Episode 19 - The Government Wants to….HELP?
“If the tide is rising, you want to be in the boat, not on the shore.”
- Nelson Barss
Government Help for Home Buyers: What I Like, What Worries Me, and What I Think You Should Do
Lately, I’ve found myself conflicted.
I genuinely love seeing efforts to help home buyers, especially first-time home buyers in Utah. This is my career. I help people buy homes, and I absolutely support smart policies that make homeownership more realistic. But some of the proposals being discussed give me an uneasy feeling.
My concern is unintended consequences. When I look at many housing proposals, I see a lot of short-term thinking focused on helping demand, not fixing supply. And when demand gets more help without enough homes available, home prices tend to rise. That may help some buyers today, but it can make things harder for the next generation.
The Core Problem in Housing
The biggest issue in today’s housing market is simple.
We have too much demand and not enough supply.
That is why home prices have stayed high. So anytime I hear about a proposal that lowers costs for buyers across the board without increasing the number of homes available, I get nervous. In the long run, that kind of policy can push prices even higher.
I’m all for helping Utah home buyers. But I want that help to actually improve the market, not just create a temporary break before prices climb again.
If you want help understanding how these changes could affect your home buying plans in Utah, this is a great time to schedule a consultation and look at your options one-on-one.
Some Proposals May Never Happen, or May Be Far Off
A lot of ideas make headlines long before they become reality. Some may never happen at all.
The 50-Year Mortgage
The 50-year mortgage has gotten a lot of attention lately. I looked into it when it first started making noise, and I came away skeptical.
My first concern is that a 50-year mortgage would probably come with a higher interest rate. If that happens, the monthly savings may end up being minimal. On a typical home, the savings might only be around $150 per month.
The bigger issue is what happens to the market if monthly payments drop for everyone. If buyers across the country suddenly have access to lower payments, many will simply be willing to pay more for a home. That would likely drive up home prices quickly.
This is exactly the kind of proposal that makes my stomach turn because it focuses only on demand. It does nothing to solve the real issue, which is the shortage of available homes.
A Cap on Credit Card Interest Rates
Another idea being floated is a cap on credit card interest rates.
Even if this becomes law someday, I’m not convinced it would make a major difference for first-time home buyers. Most first-time buyers I work with are not buried in credit card debt. They are often younger, saving money, finishing school, and trying to prepare for homeownership.
The people who might benefit most from lower credit card payments could become stronger buyers in the market. That means more competition for homes, which could drive prices up further. Again, that helps demand without solving supply.
Using a 401(k) for a Down Payment
This is one proposal I actually like.
Right now, there are already rules that allow a penalty-free withdrawal of up to $10,000 from an IRA for a home purchase. The idea of allowing something similar for 401(k) accounts makes sense to me, especially because many first-time buyers have small 401(k) balances from their first jobs.
I also think this kind of help needs to be modernized. The numbers in place were created decades ago, when home prices were much lower. Today, especially in Utah, the amount needed for a down payment is much different.
This proposal could help buyers come up with their own down payment instead of relying on zero-down programs that often come with higher rates and higher costs. That can mean a better mortgage, lower closing costs, and a lower monthly payment.
It does not fix supply, but I still think this one could be genuinely helpful.
What’s Already Happening Right Now
Some changes are not theoretical. They are already affecting mortgage rates and the housing market today.
Pressure for Lower Interest Rates
One of the biggest developments right now is pressure on the Fed to lower rates.
Rates have already come down significantly over the last 18 months, and that has improved affordability for some buyers. In my view, lower rates are helpful, but only if they come down gradually. If rates fall too quickly, I believe housing demand will surge and prices will start rising fast.
That’s why my advice is to buy on the front end of that movement if you can. If rates continue to drop later, I can help you refinance. But if you wait too long and the market heats up, you may end up paying more for the house itself.
For many Utah home buyers, the better move may be getting in before competition ramps up. If you want to run those numbers for your situation, set up a consultation and I’ll help you compare the options.
Mortgage Bond Buying
Another major development is bond buying.
Fannie Mae and Freddie Mac have been instructed to buy mortgage bonds back from the market, and that already had an effect. Mortgage rates moved lower after that announcement. This kind of action can help bring rates down over time, even apart from what the Fed is doing.
I like this kind of support when it happens in a measured way. I do not want to see a sudden drop that creates a frenzy. Slow improvement is much healthier for the market.
