Housing in Federal Way reflects its history as a post-war suburban city that continued building through the late twentieth century. Established neighborhoods such as Twin Lakes, laid out in the 1960s around a private golf course and three man-made lakes, offer split-level and raised-ranch homes, many with basements or later additions. Steel Lake features mid-century homes with lake access, while Marine Hills sits on higher ground with Puget Sound views and larger lots. Campus Highlands and other later sections added 1990s-era construction. The stock also includes townhouses, condominiums, and apartments clustered near major corridors, giving the city a broader range of housing types than many of its neighbors.

Federal Way's neighborhoods trace distinct eras of development. Marine Hills, on the city's west side, is known for Puget Sound views, larger lots, and some of the area's more spacious homes. Twin Lakes is a 1960s planned community organized around a private golf course and three lakes, with a strong association identity and lakefront properties. Steel Lake offers mid-century homes around a namesake lake with public access. Campus Highlands, built largely in the 1990s, represents the city's newer residential stock. These neighborhoods sit alongside commercial corridors and the more urbanized center around The Commons and Town Square, creating a patchwork of suburban enclaves that share the city's parks, schools, and transit facilities.

Federal Way offers a mix of suburban convenience and regional amenities. The Commons at Federal Way, the city's main indoor mall, brings more than 60 retailers, dining, and entertainment options together along South 320th Street, while Pacific Highway South provides a broad commercial corridor of restaurants, grocers, and services. The Performing Arts & Event Center and Town Square Park form a civic and cultural anchor where the city hosts concerts, festivals, and a seasonal farmers market. Residents can reach the restaurants and nightlife of Tacoma and Seattle by car or transit, and the waterfront communities along Puget Sound offer additional recreation. The overall pace is quieter than the region's urban cores, oriented toward families, schools, and outdoor activity.

Federal Way is served by Federal Way Public Schools, a single K-12 district that operates elementary, middle, and high schools across the city. Among its high schools are Federal Way High School, Thomas Jefferson High School, and Todd Beamer High School. The district also supports a network of elementary schools, with Twin Lakes Elementary among those frequently cited by families on the city's west side. Federal Way's schools serve a diverse student population, and the district has invested in facilities and career-oriented programming alongside core academics. Private and parochial options and early-learning centers round out the educational landscape for families moving to the city.

Federal Way sits at a major regional crossroads, with Interstate 5 running through the city and providing direct freeway access north to Seattle and south to Tacoma. State Route 18 connects eastward toward the Kent Valley and the Cascades. The Sound Transit Link light rail system extends into the city, with service connecting Federal Way to Seattle-Tacoma International Airport and downtown Seattle, and the Federal Way Transit Center serves regional buses. Sea-Tac Airport lies roughly 15 miles to the north, making the city convenient for air travel and airport-area employment. Most residents rely on cars for daily trips, but expanded rail service gives commuters a viable alternative for reaching Seattle's job centers.

Federal Way maintains an unusually large park system for a city of its size, with more than 30 developed parks, major trails, and open space totaling over 1,000 acres. Dash Point State Park, on the city's northwestern edge along Puget Sound, offers beach access, forested hiking trails, and camping. Wild Waves Theme & Water Park provides a major regional amusement and water-park destination within the city limits. PowellsWood Garden, a cultivated botanical garden, and numerous neighborhood parks, sports fields, and playgrounds round out the offerings. The city's community center and recreation programs support leagues, classes, and year-round activities for residents of all ages.