No money down to buy a house? It can be done, says agent
Jul 22, 2024, 3:57 PM | Updated: Jul 23, 2024, 3:51 pm
A “for sale” sign is displayed outside of a house in Layton. Median price of a home just went down for the first time in 10 years. A Utah realtor joined KSL at Night to discuss what this means for Utah. Photo: Shafkat Anowar, Deseret News
SALT LAKE CITY — The average price of a house in Utah is $522,732 — up 2.1% over the past year. With a down payment of 20%, prepare to drop more than $100,000 for that house to start the buying agreement.
But can you actually purchase a home with no money down?
Co-owner of The Stern Team, Russell Faucette, spoke with Dave & Dujanovic about how to buy a home with little or no money down.
Faucette said for his first home, he said he got an FHA loan for 3.5% and worked with the owner on paying his closing costs.
He added the most popular no-money-down program in the state is Utah Housing Corporation, which is an FHA loan.
“The other three and a half [percent] is a Utah Housing product where they actually give you a second mortgage,” said Faucette. “All you’re doing is coming in with your closing cost, and if you can negotiate that with the seller, then you don’t have any money out of pocket, essentially.”
The buyer is essentially taking out a second loan for $3,500, which is attached to the house.
A better way to sell a house
Another possible ray of optimism for buyers is the housing inventory in Utah is growing, Faucette said.
Instead of dropping the price of the house, buyers are likely to be more inclined to swallow the closing costs.
“As supposed to having to drop maybe $25,000 or $50,000 to start getting activity, if you offer to pay for those closing costs . . . now we’re talking $10[000] to $15,000. You may be able to secure a buyer better than actually doing a price drop to open up a bigger buyer pool,” he said.
Because first-time home buyers don’t typically have the equity to use from their former house, they typically pursue no-money-down loans, such as FHA, Freddie Mac or Fannie Mae.
“It’s a way for them to get in without having to save a ton of money; especially with inflation right now, more and more people are living paycheck to paycheck,” Faucette said.
Related: How Utah is ensuring homes go to owners, not renters
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