1st Advantage MortgageHome / States / Washington / Federal Way
Washington market guide
DSCR loans in Federal Way, WA
Rental financing for Federal Way investors, qualified on the property's rent.
Investors buying in Federal Way, WA are measured on the rent the property earns. Locally, median gross rent is $1,797 and median real estate taxes are $4,706 a year, which together set how much loan a rent can carry.
Local data for Federal Way investors
Citywide, Federal Way renters pay a median $1,797 in gross rent (rent plus utilities), close to the Washington median of $1,760, and owner-occupied homes have a median value of $552,800, close to the Washington median of $564,600. The gross rent-to-value ratio for Federal Way works out to 3.9% (twelve months of median rent divided by median value), on the low side, so the payment, not the rent, usually decides whether a file clears. The figure combines all rental types with all owner-occupied homes, so it is a screening number and not an appraisal.
| Indicator | Washington | Federal Way | Difference |
|---|---|---|---|
| Annual property tax bill, median | $4,556 | $4,706 | +3% |
| Household income, median | $98,141 | $86,909 | -11% |
| Typical owner-occupied value | $564,600 | $552,800 | -2% |
| Typical monthly rent | $1,760 | $1,797 | +2% |
| Persons per household | 2.50 | 2.76 | |
| Share in 2-4 unit buildings | 5.8% | 10.9% | +88% |
| Share of homes detached | 61.9% | 49.2% | -21% |
| Long commuters, 45 min plus | 16.9% | 25.3% | +50% |
| Degree holders, age 25+ | 39.6% | 30.8% | -22% |
| Workers on their own account | 9.6% | 8.3% | -13% |
| Typical construction year | 1985 | 1984 | |
| Annual rent divided by value | 3.7% | 3.9% | +4% |
| Households that rent | 36.2% | 44.7% | +23% |
| Tax as a share of home value | 0.81% | 0.85% | +5% |
| Residents (Census estimate) | 7,816,116 | 99,493 |
The renter share is 44.7% in Federal Way, about 23% above the Washington median of 36%, a sizable rental market. Median household income is $86,909, about 11% below the Washington median of $98,141, and 61% of renter households pay 30 percent or more of income on rent.
Housing mix and age in Federal Way
Buildings with two or more units make up about 44% of Federal Way's housing, including 11% in two to four unit buildings and 22% in buildings of five to 19 units. With 1984 as the median build year, expect aging HVAC and roofs and ask for the dates of the last replacements.
Use vacancy as a reality check: 5% of all units are vacant in Federal Way, and the rental vacancy rate is 4.4%.
What the data means for Federal Way buyers
A 3.9% gross ratio leaves little margin in Federal Way. Every dollar of insurance, tax and association dues matters, and some deals work only with lower leverage. With a 1984 median build year, the question for each property is when the roof and HVAC were last replaced. With about 45% of households renting, Federal Way has enough tenants to support investors without being dominated by them.
What costs can do to a Federal Way ratio
Real estate taxes are a line the rent has to cover. The median owner in Federal Way pays $4,706 a year (close to the Washington median of $4,556), which is about 0.85% of the median home value. Set beside the median rent, the tax alone consumes about 22% of annual rent.
King County carries a very high overall rating in FEMA's National Risk Index, where earthquakes (very high), riverine flooding (very high) and avalanches (very high) rank highest.
| Hazard in King County, FEMA index | Level |
|---|---|
| Landslides exposure | Relatively High |
| Avalanches exposure | Very High |
| Riverine flooding exposure | Very High |
| Earthquakes exposure | Very High |
| Social vulnerability score | Very Low |
| Annualized loss estimate | Very High |
| Composite risk | Very High |
Many investors meet insurance too late, so get a quote tied to the Federal Way property's roof age and flood zone before you waive your inspection period.
Working the Federal Way rent math
Try the math at the medians. With rent at $1,797 and taxes near $392 a month, a 1.00 DSCR leaves $1,405 for everything else in the payment, a 1.20 ratio leaves $1,105, and a 1.25 ratio leaves $1,045. Any real property will differ, but the exercise shows how little room insurance and dues can take.
