Loan Programs and Grants
For First-Time Home Buyers In Utah
Did you know that if you are a first-time home buyer in Utah, you may be eligible for grants and programs that help with down payment costs, more favorable loan terms, and other grants?
We have compiled a list of the programs and types of loans available for first-time home buyers in Utah. Please check with your lending institution and the individual programs to check the requirements and your eligibility.
Your eligibility for these first time home buying programs may depend on your credit score and history, your ability to pay a mortgage, your individual circumstances, and the location of the home you wish to purchase. To qualify for first-time home buying programs, you must not have owned a home in the last three years.
If you are a first-time home buyer in Utah, the REALTORSⓇ at Your Utah Realty are ready to help you locate your first home. Search for homes and learn how to buy a home in Utah.
National First Time
Home Buyers Programs
National first time home buyer programs can help you buy a home with lower down payments or closing costs. Many lending institutions offer loans with these programs. Each varies in requirements and terms so it’s important to understand each and whether you are eligible for these programs. When applying for a loan or getting your pre-approval letter, check with your lender to see if you qualify.
FHA loans are insured by the Federal Housing Administration and have lower credit score requirements and smaller down payment requirements than conventional loans.
What Credit Score Do I Need For A FHA Loan?
Depending on the amount of down payment you have, you can qualify for a FHA loan for as little as 500. If you have a credit score of 500 to 579, you will need at least a 10 percent down payment. With a credit score of 580, you may qualify for a loan with as little as 3.5 percent down.
With an FHA loan, you will be required to have Private Mortgage Insurance or PMI which means that your overall borrowing costs will be higher. You cannot cancel your PMI premiums. Private mortgage insurance covers the lender if you default on the loan.
Did You Know?
You don’t need to buy a single family home with an FHA loan. FHA loans can be used to purchase 1-4 unit homes which can be a great opportunity for real estate investors.
FHA Section 203(k):
If you are interested in a home that needs extensive repairs or rehabilitation, FHA Section 203(k) insurance allows homebuyers and homeowners to finance the purchase or refinancing of a house and the cost of repairs or rehabilitation through a single mortgage.
Did You Know?
Home sellers can use FHA Section 203(k) insured loans to prepare their homes to sell.
Learn more about the FHA Section 203(k) loan insurance program here.
USDA loans for first-time homebuyers are available for applicants who qualify with a credit score of 640 and above who are purchasing an eligible property in a rural area. No down payment is required and PMI premiums are low.
To qualify for a USDA loan, you must:
- Have a credit score of 640 or more (lower credit scores may qualify)
- Use the home as your primary residence
- Live in an area that the USDA has determined to be an eligible rural area
To learn more about the USDA program, click here.
Good Neighbor Next Door
If you are a teacher in pre-Kindergarten through 12th grade, law enforcement officer, firefighter, or emergency medical technician, you may qualify for the Good Neighbor Next Door program through HUD. Eligible single family homes are listed for up to seven days and are located in areas designated by HUD for revitalization.
The Good Neighbor Next Door program offers up to 50% off the home’s listing price provided the homeowner agrees to occupy the home for 36 months. HUD requires a second note to be signed in addition to the primary mortgage for the discounted amount. If you fail to occupy the home for 36 months, you must begin making payments and pay interest on that amount.
Did You Know?
If you are a teacher, you may even be eligible for a grant through the Teacher Next Door program that can help with down payment and closing costs. This program is also administered through the federal government.
See more about GNND loans.
Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac are not loan programs and neither offer mortgages. Rather, they are known as GSE’s or Government Sponsored Enterprises. They back most conventional loans made by banks and set the standards for what guidelines are set to qualify for a loan.
When choosing a lender, you should check to see that the lender provides loans backed by both Fannie Mae or Freddie Mac because they can run your profile against both lenders standards and offer you the loan that gives you the most favorable terms.
Loans backed by either Freddie Mac or Fannie Mae are often low-cost loans that are great for first-time homebuyers. Both require a minimum 3 percent down payment and a minimum credit score of 620 with a solid credit history to qualify. What’s important is your debt-to-income ratio, so if you have a high debt-to-income ratio and you don’t qualify for other loans, you may want to consider a Fannie Mae loan.
