Buying Your First Utah Home? See What Kind of Down Payment You Need


Buying Your First Utah Home? See What Kind of Down Payment You Need

Learn about the types of loans available and what down payment is right for you

If you’re shopping for a mortgage for your first Utah home, there are a few things to consider before making your decision. 

But first, what is a down payment? A down payment is the amount of money that you pay up front for the house. 

Take, for example, a home with a purchase price of $100,000.  

If your down payment is 20%, you would pay $20,000 up front. The remaining $80,000 would be the amount of your mortgage. This is the loan amount you would pay off in monthly installments throughout the period of your mortgage. 

Types of Down Payments

Different types of loans require different down payment amounts. Let’s take a look at the types of loans available for first-time home buyers.

FHA: An FHA loan is a mortgage insured by the Federal Housing Administration. FHA loans are helpful for buyers with limited savings or lower credit scores.  

The credit and income guidelines are more relaxed on an FHA loan, allowing down payments as low as 3.5% with a 580 FICO score. The program also limits the amount of closing costs you are required to pay.

VA: A mortgage loan program established by the U.S. Department of Veterans Affairs, VA loans offer up to 100% financing on the value of a home to help eligible veterans and their families obtain home financing. This means no down payment is required.

Jumbo: A jumbo mortgage is a loan amount that is above the limits set by the government, also referred to as a non-conforming loan. 

The cost of a jumbo loan is higher than a standard loan, so expect a higher interest rate for a jumbo loan. The home must also be located in a higher-cost area, which is a neighborhood that can support a higher mortgage. 

USDA: The United States Department of Agriculture offers a loan program with up to 100% financing for homes in certain rural areas. This means you could qualify for a loan with zero down payment in USDA approved areas.

Which Loan Is Right for You?

Deciding which mortgage is right for you depends on the monthly mortgage payment you can afford, your credit score, veteran status, and other criteria.  

If you’re able to put down a larger down payment, such as 20%, there are advantages such as:

  • A smaller mortgage loan balance
  • Lower interest rates
  • Reduced mortgage insurance premiums 
  • More manageable monthly payments  

However if a 3.5% down payment is more feasible for your budget, there are advantages to a smaller down payment, too:

  • Enter the housing market faster
  • More short-term flexibility
  • More cash available for investments or retirement savings
  • If you plan on moving in a few years, less cash invested into the home  

For many first-time buyers, the down payment is the biggest obstacle to homeownership. So loans with lower down payment requirements, such as FHA, VA, and USDA loans, are usually the most attractive. 

Many of these loans will require the borrower to purchase some type of private mortgage insurance (PMI), however. The average annual cost of PMI typically ranges from 0.55% to 2.25% of the original loan amount.

For first-time home buyers, the FHA loan with a 3.5% down payment is one of the most popular choices.  

According to Zillow, the average price for a home in Utah is $386,723. 3.5% of this amount is a downpayment of around $13,500 if you’re buying a home priced in this range.  

Take the Next Step in Purchasing Your First Utah Home 

Here at Graystone Mortgage, we make achieving home ownership easy.  

If you’re ready to buy your first home in Utah, we’re standing by to help you make it a reality.  

Call us today at 801-893-0844 to speak to one of our experienced mortgage professionals and learn more about what kind of mortgage interest rates may be available for you.