NWAOR: First-time Homebuyers Assistance Program now available
Homebuying just got a little easier for some Utah families. That’s because Utah Housing Corp. has rolled out a new program that could provide approximately 2,500 qualifying buyers with up to $20,000 for down payment assistance and other homebuying costs.
The Utah Legislature directed Utah Housing to create the First-time Homebuyers Assistance Program and appropriated $50 million for the effort. The program is now up and running with the goal of helping first-time homebuyers while promoting the construction of affordable starter homes.
Interested in seeing if the program is right for you? Here are some important details about how it works:
What is the program?
The program is for first-time buyers purchasing a newly constructed home with a price of $450,000 or less. Qualifying buyers receive up to $20,000 to use for down payment, closing costs or a permanent buydown of the mortgage interest rate.
The money is not a grant. Instead, it is a loan with a 0% interest rate and no monthly payment. Buyers must repay the money when they sell the house or refinance the mortgage. The repayment amount depends on the equity at the time of sale or refinance and never exceeds the amount borrowed.
Even though the program is a loan rather than a grant, it helps buyers overcome the upfront financial hurdles to homeownership. A 2022 study from the National Association of Realtors found that difficulty saving for a down payment was one of the biggest obstacles to homeownership. About three-quarters of buyers said they are saving for a down payment and expect it to take six months to three years.
This program helps close the savings gap by reducing the out-of-pocket money needed for a purchase. This helps buyers achieve homeownership faster, which in turn allows them to begin building wealth and equity.
What are the program qualifications?
The program is for first-time buyers. This is defined as someone who, including their spouse, has not owned an interest in their primary residence within the past three years. Displaced homemakers and single parents may also qualify even if they owned a home with their spouse within the past three years.
Approved houses are new construction or newly constructed-not-yet-inhabited with a purchase price of $450,000 or less. There are no exceptions; the home cannot cost more than $450,000.
The property must be a residential unit located in Utah and can be a detached single-family house, a townhome or a condominium. Manufactured and modular homes attached to a permanent foundation also qualify.
The buyer must be a Utah resident, defined as someone who has lived in the state for at least 12 months prior to closing. Upon purchase, the buyer must occupy the home as a primary residence.
Buyers must also use a Utah Housing lender. Qualifying income limits are determined by which Utah Housing loan program they use.
How are funds distributed?
Buyers apply for funds through a Utah Housing Corp. lender. Once the buyer is credit-qualified, the lender submits a program reservation request to Utah Housing. Buyers are not required to have a home selected or constructed at the time they reserve funds.
Once Utah Housing approves the reservation request, the buyer has 90 days to find and close on a house. If the buyer needs more time, there is the possibility of extensions based on the buyer’s progress in the home search and construction process. When the buyer is ready to close, the lender and title company coordinate with Utah Housing to receive funds.
If you’re interested in using this program, make sure to submit your request as soon as possible. Funds are available on a first-come, first-served basis and are anticipated to last about two years.
Why is the program for new construction?
Not only will the program help buyers get into homes, but it will also spur the construction of new, lower-priced housing options. Local builders are striving to create condos priced in the $200,000s, townhomes in the $300,000s and single-family homes under $450,000.
“The encouragement for this program is first to get more homes built that are affordable to first-time homebuyers,” said Jonathan Hanks with Utah Housing Corp. in a presentation to Utah Realtors.
To learn more about the First-time Homebuyers Assistance Program, visit UtahHousingCorp.org and talk to a Utah Housing-approved lender. For help finding a qualifying home, talk to a local Realtor. A directory of Northern Wasatch Realtors is available at NWAOR.com.
Adam Speth is the 2023 president of the Northern Wasatch Association of Realtors.