Utah SB240 - Frequently Asked Questions
The Utah Housing Corporation will release approximately $50 million in funds for loans closing on or after July 25th, designed to provide first-time homebuyers up to $20,000 to assist with down payment or closing costs.
The following information was obtained directly from the Utah Housing Corporation.
First-time Homebuyer Program Assistance
DEFINITIONS FROM SB240 USED IN THE FOLLOWING FAQ SHEET
- “Qualifying mortgage loan” - a mortgage loan that is purchased and serviced by Utah Housing and secured by a recorded deed of trust in the county where the home is located.
- “Qualifying residential unit” - a residential unit that is: located in Utah; new construction or newly constructed but not yet inhabited; financed by a qualifying mortgage loan; owner-occupied upon purchase; and purchased for an amount that does not exceed $450,000.
- “Recipient” - a first-time homebuyer who receives program funds.
- “First-time homebuyer” - 42 U.S. Code § 12852 defines a first-time homebuyer as an individual who
- (and whose spouse) has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property.
- is a displaced homemaker, who except for owning a home with his or her spouse or residing in a home owned by the spouse, meets the requirements of a).
- is a single parent who, except for owning a home with his or her spouse or residing in a home while married, meets the requirements of a).
When will the program assistance funds be available?
Funding of Program loans will be available for loan closings happening on or after July 25, 2023 (funding request must be received 3 business days prior to closing, i.e. July 19). Reservation requests may be submitted by a Utah Housing Participating Lender (Lender) beginning Tuesday, July 11, 2023.
When can I apply for program assistance?
Once the recipient has credit-qualified with a Utah Housing Participating Lender, the lender may submit a Program Assistance reservation request.
What are the terms of the program assistance loan?
The Program Assistance loan is a 0% interest, no monthly payment loan secured by a recorded Deed of Trust and evidenced by a Subordinate Note.
Can I reserve funds before construction starts, or before I have signed a contract?
Yes, and the reservation will have an expiration date that will be defined in published Program rules.
If I entered into a construction contract prior to the creation of the program, am I still eligible for program assistance?
Yes, if the recipient closes on the purchase of the qualifying residential unit and the Program Assistance is funded after July 1, 2023.
Who will administer the program and fund the program assistance?
Utah Housing will administer the Program and establish rules governing the method of application, process, and other criteria that will be used to provide Program Assistance to recipients.
Who will service the program assistance loan?
Utah Housing will service both the Program Assistance loan and the qualifying mortgage loan.
Can the program assistance be combined with Utah Housing's down payment assistance 2nd mortgage?
Yes. In this situation, the Deed of Trust for the Program Assistance loan will be recorded in a third lien position.
If I receive program assistance and choose to not use Utah Housing's down payment assistance 2nd mortgage, will I receive a rate reduction on my qualifying mortgage loan?
Based on current market conditions, a rate reduction may be applied at the time of interest rate lock request.
Can the program assistance be combined with the veterans or law enforcement and correction officer grants administered by Utah Housing?
No.
Must a buyer use a certain lender or loan program to receive the assistance?
Yes. A Utah Housing Participating Lender must be used to obtain a qualifying mortgage loan. Any first mortgage loan program offered by Utah Housing may be used in conjunction with Program Assistance.
How much may I receive in program assistance and for what purpose(s) may it be used?
You may receive up to $20,000 in Program Assistance and the funds may be used for down payment, closing costs, and/ or a permanent interest rate buydown for the qualifying mortgage loan.
How many homebuyers will the program assist?
The $50 million appropriated by the Utah legislature is anticipated to assist approximately 2,500 homebuyers. Future funds may be available based on repayment of Program Assistance received from the sale of qualifying residential units or the refinance of qualifying mortgage loans.
Is there a maximum purchase price for a qualifying residential unit?
Yes, the maximum purchase price is $450,000.
Why is the program only for newly-built homes?
The Program’s objectives are to assist first-time homebuyers and incentivize builders to produce affordable housing units throughout the state.
Will there be income limits?
Yes. It is anticipated that limits will be similar to Utah Housing’s non-FirstHome income limits. Income limits will be further defined when Program rules are published.
Must I be a Utah resident in order to qualify for program assistance?
Yes. Any recipient must have been a resident of Utah for at least the previous twelve (12) months prior to closing.
What are the eligible property types?
Eligible property types include detached single-family homes, condominiums, townhomes, or similar residential dwellings, including manufactured or modular homes attached to a permanent foundation.
Must the program assistance be repaid when the qualifying residential unit is sold or the qualifying mortgage loan is refinanced?
If the recipient completes a sale or refinance the recipient shall repay an amount equal to the lesser of:
- the amount of Program Assistance the recipient received; or
- 50% of the home equity amount.
