Wish you could buy a home but not sure how to make it happen?
Maybe your credit is not that great. Maybe you have a hard time saving money for a full down payment.
Whatever the excuse, let me ask 3 you important questions:
Have you been paying your rent on time?
There is nothing wrong with renting, especially if you’re not quite sure if you want to commit to a certain place at this time in your life.
But if you’ve been in the same home for years, and you’re essentially making the mortgage payment for your landlord.. what’s holding you back?
Do you have a stable job or set of skills?
Don’t be afraid of committing to a mortgage payment. You are already committed to making your rent payments if you answered YES to #1 above. In truth, if you do experience financial difficulties, your landlord will kick you out much faster than your mortgage lender will.
Take a look at your employment history. Are you confident your skills can secure you a similar of better job should you lose the one you currently have? Do you have a track history of overcoming difficulties and finding solutions? Well then.
Are you ready to start building wealth?
We are a nation of consumers. The word “wealth” doesn’t resonate with most of us unfortunately. But this is exactly what owning a home is – building wealth.
Sure, home prices could go down, but they mostly go up. Utah is one of the fastest growing states, and housing inventory is on the low side. The demand is up, and it shows in the ever rising rent prices.
Buy in a price range you can afford. Keep your mortgage payment similar to what you were paying on rent. If that’s not an option, get creative. Look into getting roommates to help ease the financial burden, consider changing jobs, or find ways to commute. Don’t be a snob – if a fixer upper is the way to go right now, then take on the challenge. Look at this as a stepping stone towards being able to afford your dream home.
Now that we had that little pep talk, let’s get down to business.
Utah Down Payment Assistance (DPA) usually comes either in form of a grant that gets forgiven after a certain period of time, or a 0% interest deferred loan that needs to be repaid when the property is sold, or primary residence is terminated.
Homeownership assistance is available for low to moderate income families. Different counties and sometimes different cities have their own programs and guidelines. Down payment assistance funds are limited and are generally distributed on a first come-first served basis.
You’re actually in luck, because new down payment assistance funds are usually received at the end of summer, after the home purchase madness has passed.
Update 10-02-17: As of right now, funds seem to be available everywhere, including Salt lake County!
Utah Down Payment Assistance Program main requirements are:
You must be a first time homebuyer, but it’s not to be taken literally. You are considered a first time homebuyer if you have not owned a home in the past 3 years, or if you are a single parent or a displaced homemaker who has only owned a home with a former spouse while married
The City of West Jordan is the only exception, requiring that eligible applicants not own a home in the past 24 months.
The annual gross household income must be equal to or less than 80% of the current Area Median Income as established by HUD (Department of Housing and Urban Development). The household income includes any and all income from family members that are at least 18 years old (16 for West Jordan). It will generally look like this:
- Applicants must complete a Homebuyer Education Course as required by each of the Downpayment Assistance Program guidelines.
Now for the good stuff.
Below is a handy chart comparing the Utah Down Payment Assistance Programs currently available.
- The first number in the debt to income is known as the “front ratio”, and only some programs have this limitation. It represents the percentage of gross income that can go towards your new mortgage payment (including the escrows).
- The second number is known as “the back end ratio”, and it represents the total percentage of your gross income that can go towards monthly liabilities (this includes the new mortgage payment, any credit card payments, auto loans etc).
How to apply for a Utah Down Payment Assistance Program
This again depends on where you are looking to purchase.
Some Utah Down Payment Assistance Programs require an application once a home is located and under contract. Some require you to complete the homebuyer education course or at least have it scheduled before even considering your application.
All will want to see a Pre-Qualification Letter from the lender of choice. Use my secure online application, and I will have one ready for you the same day (personal record is 10min). You can use a Utah Down Payment Assistance Program with any type of loan, such as an FHA, Conventional or even a VA loan (the down payment assistance funds can be used for closing costs and securing a lower interest rate).