If you are putting less than 20% down, you will need to pay PMI insurance, however once your loan-to-value ratio drops below 80%, you can have the PMI premium removed.
Did You Know?
Most of the mortgages purchased by Fannie Mae and Freddie Mac are prime, fixed-rate loans on which borrowers are current.
Fannie Mae HomePath ReadyBuyer Program
A HomePath home is a foreclosure owned by Fannie Mae. To qualify for the Fannie Mae Ready Buyer program, you must complete the Fannie Mae Ready Buyer program which is an online course before you submit an offer. Foreclosed homes are sold as is, however, you can buy a home with as little as 3% down and you may qualify for up to 3% in closing cost reimbursements.
Learn more about the HomePath Ready Buyer Program.
If you are purchasing an energy efficient home or are making improvements to make your home more energy efficient, you may qualify for better loan terms, which can increase your borrowing power. Energy efficient mortgages help you stretch your debt-to-income ratios when qualifying for a mortgage.
EEM loans can be used when applying for conventional loans, FHA loans, Fannie Mae loans, or VA loans. Generally, Freddie Mac does not use energy efficient mortgages.
Did You Know?
The cost of the energy-efficient improvements that may be eligible for financing into the mortgage is the greater of 5 percent of the property’s value (not to exceed $8,000) or $4,000.
Learn more about Energy-Efficient Mortgages.
Utah First Time Home Buyer Programs
Each year new grants and programs may be available for first time home buyers in Utah. Your Utah Realty will continue to keep our eye out for programs for Utah’s home buyers.
Here are Utah’s first time home buyer programs in 2020:
Utah Housing Corporation NoMI Loans
The Utah Housing Corporation does not directly provide mortgages but offers borrowers assistance with getting a second mortgage to finance a down payment and closing costs. There are veteran-specific programs available as well.
Click here to learn about Utah Housing Corporation assistance programs.
The Community Development Corporation of Utah
Low-to-moderate income households can qualify for Down Payment Assistance (DPA) through the CDCU. These are deferred loans for the funds needed for down payments and closing costs towards the purchase of a home. These deferred loans have no payments and no interest that are forgivable after a certain amount of time.
Learn more about CDCU down payment assistance loans.
West Valley City Grant Programs
If you are considering purchasing a home in West Valley City, Utah you may want to view the various assistance programs and grants that are available for first-time home buyers. Not only are there down payment assistance programs, but there are several home rehabilitation programs as well. There are several requirements and stipulations, but the savings and benefits are worth it if you qualify!
West Jordan City Grant Programs
First-time home buyers purchasing a home in West Jordan may qualify for the West Jordan City First Time Home Buyers Grant. There are down payment assistance programs and home rehabilitation programs available too. See if you qualify and if the home you wish to purchase is eligible for the grant and programs.
Native American Direct Loan
If you are a veteran who is Native American, or your spouse is Native American, you may qualify for the Native American Direct Loan that allows you to purchase, build, or improve a home on Federal Trust Lands. Benefits of this loan are no down payment, no PMI required, low interest rates, and limited closing costs.
See the requirements to qualify for the Native American Direct Loan.
As a veteran, service member, or surviving spouse, you may be eligible for the benefits of a VA loan. VA loans can be obtained through most lending institutions. Benefits include no down payment, limited closing costs, no PMI and a portion of the loan is guaranteed, therefore you may receive more favorable terms on the loan.
Did You Know?
If you are a veteran who has experienced bankruptcy or foreclosure, you can still qualify for a VA loan after a two-year waiting period.
View the U.S. Department of Veterans Affairs website for more information.
Are You A First Time Home Buyer In Utah?
Let Your Utah Realty Help You
We hope this information gives you a better understanding of the types of programs and loans that are available for first-time home buyers in Utah. If you would like more information or would like to speak to a lender, we have several resources available.
To search for homes or to view properties, give us a call today. We’re excited to help you meet your goal of homeownership. It may be easier than you think!
*Disclaimer: Please note that some of the programs listed here may involve a second mortgage with payments that are forgiven, deferred, or subsidized in some manner until resale of the mortgaged property. It is up to you to contact the entities involved in the loan program to determine if each program is right for you and to learn more about the requirements and specifics of each program. This may not be a complete list of all the possible loan programs for first-time home buyers in Utah.