Accumulating enough savings for a down payment, closing
costs, moving costs and an extra cushion of emergency
savings can be the most challenging aspect of buying a
home in Utah County. Renters who want the stability and
pride of homeownership and the opportunity to build
equity in a home are sometimes thwarted by the lack of
cash even if they have excellent credit and a stable
income. It has become increasingly difficult to get a
loan in Utah County over the past few years.
Here's why: Even federally insured (FHA) Federal Housing
Association loans require a down payment of 3.5%. That
may not sound like a lot, but on a $200,000 home, you
would need $7,000 just for the down payment.
Zero-down-payment mortgage loans used to be popular when
home values were rapidly rising. Zero down payment
mortgages are very rare and difficult to find in Utah
County. These days, almost no conventional loans are
available without a down payment of at least 3% to 5% of
the home price or more. However, some homebuyers may be
able to qualify for a no-down-payment home loan through
one of several programs.
The caveat is that borrowers must be able to provide
documentation of adequate income to repay the loan and
must have good credit -- at the very least a score of
620 or higher. Some lenders and loan programs will
require a higher score than 620. Before you get too
excited about buying a home ask a lender to pull your
credit report and find out what your credit score is.
No Money Down for VA Military Families
Military families and veterans may qualify for a
Veterans Affairs loan, which offers 100% financing. The
VA loan program has been in place since World War II and
is an insurance program that guarantees loans up to a
certain limit. In most areas, that limit is $417,000,
but the limit is higher in counties with more-expensive
housing. If you are a veteran ask Paul to provide you
with a good VA lender in Utah County. VA loans often
take a little longer to do and require more paperwork.
To apply for a VA loan, borrowers must obtain a
certificate of eligibility from a VA eligibility center.
After obtaining a COE, borrowers can work with any
lender that offers VA loans.
VA loans not only do not require a down payment, but the
mortgage insurance of 2.15 points (a point is equal to
1% of the loan amount) can be wrapped into the loan.
Loan qualifications vary from lender to lender, but in
general, VA loans require a debt-to-income ratio of
about 41%.
USDA rural development housing loans: Some
Cities in Utah County Qualify
Some potential buyers who live in specifically
designated regions in Utah County may qualify for a U.S.
Department of Agriculture Rural Development housing
loan. Although the loans are for "rural" areas, some
eligible locations are actually near towns. Check the
USDA eligibility page to find out if the area where you
want to buy is a designated area. In 2012 parts of Lehi
were considered Rural housing. The part of
Lehi Utah
was the west side. Also,
Saratoga Springs and
Eagle Mountain,
Payson
and
Santaquin were considered
rural housing cities.
Qualifying for a USDA home loan requires not only
location eligibility but also conforming to income
limitations. Borrowers can enter their ZIP code, income
and number of household members here to find out if they
meet the guidelines.
USDA loans are geared to low- and moderate-income
households in Utah County that have the income to afford
the home payments but may be unable to save enough for a
down payment. Minimum credit scores vary from lender to
lender, anywhere from 600 to 640 or higher.
An upfront loan guarantee fee of 3.5% of the loan amount
is required, but borrowers can wrap that fee into the
loan balance to avoid the need for any cash at closing.