Registration, deposits and nightly stays in Federal Way
Rental registration, inspection and nightly-stay rules differ by city, and we have not verified Federal Way's from a municipal source. A short call to the city and King County before you make an offer is cheap insurance. State tax treatment of short stays, as it applies to Federal Way. Washington treats rentals of under 30 consecutive days as taxable transient lodging, so an owner who advertises overnight stays registers with the Department of Revenue and collects retail sales tax and any local lodging taxes, even when a marketplace also collects.
After move-out, the Federal Way owner has 30 days to return the deposit or account for deductions.
Federal Way compared with nearby markets
Among the nearby markets above, Tacoma has the lowest median home value at $479,600 and Renton the highest at $672,600, against $552,800 in Federal Way.
| Market | Renter share | Tax bill | Home value | Residents | Rent |
|---|---|---|---|---|---|
| Renton | 46% | $5,969 | $672,600 | 105,317 | $1,998 |
| Kent | 43% | $5,446 | $587,800 | 135,603 | $1,909 |
| Tacoma | 44% | $4,482 | $479,600 | 222,758 | $1,676 |
| Auburn | 39% | $5,484 | $547,900 | 85,676 | $1,786 |
| Federal Way | 45% | $4,706 | $552,800 | 99,493 | $1,797 |
What fills Federal Way rentals
The self-employed share of the workforce is 8.3%, and those owners tend to be exactly the buyers DSCR financing was built for. Other workforce markers: government workers are about 13% of employment, 31% of adults hold a bachelor's degree or higher and 25% of commuters travel 45 minutes or more.
Wikipedia's employer table for Federal Way for 2022 names Federal Way Public Schools, World Vision International, CHI Franciscan Health - St. Francis Hospital, United States Postal Service and Washington Conference of Seventh-Day Adventists among the largest employers, a useful starting point for judging how steady renter demand is. Access runs through interstate access via I-5, which shapes where commuters want to live and how long a showing takes.
Taking a Federal Way deal to a lender
Ready to test a Federal Way deal? Use the calculator for the ratio, then start your application or send us the scenario.
More Washington markets
- All Washington DSCR loans
- DSCR loans in Auburn, WA
- DSCR loans in Tacoma, WA
- DSCR loans in Kent, WA
- DSCR loans in Renton, WA
- Every market we cover
References
- FEMA National Risk Index
- Wikipedia article, Federal Way, Washington
- Washington security deposit statute (RCW 59.18.260, 59.18.270, 59.18.280, 59.18.285, 59.18.610)
- For nightly stays in Federal Way: Washington DOR, personal home rentals
- For nightly stays in Federal Way: Online marketplaces and property managers
- American Community Survey tables, Washington
We took the Federal Way data from Census ACS five-year tables for 2020 to 2024, estimates with margins of error. RedFlagLease (CC BY 4.0) supplies the Washington landlord-tenant notes, and the statutes are linked. Our check date is October 2026, so look for newer Federal Way rules before you commit.
DSCR loan availability varies by property and lender program and is not an offer to lend. See our disclosures.
Frequently asked questions
Lease or market rent: what counts in Federal Way?
It comes from a lease or from the market rent in the appraisal, whichever the program uses. Against that, the Federal Way median is $1,797.
Does the ratio in Federal Way include taxes and dues?
They do. Rent of $1,797 divided by 1.25 gives about $1,438 as the payment ceiling, and $392 of that is spoken for by the median Federal Way tax bill.
What tax bill should I expect on a Federal Way rental?
Median taxes paid are $4,706 a year, or 0.85% of median value, compared with 0.81% statewide. Ask King County's tax office what the bill becomes after your sale.
Can nightly stays at a Federal Way property support a DSCR file?
Where lender guidelines allow it, yes, with platform history or a market projection. First confirm that Federal Way and any HOA permit stays under 30 days, and that you can register for Washington lodging tax.
What are the security deposit rules for a Washington landlord?
A landlord has 30 days to return the deposit. Both come from RCW 59.18.260, 59.18.270, 59.18.280, 59.18.285, 59.18.610.
Is flood or storm risk a concern for a Federal Way rental?
The National Risk Index gives the county an overall very high rating. Use that as a prompt to get quotes, not as a verdict on one Federal Way street.
Do I need an LLC to buy a rental in Federal Way?
No, but it is common. Entity borrowers supply articles, an operating agreement and an EIN letter, and the owners typically guarantee the loan. A Washington attorney can advise on structure.