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Being a first-time home buyer in Utah can be a little overwhelming, after all, it is a big investment financially and emotionally. And since buying your first home is one of the biggest milestones of your adult life, you’re going to want to do it right. Here’s everything you need to know as a first-time home buyer in Utah. From financing to picking the right house- we’ll help you! 

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Modern living room with fireplace | First time home buyer Utah
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First-Time Home Buyer

There’s nothing like being a first-time home buyer in Utah, especially right now. There’s solid growth in the economy, plenty of opportunities for outdoor recreation, and the crime rate is one of the lowest in the country.  These and other reasons are why buying a new home makes perfect sense, but let’s make sure you are ready.

Make Sure You’re Good For It

It’s not the most exciting part of buying your first home. In fact, it’s kind of the opposite of exciting. But it’s really important to have your financial ducks in a row as early in the process as possible. You’ll want to figure out how much you can afford for your new home. 

You don’t want to get yourself into a financial obligation if you can’t live up to it, so if you’re going down the loan route, make sure that you’ll be able to meet the requirements of that loan and still manage other expenses. Your monthly mortgage payment should be something you can take care of without going through too much trouble. 

In fact, Bankrate.com suggests homebuyers follow the 28/36 rule when using a mortgage calculator to determine how much they can afford. 

  • Spend no more than 28% of gross income on housing.
  • Spend no more than 36% of gross income on debt.

It is also a good idea to take care of your current debts before tying yourself to a house as well. And you also want to be careful not to take on new liabilities, so avoid new credit or anything like that for a while. 

You might want to take your savings seriously too if making a down payment is something you’ve set your sights on. Preparing for the costs that will probably follow the purchase is also wise, as you don’t want to get overwhelmed with expenses down the line.

Get Your Affairs in Order

There’s a lot of documentation that’s required when applying for a mortgage. This includes your income and credit information, bank statements, and tax returns; any record of your finances will have to be carefully curated and safeguarded before you meet with a banker. 

As you probably know, an error in your credit information could cause your credit score to plummet, thus affecting your eligibility for a mortgage. So keep track of everything to prevent any hiccups in your loan application.

Taking note of your spending will also go a long way in helping you realize your home-buying goals. If you know your expenses, you can easily set aside the money for your mortgage. Every expense, big and small, must be noted down to make sure that you get a true reflection of what your wallet looks like. 

Financing Your Home

Sure, most mortgage bankers will need up to 20% of the price of the house upfront. But, for those with not-so-good credit and anyone that can’t make that kind of down payment, you have FHA loans. This is the government’s best attempt at helping you finance the purchase of your home. With this loan, the down payment is as low as 3.5% and the interest rates can be lower than commercial offerings. 

When considering which assistance program to go with, you’ll have to compare how much closing cost and tax credit assistance you get. One interest rate could be better than the other as well, so that’s something else to factor into the equation. Getting as many quotes as you can is a great way to find out which option is best for you.

Additionally, Utah Legislature recently finalized a first-time homebuyer assistance program called S.B. 240. The program is offering up to $20,000 in assistance and allows first-time homebuyers to use that for down payment assistance, closing costs, and/or a permanent interest rate buydown on qualifying loans on homes priced at or below $450,000. Read more about the Utah First-Time Homebuyer Program S.B. 240 here.

You’ll have to go through a handful of lenders before singling one out. No matter how good the first offer sounds, move on and hear the next one. Reviewing different types of loans and weighing their advantages against their disadvantages only makes sense. 

See the Bigger Picture

Larger down payments will usually result in lower monthly payments and interest rates, while a smaller down payment obviously allows you more financial freedom. You can add more money into your rainy day fund and take care of more pressing expenses or to furnish your new home.

Show that You Mean Business

Properties get swooped up quicker than you think in Utah. One moment a property is listed, the next it’s off the market. Take steps that will let you act quickly on the home of your choice, like getting a  pre-approval letter from your lender. This gives sellers confidence in you. It shows how much money you’ll need to fund your purchase, and it’s a great way to show commitment toward the sale.

Press On as a First-Time Home Buyer

Don’t make assumptions about whether you qualify for a loan. Speaking to your home loan lender will make it clear where you stand. If it does happen that you’re not eligible for a loan, know that it isn’t the end of your dream. You can still speak to your mortgage provider and find out why you didn’t qualify so you know what to fix.

Read Up On It

The more you understand what purchasing a home means for you, the more likely you are to make good choices. 

Surprise expenses won’t do you any good, so if you know what to expect; you can better manage your finances. Understanding how your local HOA operates and knowing the different housing regulations will also help you avoid unnecessary penalties and costs.

There are free and easily accessible homebuyer seminars you can be a part of as well. You can find homeownership programs and products on the Housing Education Coalition of Utah Directory.

Picking the Perfect Property

If the house needs too much of your time, energy, money, and equity; you’re probably better off without it. Look at your lifestyle and see if it suits the type of property you’re going for. Does a townhouse cater better to your needs or will a single-family home do the trick? 

The neighborhood matters too as it’ll affect the value of the home in the long term and even your happiness. Established neighborhoods in the suburbs have their charm, but as the new folks in town, it can be hard to make friends. Remember middle school when you were the odd man out?  Neighbors in an established neighborhood likely have known each other for years and unfortunately, their tribe may be full.

In Daybreak, you can have the best of both worlds—an established community with award-winning charm, dozens of amenities to explore, and a community council (LiveDAYBREAK) that throws amazing events to help you meet your neighbors. Yep, even in a pandemic this dedicated team has found safe and fun ways to connect. Get to know LiveDAYBREAK, here.

