Utah is the clearest example in the country of why the words “down payment assistance” need unpacking. The state offers up to $27,500 in help, and it also offers a $20,000 new-construction program. None of it is a grant, none of it is forgivable, and one option charges you 3.5% interest.
That does not make these programs bad. It does mean you need to read the structure before you sign. Here is the honest breakdown.
Utah Housing’s two DPA second loans
Utah Housing Corporation offers two down payment assistance seconds, and you choose one. They work very differently.
Traditional DPA Second — you make monthly payments
Up to 6% of the first mortgage amount, capped at $27,500. It is a fully amortizing 30-year fixed second mortgage with required monthly payments. The rate is set at 1% above your first mortgage rate (capped at 8%, and never below your first rate).
In practice this means two payments to Utah Housing every month. If your first mortgage is at 6.25%, this second is at 7.25%.
Deferred DPA Second — no payment, but interest still accrues
Up to 3.5% of the first mortgage amount, also capped at $27,500. No monthly payment — but this is the part people miss: it carries a fixed 3.5% deferred simple interest rate. The outstanding principal plus accrued interest comes due at maturity, sale, or refinance.
So “deferred” here does not mean free. On $20,000 held for eight years at 3.5% simple, you would owe roughly $5,600 in accrued interest on top of the principal. Compare that carefully against the traditional option before choosing.
The $20,000 new-construction program (SB 240)
Utah’s First-time Homebuyer Assistance Program is a separate state initiative with an unusual repayment formula and a hard restriction on what you can buy.
- Up to $20,000, usable for down payment, closing costs, or a permanent interest rate buydown.
- 0% interest and no monthly payment — but repayable on sale or refinance. You repay the lesser of the original amount received or 50% of the equity you gained. Refinancing into another qualifying mortgage defers repayment rather than triggering it.
- The home must be newly constructed and not yet inhabited. This program does not work on existing homes.
- $450,000 purchase price cap.
- You must have been a Utah resident for 12 months before closing, and occupy within 60 days.
- You must qualify for a Utah Housing mortgage.
Funding status: the program received an $80 million appropriation projected to serve about 3,900 buyers. Utah Housing’s FAQ, updated July 16, 2026, states funds are currently available and will be as long as funds last. Money also recycles back as earlier recipients sell or refinance.
The rate buydown option is worth serious thought. On a new-construction purchase, permanently lowering your rate can be worth more over thirty years than the same $20,000 applied to your down payment.
Program requirements and limits
Utah Housing’s eligibility matrix was last revised July 6, 2026.
By loan program
- FirstHome: 660 minimum credit score. First-time buyer required, with exceptions for single parents and veterans. Income and purchase price limits apply. Homebuyer education is recommended but not required.
- FHA/VA Mortgage: 620 minimum. Income cap $165,200. Education required when all occupants are first-time buyers.
- Freddie Mac HFA Advantage: 680 minimum (700 for two-to-four units). Income cap $165,200.
FirstHome income and price limits by county
Limits are set by county group and household size (one-to-two people versus three or more), with matched price caps:
- Salt Lake: $126,100 / $145,000; price cap $666,600.
- Utah & Juab: $143,000 / $166,800; cap $769,100.
- Davis, Weber, Summit, Wasatch, Morgan: $141,400 / $164,600; cap $778,500.
- Washington: $118,000 / $135,700; cap $635,300.
- Tooele: $121,300 / $139,400; cap $666,600.
What Utah does not offer
No true grant. No forgivable loan. No first-generation buyer program. Every dollar of Utah state assistance is repaid, and two of the three options accrue interest.
If you are looking for forgivable money in Utah, check city and county programs and employer-assisted housing benefits separately — that is where it occasionally appears.
Choosing sensibly
- Decide first whether new construction works for you. If it does, the SB 240 program is the best terms available in Utah — 0% interest and repayment capped at half your equity gain.
- If you are buying an existing home, compare the two Utah Housing seconds by total cost, not by monthly payment. Ask your lender to quote the deferred option’s payoff at year five, year eight and year ten with accrued interest included.
- Consider the rate buydown option on SB 240 rather than reflexively applying it to the down payment.
- Check your county income limit and price cap — Utah’s vary widely by county group.
- Confirm SB 240 funding availability at application, since the appropriation is finite even though funds recycle.
Frequently asked questions
Does Utah offer down payment assistance grants?
No. Utah Housing offers two second mortgages and the state offers a new-construction program, but none are grants and none are forgivable. Every dollar is repaid, and two of the three options accrue interest.
Is Utah’s deferred down payment assistance interest-free?
No. The Deferred DPA Second carries a fixed 3.5% deferred simple interest rate. You make no monthly payments, but principal plus accrued interest is due at maturity, sale or refinance.
How much down payment assistance can I get in Utah?
Up to $27,500 through Utah Housing — either 6% of the first mortgage through the amortizing traditional second, or 3.5% through the deferred second. Separately, the SB 240 program offers up to $20,000 for newly constructed homes only.
What is Utah’s SB 240 first-time homebuyer program?
A state program offering up to $20,000 at 0% interest for down payment, closing costs or a rate buydown on a newly constructed, never-inhabited home under $450,000. You repay the lesser of the amount received or 50% of your equity gain when you sell.
What credit score do I need in Utah?
It depends on the loan product: 620 for FHA and VA, 660 for FirstHome, and 680 for the Freddie Mac HFA Advantage conventional option (700 for two-to-four units).
Can I use Utah’s $20,000 program on an existing home?
No. The SB 240 program requires a newly constructed home that has not yet been inhabited, with a purchase price at or below $450,000.