Utah’s new $20,000 first-time homebuyer assistance program created by the legislature earlier this year is set to rollout in the beginning of July.
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.
The loans will have a zero percent interest rate and will not have monthly payments. Recipients will have to pay it back only when they sell the home or refinance the mortgage.
“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, the newly built residential units must be priced at or below $450,000. The price limit aims to incentivize builders to build affordable housing.
“It holds the price level,” explained Ross Ford, executive vice president of the Utah Home Builders Association.
Ford said the program is already making builders focus on the $450,000 limit.
“I’ve had a number of builders start talking to us saying they’re looking for ways for, ‘How can we do this? How can we get this down?’” he said.
A resident who has already entered into a construction contract can still qualify for the program and long as they close on the purchase after July 1.
“In America, we believe in home ownership, and in Utah, we believe in home ownership,” Senate President Stuart Adams, R-Layton, said in February during the legislative session.
Adams sponsored the bill, SB240, which created the assistance program. Without help, Adams said many families would not be able to make the jump into homeownership.
“We may be losing our middle class,” he said. “Most of people’s net worth is in their home. The security and stability, I think, economically, and I think emotionally, comes from property ownership.”
Utah residents can qualify for the assistance as long as 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 is enough to help 2,500 first-time homebuyers.