Remember to make a list of what is important to you, if your new home and neighborhood can tick 8 out of 10 boxes, you’re in good shape.

Why Buying a New Home Makes Perfect Sense

Buying a new home means you can finally put your Pinterest ideas to good use. During the home buying process, you can work with your home builder to customize the home to suit your needs and wants. No need for a “honey-do list.” Get it done the way you want it the first time around.

Also, remember that the cost of maintenance and utilities for a new home is typically lower. Nobody likes spending extra money. So, when it comes to the choice between a new home or an existing home, it is a no-brainer. Buying a new home will save you more money than an existing home of the same size, due to improvements in building materials and practices. 

What Qualifies a First-Time Home Buyer?

The phrase ‘first-time buyer’ seems simple and straightforward, but there’s more to it than meets the eye. If you haven’t had a principal residence for more than 3 years, you’re considered a first-time buyer. If you’ve owned a house with a spouse before and ended up displaced, you’re a first-time homebuyer.  Remember, there are perks to being labeled this, so you’ll want to do what you can to earn it.

Are You Prepared to Make the Purchase?

Buying a new home is an investment that has a certain amount of risk attached to it. While the prospect may be exciting, it’s important to take a step back and figure out if you’re ready to take this huge step. Having consistent cash flow is a good sign that it may be time to put in an offer for a house. 

Get the Right Realtor

Knowing your way around Utah just isn’t enough. In order to find the perfect neighborhood, you’ll need professional help. Getting an expert on board will help you navigate the market even more and may help you access houses you wouldn’t if you were on your own. Sometimes realtors have access to pocket listings, meaning properties that haven’t officially been listed yet. This is especially helpful in a fast-paced housing market. The longer your realtor has been dealing with Utah properties, the better.

You might think of yourself as a mighty negotiator but no one does it like a realtor. Negotiating is what they do day in and day out, and they sure have a lot of time and opportunities to hone that skill. You don’t have to worry about all the paperwork. Making an offer will be a breeze, and you can avoid a lot of mistakes by getting someone who knows the industry.

Say you’ve got your eye on new homes in South Jordan, Utah and you just don’t know the place that well. A realtor will know the ins and outs of the area. They’ll have connections as part of their network in the region. From pricing expertise to high ethical standards, you can expect to gain a lot from a real estate professional.

First Time Home Buyer in Utah FAQ

How much do first-time home buyers have to put down in Utah?

The down payment required for first-time home buyers in Utah can vary based on the type of loan they get. For conventional loans, a down payment of 20% is typically standard, but some loans may allow for down payments as low as 3-5%. For FHA loans, the minimum down payment can be as low as 3.5%. USDA and VA loans, on the other hand, might not require any down payment at all. Keep in mind that these rates can vary, and it’s always best to check with lenders or housing agencies for the most current information.

What is the 20k grant for first-time buyers in Utah?

Utah First Homebuyer Program S.B. 240: As of July 1, 2023, this program is offering up to $20,000 in assistance. Created by the Utah Legislature, S.B. 240 allocates funds to first-time homebuyers that can be used for down payment assistance, closing costs, and/or a permanent interest rate buydown on a qualifying loan. The program, administered by Utah Housing Corporation, only applies to new construction homes that are priced at or below $450,000. Read more by clicking on the link above.

How much do most first-time home buyers put down?

According to the National Association of Realtors, the average down payment for first-time homebuyers in the U.S. tends to be around 6% of the purchase price. However, this can vary based on the location, type of loan, and the buyer’s financial situation.

How to buy a house in Utah with bad credit?

According to Mortgage Utah, if you have bad credit and want to buy a house in Utah, there are a few steps you can take:

  • Improve your credit: This might include paying your bills on time, paying off debt, and not opening new credit lines.
  • Save for a larger down payment: This can often improve your chances of getting approved for a mortgage.
  • Consider an FHA loan: These loans are designed to help people with lower credit scores buy homes. They often require lower down payments and have less stringent credit requirements.
  • Explore local and state programs: Utah has various homebuyer assistance programs that might be able to help.
  • Work with a credit counselor: A credit counselor can provide guidance on improving your credit score and navigating the home-buying process.

What’s the lowest credit score to buy a house?

The minimum credit score needed to buy a house can vary greatly depending on the type of loan you’re applying for. For conventional loans, lenders typically look for a credit score of at least 620. However, you can qualify for an FHA loan with a credit score as low as 500 if you have a 10% down payment, or 580 with a smaller down payment.

What credit score is too low to buy a house?

According to The Mortgage Reports, a credit score below 500 is considered too low to qualify for most types of mortgages, including FHA loans. However, some lenders may have more flexible requirements, especially if you can make a larger down payment. Keep in mind that even if you qualify for a mortgage with a low credit score, you’ll likely face higher interest rates and more expensive mortgage insurance.

Make the Call

If you made it this far, then you have an idea of what you’re looking for and you’re ready to pull the trigger on becoming a first-time homebuyer. Just remember that the home-buying process may produce a few hurdles, but in the long run, it will be worth it.  

Luckily, Daybreak has a variety of home builders who are trained to escort you on this journey. They’ll help you navigate the complexities of the transaction and make your move nice and smooth. 

Interested in Additional First-Time Home Buyer Resources?

5 Reasons to Buy New vs Resale Home

New Home Market Conditions in Utah

New homes in South Jordan

20 Things to Know About Moving to Utah.


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