Reservations start in two weeks for Utah’s $20K first-time homebuyer program

SANDY, Utah — First-time homebuyers in Utah can start reserving a $20,000 assistance loan on July 11 to use toward the purchase of a newly built home, townhome or condo.

The Utah Housing Corporation will administer the new program that was created by the legislature earlier this year with SB240. The corporation announced this week that buyers will be able to start closing on their loans on or after July 25.

In order to make a reservation, potential buyers don’t need to already have a new home, townhome or condo selected or under contract. They just need to be pre-approved by a participating lender.

“People are really excited about it,” said Cameron Bishop, vice president of sales for RanLife Home Loans. “You have a lot of newlyweds or people coming out that need funds, they need help.”

Bishop said first-time homebuyers have had a rough time recently because of higher interest rates and increased competition.

“They’d love to own a home, they’d love to get into a condo, they’d love to get into a townhouse, but where do you start right now?” he said. “Especially with inflation going on and prices being higher, it’s harder to save up. So coming into $20,000 to help you get into your first home is a real help for a lot of people.”

The program is only for new construction, and will provide a loan for up to $20,000 that could be used for any combination of a down payment, closing costs or to permanently buy down the mortgage interest rate.

“Eligible property types include detached single-family homes, condominiums, townhomes, or similar residential dwellings, including manufactured or modular homes attached to a permanent foundation,” according to the housing corporation.

To qualify for the program, the newly built residential unit must be priced at or below $450,000 and recipients must be a resident of Utah for at least one year when they close on the loan.

The loans will have a 0% interest rate and will not have monthly payments. Recipients will have to pay back the loan — or a portion of it — only when they sell the home or refinance the mortgage.

The repayment amount will be either the amount of the assistance loan or 50% of the home’s equity at the time of sale or refinancing, whichever is less.

Realtor Jamie Kinder with Ranlife Real Estate said the program will help those who may have given up on homeownership.

“I work with a lot of builders and that is kind of a sweet spot for a condo or townhome is the $450,000-or-less range,” she said.

Kinder said it’s attractive to her clients that the loan can be used for an interest rate buy down because it makes their monthly payment far more affordable.

“It doesn’t have to be your forever home,” Kinder said. “For first-time homebuyers, the trick is: just get in somewhere and get started because then you’ll see your equity start building and you can move on from there.”

A buyer who has already entered into a construction contract can still participate in the program as long as they close on the purchase after July 25.

Utah residents can qualify for the assistance loan if they or their spouse had no ownership in a principal residence in the last three years. Displaced homemakers and single parents who owned a home with their spouse while married are exempt from that waiting period.

The $50 million allocated for the program by the Utah Legislature is enough to help 2,400 first-time homebuyers. Initial estimates indicated the funding would help 2,500 buyers, but Utah Housing Corporation said that higher number didn’t account for administrative expenses.