How Much Do You Need to Buy in Utah? You Probably Don't Need 20% Down
Hi, I'm Alex Hernandez, a mortgage loan officer with Guild Mortgage in St. George, Utah. One of the most common things I hear is, "I'll buy once I've saved 20%." Saving is great, but waiting for 20% down can push homeownership years down the road. The truth is that most loan programs don't require 20%. In this post I'll walk through the main options Utah buyers use to buy with less money down, including FHA, conventional 3% down, VA, USDA, and Utah Housing Corporation down payment assistance.
Where the 20% Myth Comes From
Twenty percent down is the point where a conventional loan no longer requires private mortgage insurance (PMI). That's useful, but it isn't a requirement to buy. Putting less down usually means paying some form of mortgage insurance, and that tradeoff is often worth it if it gets you into a home sooner. The CFPB has a good overview of how to decide on your down payment.
Low Down Payment Loan Options
FHA loans: 3.5% down
FHA loans are insured by the Federal Housing Administration. Under HUD's guidelines, borrowers with a 580 or higher credit score may put down as little as 3.5%. FHA is known for flexible credit guidelines, and it includes upfront and annual mortgage insurance. I compare it in depth in FHA vs conventional loans in Utah.
Conventional loans: as little as 3% down
Some conventional programs allow 3% down. Fannie Mae's HomeReady and Freddie Mac's Home Possible are built for low- to moderate-income buyers and allow down payments as low as 3%, with income limits that vary by area. Fannie Mae and Freddie Mac also offer 3% down options for qualifying first-time buyers. PMI applies under 20% down, but it can be removed later once you build enough equity.
VA loans: no down payment for eligible veterans
If you're a veteran, active-duty service member, or eligible surviving spouse, a VA loan may let you buy with no down payment. According to the U.S. Department of Veterans Affairs, VA-backed purchase loans generally don't require a down payment or private mortgage insurance, though most borrowers pay a VA funding fee unless exempt.
USDA loans: no down payment in eligible areas
The USDA Single Family Housing Guaranteed Loan Program helps low- and moderate-income buyers purchase homes in eligible rural areas with no down payment. "Rural" is broader than many people think, and some communities around Southern Utah may qualify. Income limits and property location rules apply, and you can check addresses on USDA's eligibility site.
Utah Housing Corporation Programs and Down Payment Assistance
Utah Housing Corporation (UHC) is Utah's housing finance agency. It offers mortgage programs through participating lenders, plus down payment assistance (DPA) for buyers who haven't been able to save enough for a down payment and closing costs.
FirstHome
FirstHome is designed for qualifying first-time homebuyers, with exceptions for some single parents and veterans. It has income and purchase price limits, and UHC's materials list a minimum credit score of 660.
FHA, VA, and conventional options for repeat buyers
UHC also offers FHA, VA, and conventional programs that can be used by first-time or previous homeowners, each with its own credit and eligibility requirements.
The DPA second loan
According to Utah Housing's down payment assistance overview, UHC can provide a DPA second loan of up to 6% of the first mortgage amount, which can be used toward your down payment and/or closing costs. It's only available when paired with a Utah Housing first mortgage, and it's a loan, not a grant, so it must be repaid. UHC offers different DPA structures and caps that change over time, so check UHC's website for current terms or ask me to walk you through them.
Other Ways to Cover Your Cash to Close
- Gift funds: Many programs allow family members to gift part or all of your down payment, with proper documentation.
- Seller concessions: Depending on the program and the deal, a seller may be able to contribute toward closing costs.
- Local programs: Some cities and counties have their own assistance. Availability changes, so ask me what's open when you're ready.
Comparing the Options
| Option | Minimum down | Good to know |
|---|---|---|
| FHA | 3.5% (580+ score) | Flexible credit; upfront and annual MIP |
| Conventional (HomeReady, Home Possible, and similar) | 3% | PMI removable later; income limits on some programs |
| VA | 0% for eligible borrowers | No PMI; funding fee usually applies |
| USDA | 0% in eligible areas | Income and location limits |
| Utah Housing DPA | Second loan up to 6% of first mortgage | Paired with a UHC first mortgage; must be repaid |
So How Much Do You Need?
It depends on the price, the program, your credit, and closing costs. A lower down payment means a larger loan and usually mortgage insurance, so your monthly payment may be higher. The right answer balances cash you keep in the bank, the monthly payment you're comfortable with, and how soon you want to buy. When you apply, I'll show you real scenarios side by side. If you're curious how lenders size up your file in general, read what a lender actually looks at, and if you own a business, see my guide for self-employed buyers.
Frequently Asked Questions
Do I have to be a first-time buyer to put down less than 20%?
No. FHA, VA, USDA, and several conventional options are open to repeat buyers. Some specific programs, like UHC's FirstHome, are aimed at first-time buyers.
Is down payment assistance free money?
Not always. Utah Housing's DPA is a second loan that must be repaid. Some local programs work differently, so read the terms carefully.
Can I combine down payment assistance with FHA?
Often, yes. Utah Housing offers FHA first mortgages that can be paired with its DPA second loan, subject to eligibility.
Will less money down raise my payment?
Usually. You'll borrow more and typically pay mortgage insurance. I'll show you the tradeoff so you can decide.
Let's Find Your Number
You may be closer to owning a home than you think. Let's look at your options and figure out how much you actually need to bring to the table.
Start your application with me today →
Equal Housing Opportunity. Alex Hernandez, NMLS #1605167. This article is for general educational purposes only and is not a commitment to lend or an offer of credit. All loans are subject to credit approval, underwriting, and property eligibility. Program guidelines, loan limits, and terms can change without notice. Contact me to review the options available for your situation.