Arguably, the hardest part of buying a home in Utah is coming up with the down payment. You may know people who have put tens of thousands of dollars down and others who got a zero-down mortgage in Utah. How does it work? How much do you really need? The mortgage lenders at Integrity First Lending can tell you.
Traditionally, mortgage lenders have recommended that homebuyers save up 20% of the purchase price of a home in their target price range. Most homebuyers who don’t have 20% to put down have to pay PMI (private mortgage insurance) each month until they achieve 20% equity in the home.
PMI protects the mortgage lender from losses in the case of foreclosure. But paying $100-$200 more per month until you reach 20% equity can take a long time and cost many thousands of dollars. And PMI doesn’t go toward your mortgage — either the interest or the principal. It goes straight to the insurance company.
The median home price in Salt Lake City today is about a half-million dollars. When you consider the whole state of Utah — including rural areas — the price drops to $400,000. So a down payment of 20% on most homes in Utah is about $80,000. As a longtime Utah mortgage company, we understand that it can be hard to save up $80,000-$100,000.
Especially if you are paying on student loans or other types of debt, it can take many years to save that much money.
What are your alternatives?
Many mortgage lenders will approve your mortgage with 3% down if you have a minimum credit score of 620. FHA loans often accept 3.5% down. However, that’s still $13,000-$15,000. And you’ll have to pay PMI along with your monthly payment of mortgage, interest and taxes.
If you’re a first-time homebuyer, you may qualify for a zero-down home loan in Utah. If you’re amenable to living in a rural area, you may be able to qualify for a USDA loan, which is also no money down. If you’re a service member, veteran or the surviving spouse of a service member or veteran, you may qualify for a VA loan, which requires no money down.
Both VA and USDA loans also do not require PMI; however, you must pay fees to the lender at closing to protect them against foreclosure.
Whether you want to get a home in Salt Lake City or another part of Utah, the mortgage lenders at Integrity Lending can help. Mortgage rates in Utah are historically low, so now is the best time to buy. Give us a call or come in to talk to our friendly mortgage lenders. We’ll help you figure out a way to become a Utah homeowner.