You may have been taught that you need 20% for a down payment to buy a home...
Although that is not the truth, here is how we have helped hundreds of clients at Academy Mortgage buy a home in Utah with little to no money out of pocket using a down payment assistance program.
Utah Housing Corporation was created in 1975 by Utah legislation to serve the public by creating a pot of money which mortgage loans at reasonable interest rates and was created to provide affordable housing for low to moderate income families.
Utah Housing offers loans for first time homebuyers, home buyers who are buying a home again, home buyers who don’t have the most favorable credit, and no mortgage insurance options as well.
With favorable rates and having the opportunity to purchase a home with little to no money out of your pocket this is a great way to get into a home.
Utah housing loans follow FHA guidelines and for most loan options allow up to a 56% max debt-to-income ratio
DTI (Debt-To-Income): Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed. Reference: https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/
The pros of using Utah Housing Loan for your St. George home
- The main benefit of using a down payment assistance program is you do not have to spend your own money to get into the home.
My borrowers who have money saved I still always recommend Utah Housing loans so that way they know they can save their nest egg that they have saved for emergencies or moving expenses.
- Utah Housing loans offer great and competitive interest rates.
Depending on the loan program that best fits your situation will dictate the interest rate. I as the lender cannot pay any discount points towards the rate because Utah Housing Corporation gives us a fixed rate that can’t change and they tell us what the fees are.
The Cons of using Utah Housing Loan for your St. George home
- The main con of using a down payment assistance program is you will have a 2nd mortgage payment attached to your total mortgage payment.
Your mortgage payment is made up of a few different things. First you are paying your principal and interest which go to paying down the balance of the loan and the interest that goes to the lender for giving you the money to purchase the home. Next, your payment will consist of hazard insurance, real estate taxes, and mortgage insurance. When buying your home in St. George and using a down payment assistance program you will have an additional payment to go towards the money you borrowed for the down payment and closing costs.
- You will not walk into your new home with instant equity.
The reason you wont have instant equity is because that equity is eaten up by the amount of money you are borrowing for your down payment and closing costs. This means you will most likely need to stay in the home for awhile as you pay the mortgage down and can either refinance or sell it.
These were just a few pros and cons of buying a home in St. George Utah with little to no money down. If you have any questions please feel free to call or text me anytime and we can go over your specific financial situation and we can come up with a game plan to help you buy a home.
Alexander Hernandez | NMLS: 1605167
444B East Tabernacle St. Suite 101 Saint George, UT 84770
Academy Mortgage is an Equal Housing Lender
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