Utah Conventional Down Payment Assistance Loan

Dana Anghel By May 21, 2024 No Comments

If you’re looking to purchase a home in 2024, but found it hard to come up with a down payment, then I have good news for you.

You can now apply for a Conventional mortgage, and receive a down payment assistance loan of 3% of the purchase price (up to $15,000) for the purchase of a single family home, townhouse or condo. No monthly payments are required on the down payment assistance loan, and no interest accrues.

Who is eligible?

First time homebuyers don’t have any income restrictions. The minimum credit score is 700.

Repeat homebuyers need a 620 minimum credit score, and are eligible if under 80% of the Area Median Income (AMI) as determined by Freddie Mac. Non-occupant co-borrowers are allowed on this version of the program only, but their income will count towards the income limit.

Here is the link to check based on zip code/address. 84104 for example shows an income limit at 80% AMI of $92,320 – this is only for the income used to qualify for the mortgage, not the household income.

What kind of property can I purchase?

Must be a primary residence. Single unit family homes, townhomes and condos are eligible. Manufactured homes and multi units are not eligible.

Do I have to repay the down payment assistance loan?

Yes, the down payment assistance loan has to be paid back when you refinance, sell the property, or otherwise pay your mortgage in full. Until then, it will be recorded on the title of your property as a “silent” second lien.

Anything else I need to know?

The minimum down payment required on the Conventional mortgage is 3% (the loan programs are Home Possible and HomeOne from Freddie Mac). The maximum downpayment allowed is 5% of the purchase price.

If you have a larger down payment available, but still want to take advantage of the assistance, then you’ll need to lower your down payment as to not exceed the 5%. Recasts may or may not be allowed on a case by case basis.

The usual mortgage closing costs still apply, and cannot be covered with the down payment assistance loan. You’ll need to either negotiate to have the seller pay your closing costs, or be prepared to cover them out of pocket. I can get you an estimate before you make an offer, so your real estate agent knows how much to ask for.

Final thoughts

Finding a good down payment assistance loan to help you purchase a home in Utah isn’t an easy task.

If you’re looking to purchase a home but don’t have a down payment, these are currently your options:

  1. USDA rural loans if a rural location works for you.
  2. VA loans if you’re a veteran who has earned the eligibility
  3. A Grant or a Down Payment Assistance Loan through an approved entity

True grants are rare, and usually quite small.

Down Payment Assistance Loans offered by some cities and counties follow the Department of Housing (HUD) median income guidelines, which make it close to impossible to qualify in a market like ours, where incomes have yet to catch up with housing prices.

Then there are the Utah Housing Loans – these are loans that are bloated with fees, and offered at a considerably higher interest rate, in an already high rate environment.

Wondering where rates are at these days? Feel free to reach out to me for a no credit pull and no obligation quote at [email protected], or text me at 801-473-3154.

You can also apply right now to get Pre-Qualified, and start shopping for a home right away.