Episode 14 - Why I Believe 1% Down is the PERFECT RECIPE For First Time Buyers
“Instead of rolling thousands of dollars of upfront mortgage insurance into your loan, this program avoids that cost entirely.” - Nelson Barss
Utah First-Time Homebuyer Plan A: The 1% Down Conventional Loan With a 2% Grant
Higher mortgage rates are making Utah’s housing market feel brutal. Payments are up, and a lot of buyers feel priced out. If you are staring at the numbers and wondering if homeownership is even possible anymore, this episode is your reminder that it is still possible, especially with the right financing strategy and a guide who can walk you to the closing table.
Today’s episode focuses on what we treat as Plan A for many first-time homebuyers: a conventional loan that functions like a 1% down option.
What the program actually is
This is technically a 3% down conventional loan, paired with a lender-funded grant of 2% up to a $7,000 maximum. In other words, the lender is effectively tripling your down payment. Your portion is 1%, and the lender adds the other 2% as a true grant.
And “true grant” matters, because most down payment assistance is not really a grant. It is a second loan you repay when you sell. This one is different. It shows up as a credit, with no repayment terms attached.
If you want to see whether you qualify, schedule a free consultation and we will run your numbers side by side with other options.
Seven reasons this is such a strong first-time buyer option
It’s free money. Up to $7,000 that does not need to be paid back.
It’s statewide. No rural map rules, no county-only boundaries, and it can be used on a new home or an existing home anywhere in Utah.
It’s attainable. It is not just a good idea on paper. It is a program buyers are actually closing when they qualify. It does have income limits based on being below 80% of the area median income, but there is flexibility that many other programs do not offer. Instead of counting total household income, this program looks at qualifying income, and that can allow you to exclude certain income categories while still qualifying for the loan.
The pricing gets better when you qualify. When you are under those income limits, the interest rate and monthly mortgage insurance can improve through first-time buyer conventional pricing. And conventional mortgage insurance is removable without refinancing.
There is no upfront mortgage insurance. This is a major advantage compared to FHA-based down payment assistance options that roll an upfront mortgage insurance fee into your loan balance on day one.
It pairs with a 2-1 temporary buydown. That means the seller can help lower your rate for the first two years, which can reduce your payment by hundreds per month early on. Some other assistance programs do not allow temporary buydowns, which limits your ability to manage payments in the short term.
It protects your future refinance plan. Many buyers today hope to refinance when rates improve. Getting to a conventional refinance typically requires equity, and starting at 97% loan-to-value gives you a clearer path than starting out owing 100% or more of the home’s value.
Plan A is great, but it is not always the right fit
There are situations where another program makes more sense. Some county programs offer larger assistance amounts but must be paid back and can be hard to qualify for. If credit scores are lower, FHA may look better than conventional once you compare monthly mortgage insurance. And if income is over the limit, Utah Housing may still be a strong stepping stone and often better than staying stuck renting.
The best move is to lay every option out on paper and choose the one that matches your goals, your qualifications, and your timeline.
Ready to see if you qualify?
Consultations are free. You can meet in person in Layton, by phone anywhere in Utah or Idaho, or via Microsoft Teams. If you want to explore this 1% down conventional strategy and compare it to your other options, schedule a consultation and let’s build your plan.