First-Time Home Buyer Loans in Utah

Buying your first home is an exciting time filled with change, choices, and lots of questions.

Buying your first home is an exciting time filled with change, choices, and lots of questions. Here we answer many of the questions first-time home buyers have and offer first-time home buyer tips, such as how to get down payment assistance and take advantage of programs available to you.

Take the stress out of your home-buying experience and know what to expect by reading through this guide. If you still have questions, speak with one of our experienced loan officers to explore your options.

Am I ready to buy my first home? Renting versus Buying.

Buying your first home is a life-changing decision and you probably have asked yourself if you are ready to take this big step. Owning a home has many benefits over renting, but also carries many new responsibilities and financial decisions to consider.

Renting versus Buying

Can I afford to buy a home?

Purchasing your first home will have some upfront costs, but could be cheaper than renting in the long run. These upfront costs include a down payment, moving costs, closing costs, and any renovations that need to be made. You must also consider monthly expenses in addition to your mortgage payment, such as property taxes, homeowners and mortgage insurance (if applicable), and homeowners association fees.

By purchasing a home, however, you will build equity. Usually, most home values increase year-over-year. You can also write off mortgage interest and property taxes in many cases. Because of these factors, the cost of buying could be cheaper than renting long-term.

To assess your financial situation and determine if you can afford the upfront costs of buying your first home, check out our mortgage calculator to estimate your monthly payment or get pre-qualified and speak with a loan officer for a more specific assessment.

What credit score do I need to purchase my first home?

Credit score requirements for purchasing your first home vary depending on the type of mortgage loan you apply for. Below are general credit score requirements for conventional and government-backed loans.

Conventional loan.
 To avoid higher interest rates, it is recommended you have a credit score of 680 or higher.
FHA loan. 
A minimum credit score of 580 is required. If you have a low credit score or need a low down payment option, this may be a good loan for you.
VA loan. 
Veteran or service member loans require a credit score of 580 or higher.
USDA loan. 
For this rural and suburban area loan, a credit score of 640 or higher is ideal. Some lenders may only require a score of 620.
Utah Housing loan. 
A credit score of 620 or higher is required.

For more information about the different types of mortgage loans, we will go into more detail below.

Ready to buy? First steps for buying your first home.

Now that you’ve weighed the options and made your decision, there are a few important first steps when preparing to purchase your first home. Doing your research on types of loans and shopping around for rates will save you money and time in the long run. Don’t worry - you don’t need to be an expert, but having a general understanding of the process will give you a head start.

Determine your budget. 
Sit down and calculate your ideal monthly payment, including principal, interest, mortgage insurance, and taxes. This is important to nail down before looking at houses and submitting offers.
Explore your loan options. 
Educate yourself on the different types of home loans that are available to first-time home buyers and which ones you may qualify for. These include USDA loans, FHA loans, conventional loans, VA loans, and Utah Housing loans. Keep reading for more info on these loans.
Shop around for rates. 
Reach out to a couple of mortgage lenders to make sure you are getting the best rate out there. A small percentage difference could save you thousands of dollars.
Check out our rates.

Get pre-approved.
Before going out to house hunt, verify how much you can afford with a pre-approval letter from a lender. Many sellers will require this before accepting your offer.

See how much you could pre-qualify for.

If you have questions about how to calculate your budget, want more information about what loans you could qualify for, or would like to get pre-approved today, fill out a quick pre-qualification form.

Ready to buy

What are the different types of first-time home buyer programs?

There are dozens of loan types for first-time home buyers to choose from, however, there are four popular loan programs that most end up using: a conventional loan, a Federal Housing Administration (FHA)  loan, a Department of Veteran Affairs (VA) loan, a US Department of Agriculture (USDA) loan, or a Utah Housing loan.

Each of these loan programs are accessible, have low rate or low down payment options, and friendly terms that first-time home buyers can benefit from. A loan officer can help you know which loan is right for you, but it is helpful to be educated on your options beforehand.

Conventional loan.
Conventional loans are the most common type of mortgage. These loans are not backed by a government agency and are originated and serviced by private mortgage lenders such as banks, and credit unions. They are then sold to government-sponsored enterprises like Fannie Mae or Freddie Mac.

Conventional loans are a great choice for first-time home buyers with good credit and money saved for a down payment. Money can be gifted for a down payment as well. There are several conventional loan options that offer a low down payment of only 3%, such as Fannie Mae’s HomeReady loan, Freddie Mac’s HomePossible loan, or the Conventional 97 home loan.

FHA loan.
FHA loans are mortgages that are backed by the Federal Housing Administration. Although this backing means that mortgage insurance is required on FHA loans, because lenders are protected they are able to offer lower interest rates and less strict requirements to qualify. Many first-time home buyers find FHA loans attractive for these reasons.

First-time buyers with credit scores as low as 580 can qualify for an FHA loan with only 3.5% down. In some cases, those with credit scores of 500 can qualify with 10% down. Mortgage insurances can also be cancelled later on with a refinance once you have built equity in your home.

VA loan.
The Veterans Administration backs VA loans that are made by banks, savings and loans, and mortgage companies. The loan program has helped returning service members buy a new home, even without a down payment or an excellent credit score. These loans have become a critical lifeline for veterans who are buying their first home.

VA loans off some of the lowest rates available, often being 0.40% lower than comparable rates with zero down payment.

USDA loan.
This type of loan is available for rural areas and low-density suburbs in Utah with populations lower than 20,000. A USDA loan is a great zero-down payment mortgage option if you are looking for a home in these types of locations. First-time buyers can also benefit from lower mortgage rates and cheaper mortgage insurance with moderate-income with this type of loan.

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