Below are the requirements and links to the various Utah Down Payment Assistance Programs. Bookmark this page for easy access, it’s really important stuff.
Community Development Corporation of Utah (covers Salt Lake City, Taylorsville, and Salt Lake County minus West Valley City and West Jordan) – will prioritize applicants that have completed a HUD Approved Buyer Education Class, or have pre-purchased the education. It used to be that you couldn’t be under contract without having completed the required education, so it looks like they changed that. But given the competition for these particular funds… Complete your required education.
West Valley City requires that the pre-counseling education and the application itself is in place PRIOR to making an offer on a home.
West Jordan only requires that the education certificate is submitted prior to the loan closing, but they won’t accept online classes. You must take the homebuyer education class in person.
Davis County (including Clearfield) is one of the more lenient ones. You have to submit your homebuyer education certificate within 1 week of submitting an official application, but they will check your eligibility and documents at any time prior to having a home under contract.
Layton Down Payment Assistance requires a purchase contract before considering an application complete
Weber County requires the application for the down payment assistance to be submitted and approved prior to making any offers to purchase real estate property. Your real estate agent will also need to have attended an orientation class prior to approval. Disregard the website message – the program now has funds and it is available.
Own in Ogden wants you under contract before considering your application.
Additional information on the Utah Down Payment Assistance Programs
Depending on the guidelines, you might be required to schedule and submit an in-person application.
Your mortgage loan officer might also be able to submit it for you, so I would suggest having him/her review your eligibility and documentation prior to applying for the down payment assistance. Your income might need a bit of tweaking, and you don’t want to get rejected because the numbers you submitted were wrong.
Different programs consider different properties to be eligible. You are 100% on the safe side with a detached single family residence. Attached single family residences such as townhomes and condos are also usually eligible. New construction, multi-unit properties and manufactured homes are generally not eligible, but there are exceptions (ogden is one of the cities that will consider multi unit properties on a case by case basis).
Renters cannot be displaced by the sale of the property. The home must be either owner occupied or vacant, and the seller will need to attest to this.
Having excess funds will get you disqualified, regardless of the fact that you meet all the other criteria. This again varies by down payment assistance program, which is why it’s important to have a knowledgeable loan officer review your paperwork prior to submitting an application.
Make sure you allow enough time to close on your loan depending on which down payment assistance program you will be using. Some have lengthier paperwork and processes, and the last thing you want is to void your purchase contract due to delays of the sort.
The triggering event for grant repayment can be the sale of the home, transfer of title, refinancing to take out equity or terminating primary residentship. Reading the terms of your loan or grant is important, especially where there is a $5,000 penalty if the home is sold within 2 years – see Provo/Utah County down payment assistance underwriting criteria.
Last but not least, there is a certain amount of common sense involved. The goal of these programs is not no nickel and dime you. Even if you don’t meet the guidelines exactly, don’t be afraid to ask for an exception and argue your case. The goal of the down payment assistance program is to give nice people like you an option to become homeowners sooner rather than later. You just have to do your part.
Do you know anyone that can benefit from this information?
Please share this article on your social media – it might help guide a friend on the path of homeownership and financial well being.
If you ever tried to find out more about Utah down payment assistance programs, you know what a pain it is to get any valuable information. Not only there are multiple sources (some not very obvious, some not very helpful), and many mortgage loan officers are not even aware these programs exist.
I hope you appreciate my research, and I will be more than happy to guide you through the process – please apply with confidence.
First Class Home Mortgage is a local brokerage, and you are guaranteed to get lower interest rates, and better customer service than with any of the big mortgage companies. We don’t believe in throwing buckets of money to advertise how good we are – we prove it by educating people, offering second opinions and asking for a referral or two once you become a happy customer.
Still have questions about any of the Utah Down payment Assistance Program? Do you need guidance preparing for future homeownership, perhaps rebuilding credit? Send me an email at email@example.com, I look forward to hearing from you.