the initial payment? Origination fees, closing costs, and any payoff the provider requires.
6. What do I need your consent for? Refinancing, a new loan, renting, a remodel, a sale below market.
7. Do improvements I pay for count toward your share? Some contracts credit them; others do not.
8. What counts as a default, and what happens then? Including missed insurance, deferred maintenance, and a change in occupancy.
9. What does an early buyout cost? Including whether it is at least the initial payment.
10. Is the company licensed in Washington? You can check any company on the department's license lookup.

Then have a Washington real estate attorney read the contract before you sign it, and ask a CPA how the initial payment and the settlement are treated for taxes. I can tell you what the agreement does to your mortgage options. The contract and the tax questions belong to them.

If you are starting from scratch on an equity decision, my Seattle refinance guide lays out every refinance path, and the Eastlake, Capitol Hill, and Wallingford guides cover the neighborhoods where long-time owners hold the most equity.

FAQ: Home Equity Agreements in Seattle