First-Time Homebuyer Programs in Utah

Buying a house for the first time can be quite overwhelming, especially when it comes to finances. First-time homebuyer programs in Utah help lessen this burden by offering loan programs with few upfront costs. MoneyGeek compiled these programs, so you can explore your options while you’re finding your first-ever home.

There are so many things to think about when you’re a first-time homebuyer. A significant factor to consider while purchasing a home is your down payment. The down payment is the initial deposit that goes toward your house’s total value. This amount has several benefits, including decreasing the size of your home loan.

The recommended amount for your down payment is usually 20% of the home’s price. Homebuyer assistance programs help first-time homebuyers in case the down payment is too expensive. These programs can either completely do away with the down payment or significantly reduce it.

Homebuyers can choose between federal and Utah-specific programs. Federal programs include USDA, VA, FHA and conventional loans. Utah's programs are more state-specific, and they include assistance from the Utah Housing Corporation and grants for first-time homebuyers who are veterans.

Homebuyers can purchase their homes without upfront down payments through zero-down-payment loan programs, like those offered by the USDA and VA.

U.S. Department of Agriculture (USDA) loans help aspiring homeowners purchase a home of less than 2,000 square feet in eligible rural areas without a down payment. They accept applicants with low-to-moderate income as long as they pass the eligibility requirements.

Like other loans, USDA loans also require applicants to meet their income requirements, though there’s no exact credit score requirement. An applicant should earn below 115% of the median income in the neighborhood where they want to buy their home.

These loans are not only for buying your first home, since they’re also available for repeat buyers or borrowers. USDA loans can also be used for rehabilitating or improving a house and building a new home.

USDA loans are provided through the USDA Rural Development Guaranteed Housing Loan Program.

U.S. Department of Veterans Affairs (VA) loans are available to active military members, veterans and their eligible surviving spouses. These loans don’t have a minimum credit score requirement, although individual lenders may have their minimums.

Compared to conventional loans, VA loans don’t require a down payment, have lower interest rates, do not require private mortgage insurance (PMI) and typically only require a debt-to-income ratio of 41%.

To apply, you will first need to acquire a Certificate of Eligibility from the Department of Veterans Affairs, as this will indicate that your service history qualifies you for the program.

Low-down-payment loan programs, like FHA and FHA 203(k) loans, reduce your down payment to as little as 3.5% of the cost of your home.

Fannie Mae and Freddie Mac mortgages are also known as conventional loans. These are mortgage loans offered by private lenders.

Simply put, conventional loans are from private companies, like banks and credit unions. They typically require a 20% down payment to avoid private mortgage insurance (PMI). That said, you can qualify for a conventional loan with as little as 3% down, depending on other factors.

The vast majority of mortgages fall into the conventional loan category, as more than 80% of all U.S. mortgages fit this description. Today, conventional mortgages usually have 30-year terms with minimum credit scores of 620.

The requirements for conventional loans vary by the lender. It’s best to check the credit and eligibility requirements of your lender if you’re planning to get a conventional loan.

Private lenders may offer home loans or mortgages that are insured by the Federal Housing Administration (FHA) under the U.S. Department of Housing and Urban Development (HUD). These are called FHA loans.

Through FHA loans, homebuyers can have smaller down payments and less stringent credit requirements. Borrowers with credit scores of 580 and above can qualify for a loan with a 3.5% down payment. If your credit score is between 500 and 579, you can qualify for a loan with a down payment of 10%.

Your loan application has a better chance of being approved with the help of FHA loans. These loans are underwritten by private companies, and the FHA’s role is to guarantee your loan. As a result, private lenders have less risk in granting you a loan despite low credit or small down payments.

FHA 203(k) loans help pay for the purchase price of a house and its renovation costs in one convenient package.

Through this loan, homeowners can avoid applying for separate loans to cover the mortgage and the cost of repairs. FHA 203(k) loans also have lower credit requirements, making them more broadly accessible.

The FHA 203(k) loan is available in two types. The standard 203(k) is for properties that require extensive renovations exceeding $5,000, and it requires the oversight of an FHA-approved consultant. Meanwhile, the streamlined 203(k) is easier to apply for and receive, as it is intended for minor repairs not exceeding $35,000.

These are several Utah homebuyer programs that can help you purchase your first home.

The Utah Housing Corporation Down Payment Assistance Loan Program can grant a FirstHome Loan to help you pay for your down payment by giving you 6% of your loan amount. Eligible loans can either be FHA or VA loans.

A $2,500 grant is available for eligible military members and veterans through the Utah Veteran First-Time Homebuyer Grant Program.

This program, offered through NeighborWorks Salt Lake, provides down payment assistance for first-time homebuyers who take the organization’s financial management course. It provides $2 for every $1 you save in your IDA account, up to a total of $3,000.

MoneyGeek provided responses to some of the most frequently asked questions concerning first-time homebuyer programs in Utah that might help you get a home of your own.