Utah First-Time Home Buying Assistance Programs for 2023

Who Is Considered a First-Time Homebuyer in Utah?

The answer to that question isn’t as obvious as it seems. For most programs offered in Utah and elsewhere, applicants are considered first-time homebuyers if they haven’t owned a home for the past three years.

Some programs may make exceptions for veterans, single parents, and others. It’s a good idea to be clear on specific eligibility standards before you start any application.

Other Utah Homebuyer Programs by Location

If you already know which Utah community you hope to make your home, you also may want to research local first-time homebuyer programs. If you can’t find assistance in your chosen location, you may want to check back occasionally for new offers. Some first-time homebuyer programs base their opportunities (and deadlines) on the funds they expect to become available. When their money runs out, they may press pause.

Clearfield City Down Payment Assistance Program

Qualifying first-time homebuyers in Clearfield City may qualify for a matching grant of up to $7,500 to help cover their down payment and closing costs. The grant, which is administered by the Davis Community Housing Authority, is forgiven over a period of seven years. It can be used for a single-family detached home, condominium, or townhome with a maximum purchase price of $400,000.

Applicants must meet income limits and other criteria. You can go to the program’s web page to check out the benefits and requirements, or call 801-939-9198 to verify the availability of funds.

At Home in Layton Down Payment Assistance Program

Layton City offers the At Home in Layton Down Payment Assistance Program to income-eligible first-time homebuyers. The assistance comes in the form of a grant of up to $7,500 that can be used for a down payment, closing costs, or principal reduction. If the purchased home is sold before the end of the fifth year after closing, all or a portion of the grant may have to be repaid to the city.

Funds are limited, and applications are accepted on a first-come, first-served basis. For more information, you can check out the program’s web page or go to the brochure for application guidelines . Contact the Layton City Community Development Block Grant administrator at 801-336-3770 or [email protected].

Own in Ogden Loan Program

The Own in Ogden loan program provides qualifying first-time and repeat homebuyers with a 0% interest, deferred-payment second loan for their down payment or closing costs. The loan also can be used to reduce the principal on the buyer’s first mortgage.

•  Homebuyers can receive $10,000 to purchase a primary residence in Ogden

•  State-certified K-12 classroom teachers or administrators in schools that serve city students can receive a $15,000 loan

•  Ogden employees and new hires who don’t currently live in the city can receive a loan of up to $15,000 to help them move there

•  Ogden police officers and firefighters can receive a $20,000 loan Income and purchase limits apply. For more information, you can go to the program’s web page or go to the program brochure for application guidelines .

Provo Home Purchase Plus Program

The Provo Home Purchase Plus Program offers eligible homeowners the opportunity to apply for a 0% interest, deferred-payment second loan to help pay their down payment and closing costs. Payment is due in full when the borrower no longer lives in the home as their primary residence. (If the home is sold or vacated within two years of purchase, there may be a $5,000 penalty.)

Income limits, asset limits, credit requirements, and purchase price limits apply, and all household members over 18 must pass a background check. For more information, check out the program’s web page or call 801-852-6160.

Utah County Loan to Own Program

Utah County’s Loan to Own program provides down payment assistance to moderate-income first-time homebuyers in the form of a 0% interest, deferred-payment second loan. The loan must be repaid if the owner vacates or sells the property, and there is a $5,000 penalty if the owner does so within two years of closing.

This program is available countywide except for Eagle Mountain, Alpine, Fairfield, and Provo. Buyers must contribute $1,000 of their own money toward the down payment. Income limits, asset limits, credit requirements, and purchase price limits apply. You can get more information at the program’s web page or call 801-852-6400.

How to Apply to Utah Programs for First-Time Homebuyers

Follow the links under each program to find an approved lender or other contact.

Recommended: Understanding Mortgage Basics

Federal Programs for First-Time Homebuyers

Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

Federal Housing Administration (FHA) Loans

The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO^® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.

Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

Very low- and low-income borrowers may make a 3% down payment on a Home Possible^® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

The Home Possible mortgage is for buyers who have a credit score of at least 660.

Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

Fannie Mae HomeReady Mortgages

Fannie Mae HomeReady^® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

Fannie Mae Standard 97 LTV Loan

The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

Department of Veterans Affairs (VA) Loans

Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

Native American Veteran Direct Loans (NADLs)

Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee.

US Department of Agriculture (USDA) Loans

No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

HUD Good Neighbor Next Door Program

This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

First-Time Homebuyer Stats for 2022

Ever wonder where you fit amid the mix of buyers who are out there shopping for their first home or first in a while? Here are some stats from a recent National Association of Realtors® Profile of Home Buyers and Sellers:

Percentage of buyers nationwide who are first-time buyers: 34%

Percentage of buyers in the NAR’s West region who are first-time buyers: 34%

Median household income of first-time buyers nationwide: $86,500

Type of home purchased by first-time buyers nationwide:

•  Detached single-family home: 80%

•  Townhouse/rowhouse: 9%

•  Condo/apartment (five or more units): 1%

•  Duplex/condo/apartment (two to four units: 2%

•  Other: 8%

Median home price for first-time buyers nationwide: $252,000

Median down payment for first-time buyers nationwide: 7%

Median age of first-time buyers nationwide: 33

Relationship status of first-time buyers nationwide:

•  Married: 50%

•  Single females: 20%

•  Unmarried couples: 17%

•  Single males: 11%

First-time buyers with kids nationwide:

•  No children: 70%

•  One child: 15%

•  Two children: 11%

•  Three or more children: 5%

Additional Financing Tips for First-Time Homebuyers

In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

•  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

•  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

•  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

•  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

•  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

•  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

•  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

The Takeaway

Utah has a stream of state and local assistance for low- to moderate-income first-time homebuyers. Other first-time buyers may find a good choice among the vast landscape of mortgages on their own.