With home prices climbing in Utah, first-time homebuyers might need a boost to gain entry into the state’s housing market. Despite the affordability challenges, first-time buyers in Utah could be eligible for mortgage and down payment assistance options make it easier to purchase a home. Utah Housing Corporation, the state’s housing authority, is one resource for these programs, many of which are aimed at first-time buyers with low to moderate incomes.
Utah first-time homebuyer loan programs
Utah Housing Corporation (UHC or Utah Housing) has four mortgage programs available to first-time homebuyers, with some also open to repeat buyers. These 30-year fixed-rate loans range from FHA and VA loans to conventional loans, and down payment assistance can be combined with any of the programs. Here’s a breakdown of each:
Utah Housing FirstHome and Home Again loans
The Utah Housing FirstHome Loan is designed for first-time buyers with modest incomes and eligible single parents or veterans. This loan tends to boast the lowest interest rate among the agency’s programs in order to keep monthly mortgage payments low.
Utah Housing’s Home Again Loan is available to families with modest incomes who are previous homeowners and don’t not qualify for FirstHome loans. This loan is available to both repeat homebuyers and first time buyers.
Neither the FirstHome Loan nor the Home Again Loan require borrowers to take part in homebuyer education courses.
- 660 minimum credit score
- Maximum debt-to-income (DTI) ratio based on FHA or VA loan requirements; if applying with a co-signer, the co-signer’s DTI ratio can’t exceed 45 percent
- Must meet Utah Housing income limits
- Must be an owner-occupied single-family home, manufactured home or FHA-approved condominium or planned unit development (PUD); can be an owner-occupied duplex for Home Again Loan
- Must be one acre or less (or five acres or less if in a rural area) for FirstHome Loan; no acreage limits for Home Again Loan
- Must meet Utah Housing purchase price limits for FirstHome Loan; no purchase price limits for Home Again Loan
Utah Housing Score Loan
Utah Housing’s Score Loan helps make homeownership possible for first-time and repeat buyers who have a poor credit history and a low or moderate income. Repeat buyers must not own any other property at the time of closing to be eligible for this type of loan.
- 620 minimum credit score
- Maximum 45 percent DTI ratio
- Must complete homebuyer education course
- Must meet Utah Housing income limits
- Must be an owner-occupied single-family home
- Must meet Utah Housing purchase price limits
Utah down payment assistance
Utah Housing Down Payment Assistance
First-time homebuyers can combine a Utah Housing down payment assistance second mortgage with one of the agency’s first mortgage programs. The second mortgage is a 30-year, fixed-rate loan with an interest rate 2 percent higher than the rate of the first mortgage. The amount of assistance, which can be used for a down payment and closing costs, varies based on the type of first mortgage:
|Source: Utah Housing Corporation|
|FirstHome Loan or Home Again Loan||Up to 6%|
|Score Loan||Up to 4%|
Utah Housing First-Time Homebuyer Veterans Grant
Utah Housing also offers a $2,500 grant specifically to active-duty military members and veterans who are first-time homebuyers in the state. For this program, “first-time homebuyer” means you haven’t bought a primary residence in Utah in the last seven years, and if you’re a veteran, you’ll only be eligible if you’ve separated from the military within the past five years. The grant doesn’t need to be repaid, and notably, the funds don’t have to go toward your down payment or closing costs.
Salt Lake City Down Payment Assistance
Homebuyers in the Salt Lake City area could qualify for down payment assistance in the form of a forgivable, deferred loan from the Community Development Corporation of Utah (CDCU). Borrowers can put these funds toward a down payment or closing costs.
If buying in Salt Lake City, the borrower must be a first-time homebuyer or have not owned a home in the last three years. Additional eligibility requirements include:
- Must be at or below 80 percent of the area median income (AMI)
- Must complete homebuyer education course and HUD counseling session
- Must meet CDCU income limits
Chenoa Fund Down Payment Assistance
First-time and repeat homebuyers could also obtain a down payment assistance loan through the Chenoa Fund, an affordable housing program from the CBC Mortgage Agency, which is owned by the Cedar Band of Paiutes in Utah. The Chenoa Fund makes assistance available nationwide (except for in New York), not just to borrowers in Utah.
The down payment loan comes in a second mortgage that can be combined with a conventional or FHA loan for up to 5 percent in assistance. The second mortgage can be either over a 10- or 30-year term, and have as little as no interest.
The eligibility requirements include:
- 600 minimum credit score (depending on program)
- Maximum 50 percent DTI ratio (depending on program)
- Must meet income limits (depending on program)
Other first-time homebuyer loan programs
Government loan programs such as FHA, VA and USDA mortgages offer terms and rates that can make it easier for first-time homebuyers to purchase a home. Your mortgage lender can guide you through other specialized home loan and assistance options. Visit Bankrate’s first-time homebuyer programs guide for a comprehensive list of loans.
Now that you have a better idea of the mortgage and down payment assistance options available for first-time homebuyers in Utah, it’s time to make your next move. An approved Utah Housing Corporation mortgage lender can help you find a loan that suits your needs and get the application process started. Terms and interest rates vary from lender to lender, so make sure to compare loan options to find the best loan for you.