Institutional Investor Restrictions
Another change that could matter over time is the effort to limit large institutional investors from buying single-family homes.
I think this is one of the more promising ideas because it addresses real competition in the housing market. Even if institutional investors only make up a small slice of total ownership, they can have a major impact in specific local markets by targeting areas and driving up prices.
I believe this could help, especially if Congress eventually takes stronger action. It is one of the few ideas that has a chance to reduce pressure in certain markets instead of adding more buyers to an already competitive system.
Less Regulation in the Mortgage Industry
There has also been a reduction in regulation across mortgage and finance.
That lowers costs for lenders by reducing compliance, legal fees, and penalties. In theory, some of those savings should help consumers, although I am not fully convinced that is happening in a meaningful way yet.
What I do know is that mortgage lending is expensive, and lenders still spend a lot to originate loans. That is one reason brokers can often do this work more efficiently.
The Affordable Homes Act
One of the better developments on the supply side is the Affordable Homes Act.
This affects manufactured homes, not traditional site-built homes, but it matters. By reducing overregulation in the manufacturing process, it should lower costs and help increase affordable housing options, especially in rural communities.
That is the kind of change I like to see. It addresses supply, which is where we actually need help.
Government Help That Has Been Around for Years
Not every form of home buyer assistance is new. In fact, some of the most useful help has been around for a long time.
Loan Level Pricing Adjustments
One of the biggest tools the government already uses is loan level pricing adjustments.
These are pricing changes that affect the interest rate based on the buyer and the property. But for first-time home buyers under the area median income, some of those adjustments can be waived. That can lead to a better interest rate and lower monthly payment.
In Utah, those income limits are high enough that many buyers may qualify. And if you are well below those limits, there may be even more help available, including lower mortgage insurance costs.
The important thing is that this benefit does not happen automatically. You have to structure the loan correctly to take advantage of it.
Utah Housing and Other Assistance Programs
Utah also has programs that have helped buyers for decades.
Utah Housing has been around since the 1970s and has helped a lot of people become homeowners. I often mention that if you can bring your own down payment, you may get a better rate elsewhere, but Utah Housing is still a valuable option we always review.
There are also city and county programs that offer down payment assistance. Some of these programs are substantial, and they can do more than just get you into a home. They can help lower your monthly payment.
What I like about these programs is that they are targeted. They have income limits, first-time buyer requirements, and limited funds. That means they help the people who need it most without distorting the entire housing market.
Utah’s $20,000 New Home Assistance Program
One Utah program I find especially interesting is the $20,000 home buyer assistance option for certain new homes under a price cap.
What I like about it is that it encouraged builders to create more affordable homes, especially townhomes. That means it helped on the supply side as well as the buyer side.
My biggest complaint is that the assistance was tied to a Utah Housing mortgage. In many cases, buyers who qualified for a cheaper conventional mortgage ended up taking a more expensive loan just to access the assistance. A few adjustments to that structure could make the program far more effective.
So What Should You Do With All This?
This is the part I care about most.
I spend a lot of time encouraging younger buyers, including Gen Z and millennials, to stop focusing so heavily on fixing society and start focusing more on improving their own lives. I am not saying the bigger issues do not matter. I am saying that your best next move is usually not found in political frustration.
You cannot control the system. But you can control your savings, your education, your work ethic, your planning, and your timing.
That is where I believe your energy belongs.
Here is my advice:
Increase your earning potential
Save money consistently
Learn every home buying program available to you
Act early when helpful opportunities appear
Focus on building stability for yourself and your family
If the government introduces something that lowers costs for buyers, take the help and take it early. If those changes are likely to push prices up later, you want to get in before that happens.
As I said in the episode, if the tide is rising, you want to be in the boat.
Focus on What You Can Control
Over the years, I have watched the political pendulum swing back and forth. I have seen the messaging, the fear, the warnings, and the promises. And one thing I have learned is that not as much changes as people think.
The system moves slowly. Checks and balances matter. A lot of proposals never happen, and many that do happen take time.
That is why I believe your best strategy is not to sit around waiting for the perfect market or the perfect political solution. Your best strategy is to keep your head down, work hard, make smart money decisions, and move forward when the numbers make sense for you.
That mindset has helped many of the families I work with, and it may be exactly what helps you too.
If you want help sorting through Utah mortgage options, down payment assistance, or whether now is the right time to buy a house in Utah, reach out and schedule a free consultation. I would love to walk through your situation and help you build a plan.