First Time Homebuyer Programs Frequently Asked Questions
What
is
Salt Lake City
’s First Time Home Buyer Program?
Salt Lake City
offers individuals
and households who have not owned a home in the last three years, or
have recently lost their interest in a home due to a legal action such
as a divorce, the opportunity to purchase a home from the City.
Where
are the homes located?
The
homes are located in various city neighborhoods.
All are located within the boundaries of Salt Lake City. We do
not offer homes in locations outside of the City limits, such as
in
Murray
or West
Valley
City
.
What
are the prices of the homes?
The
homes are sold at appraised value.
By federal regulation, the value of the house is limited to the
current FHA maximum. Our
home prices start at approximately $90,000.
If
the homes are sold at appraised value, why should I purchase a home
from the City?
Salt Lake City
offers successful
applicants the opportunity to finance the purchase of a home at a
below market interest rate and only pay closing costs of $500.00.
We offer thirty year, fixed rate financing at either 3% or 5%,
depending on your household income.
We don’t charge a monthly or up-front mortgage insurance
premium.
What
is the condition of the homes offered for sale in the program?
We
offer a variety of homes each year.
Most are older homes that have been remodeled so they meet
Salt Lake City
’s existing housing code. In
most cases, they will have new carpet, fresh paint, and quite often
the kitchens and bathrooms have been remodeled and upgraded.
We also have some newer homes (about 5-8 years old) and from
time to time we offer newly constructed homes in the program.
What
is household income?
Each
year, the federal government announces new income guidelines for each
county in the country. These
guidelines are usually announced in February or March of each year.
Federal rules limit participation in
Salt Lake City
’s First Time Home Buyer Program to households that earn 80% or less
of the median income for Salt
Lake
County. The income varies by the
number of people in the household.
For example, the 2006 income limit for a three person household
is $44,200.00. For a four
person household, the limit is $49,100.00.
Who
is counted as a household member?
Everyone
who lives in the house is considered to be a household member.
The one exception is when a person lives in the house and pays
rent that can be verified as income on the recipient’s federal tax
returns. Income from all
household members 15 years of age and older must be included in the
household income calculation. We
don’t count unborn children as household members.
How
much can I afford?
Salt Lake City
requires that the
monthly housing payment (principal, interest, taxes and insurance) be
no more than 30% of your gross monthly income.
For example, if your total monthly household income is $2,500
per month, the maximum mortgage for which you could qualify is
approximately $148,000.00 (payment of $750 per month for 30 years at
3% interest). We also
require that your total monthly debt (including the proposed housing
payment) be no more than 39% of your gross monthly income.
In the example above, we would allow up to $225.00 in
additional monthly debt payments.
What
is counted as a debt payment?
We
include any debts reported on your credit report.
These would normally include credit card debt, installment
loans (cars, etc.) and other consumer debt.
We usually won’t include monthly medical or insurance bills.
Other monthly obligations that may not show up on your credit
report will be included in the calculation.
An example of this would be a loan taken from your employer
that is repaid through payroll deductions.
My
credit isn’t perfect. Can
I still qualify?
We
don’t require perfect credit. However,
we require that any bankruptcy be discharged for at least two years.
If you have judgments or collection accounts, you must show
that you have entered into a payment agreement and are current with
the terms of the agreement. While
we can overlook some past problems, we will carefully consider
information that indicates a lack of commitment or willingness to
repay obligations.
Do
you approve my application based on my credit score?
Our
credit reports include your credit scores from the three major
bureaus. However, they
aren’t a primary consideration in our credit decisions and are never
the sole factor in approving or declining a loan.
What
kind of employment history do I need?
We
will check employment for the past two years.
If your job history doesn’t extend that far back, we may be
able to grant an exception with a strong explanation.
We will count full time school as employment if we receive a
copy of a transcript that indicates full time student status during
the two year period. In
your current job, you must have completed any required probation
period and your likelihood of continued employment must be described
as excellent. If you just
started a new job, you must have completed your probationary period
and we must be able to verify work for the last two years in a related
field.
My
income is low. May I use a
co-signer?
We
only accept occupants as co-signers on our loans.
Using parents or any other person who doesn’t intend to
occupy the property as a co-signer isn’t allowed.
I’m
a full time student. May I
apply?
Yes.
We will include any income derived from student loans, grants
or family support as income for qualifying purposes.
I
co-signed on a loan with someone else.
Can I qualify for the program?
We
will look at the whole situation.
If you are taking a deduction for part of the interest paid on
the mortgage or if the house in question is your primary residence (or
was at some point during the last three years), or if the house is
serving as your mailing address, we will determine that you are not a
first time home buyer.
I
recently immigrated to the U.S. May I apply for the
program?
You
must be a legal resident of the
United States. You must have some type
of long-term status to apply. For
example, a person living here in the
United States
with only a tourist visa would not be approved.
A person on a student visa could be approved, provided we could
verify the applicant’s status as a full time student.
If
I choose to purchase a home from Salt Lake City, are there other conditions of the program of which I should be
aware?
Because
the program is subsidized with funding from the federal government,
certain conditions must be included in the program.
These conditions are detailed in the conditional quit claim
deed that transfers the property to the buyer and reserves certain
rights to the City. The
first time home buyer agreement also spells out these conditions.
The main conditions are that you must agree to occupy the
property as your primary residence for 15 years (the affordability
period). You agree to
properly maintain the property. The
City reserves the right to inspect the house, both inside and out,
annually for the fifteen year affordability period.
If you decide to sell the house during the affordability
period, the City has the first right of refusal to buy the house back
from you at a price established by a new appraisal.
You will receive one fifteenth of the equity for each year you
occupy the home.
Is
there a cost to apply to the program?
We
charge a $50.00 application fee. This
must be paid when you submit your application.
How
long will the process take?
The
time involved in the process varies by the number of applications we
have received, by the number and types of homes in our inventory and
by your housing needs. For
example, if you will need a four bedroom house for less than
$125,000.00, it will take longer than if you need a two bedroom house
at the same price. It will
take at least a month and probably longer to go through the entire
process.
Where
can I obtain more information?
You
may obtain more information by calling our office at 801-535-7228.
Our staff can respond to your calls from 7:00 AM until 5:00 PM.
If you would like to submit an application, you may download a
copy from our web site. ¡Se
habla Español!
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