How to Buy a House in Utah: 6 Steps

Purchasing a house is a major financial decision, often involving substantial investment and long-term commitment. In Utah, the average home value stands at $521,221, which is notably higher than the national average of $362,481. This difference underscores the importance of careful financial planning when entering the housing market in the state.

Understanding down payment assistance programs, mortgage types and state-specific regulations and requirements can ensure a smooth journey toward homeownership in the Beehive State. MoneyGeek has compiled the essential pointers to help you navigate the homebuying process in Utah.

According to the U.S. Census Bureau, the homeowner vacancy rate in Utah for the second quarter of 2024 was 0.3%. The homeowner vacancy rate measures the percentage of homes available for sale compared to the number of owned units. This rate helps indicate the balance between housing supply and demand.

Utah's homeowner vacancy rate suggests there is not enough inventory on the market to satisfy homebuyer demand, given that a stable vacancy rate is 2%. This limited inventory means homebuyers in Utah may face challenges finding suitable homes, potentially leading to increased competition and prices.

Before buying a house in Utah, it is important to closely examine your financial and credit history. A strong financial profile enhances your chances of getting approved when applying for a mortgage and securing favorable terms and rates.

Your credit score is pivotal in determining your mortgage loans and interest rates. A higher score increases your chances of securing a reasonable rate. According to Experian, the average credit score in the third quarter of 2023 was 731 in Utah.

If your credit score falls within the poor range of 300 to 579 based on the FICO scale, buying a house is possible, but getting approved for a mortgage may be challenging. Check the table below to see which mortgage type is ideal based on the minimum credit score requirements.

Source: Experian

Your debt-to-income (DTI) ratio is a key metric lenders use to determine how much of your income goes toward debt payments and how much mortgage debt you can responsibly take on. In Utah, the average mortgage debt was $294,227 in the third quarter of 2023, according to Experian. This figure highlights the financial responsibility that comes with homeownership.

Credit card payments, car loans, student loans and other financial obligations are among the monthly debt payments factored into your DTI ratio. Use our debt-to-income ratio calculator below to see your front-end DTI, which measures the percentage of your income that goes toward housing costs, and your back-end DTI, which includes all monthly debt payments.

Buying a house beyond your financial means can lead to financial strain and stress. To avoid this, consider the 28% rule, which suggests not spending more than 28% of your monthly income on mortgage payments. This guideline helps ensure your housing expenses remain manageable and within budget.

The U.S. Bureau of Labor Statistics reported the median annual income in Utah at $47,020 in April 2024. This amount translates to a gross monthly income of $3,918 before taxes. With the 28% rule, your monthly mortgage payment should be at or below $1,097.

Use our mortgage calculator below to estimate your monthly payment in Utah.

A down payment is the initial amount you pay when purchasing a house, often at 20% of the home's price. This percentage is standard because it shows lenders you are financially committed to purchasing. Yet, saving up 20% can already be a hurdle for many homebuyers. In Utah, the average home value is $521,221, which means a 20% down payment would be $104,244. For homes priced above average at $600,000, the down payment would be $120,000.

Fortunately, a 20% down payment is not mandatory. Many mortgage types allow you to put less money down, easing the path to homeownership. For instance, VA loans require no down payment, while FHA loans require just 3.5%.

Remember that if you put down less than 20%, your lender might require you to take out private mortgage insurance, which protects the lender in case of default. Our PMI calculator can estimate your monthly premium based on credit score and down payment.

Utah offers down payment assistance programs to help make homeownership a reality for many residents by providing support for the initial down payment.

One of the key providers in the state is the Utah Housing Corporation (UHC). UHC offers a range of resources and information to guide homebuyers through the process of securing down payment assistance.

Finding the right location in Utah involves evaluating several factors that can significantly impact your lifestyle and budget. Consider the average house price and weigh it against your budget. Proximity to family, friends and your workplace or school can enhance your quality of life, reducing commute times and fostering social connections. Access to public transportation, parks, restaurants and shopping centers also contributes to convenience and leisure.

The cost of living is another critical factor in choosing your new home. According to the Missouri Economic Research and Information Center (MERIC), Utah's cost of living index in the first quarter of 2024 was 102.9, slightly above the national average of 100. Here are some essential expenses to consider when selecting the right location:

• Food
• Health care
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Check the table below to see the average home values of some cities in Utah based on recent data. You can also use our cost of living calculator to help estimate how much you'll need to pay for all the essentials in different locations.

Source: Zillow

Working with a real estate agent can expedite your house hunt in Utah. They can provide advice, handle the paperwork, offer an expanded list of property options and recommend service providers like title companies and inspectors to help you buy your home in Utah.

Do your due diligence and interview agents with experience in your desired neighborhoods. Consider the following tips:

• Find someone compatible with your needs and personality
• Verify the agent's credentials, training and licensure
• Ensure they have in-depth knowledge of the area
• Shop around for agents and compare their rates

You can also use the license holder search tool from the Utah Real Estate Division to find or verify real estate agents in Utah.

Embarking on the homebuying journey in Utah involves securing a mortgage that fits your budget. Various options are available, including conventional loans, jumbo loans, FHA loans, VA loans and USDA loans. You can select from 10-year, 15-year, 20-year or 30-year terms and decide between a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Choosing the best financing option not only boosts your approval chances but also saves you money over time.

Interest rates on a mortgage can change daily due to the type of mortgage, the lender, the economy and other factors. Understanding the difference between interest rates and APR is key. While the interest rate is the cost you pay each year to borrow the money, the APR includes the interest rate plus other costs such as broker fees and closing costs. APR provides a more comprehensive view of the true cost of borrowing.

As of December 2024, the APR for a 30-year fixed conforming loan in Utah is 6.37%, while the APR for a 30-year fixed-rate FHA loan is 7.91%. Check the table below to see the current rates in Utah by mortgage type.

Obtaining a mortgage pre-approval in Utah is a strategic step for prospective homebuyers. It clearly shows your purchasing power and strengthens your position when making offers. Lenders will issue a mortgage pre-approval letter, valid for 60 to 90 days, which serves as evidence of your ability to secure financing and gives you a window to find the right property.

To get pre-approved, you'll need to submit several documents:

• Proof of income, such as pay stubs or tax returns
• Credit history report
• Identification, like a driver's license or passport
• Bank statements
• Debt information, including credit card and loan statements

Understanding the distinction between mortgage pre-approval and prequalification is crucial. Pre-approval involves a detailed examination of your financial situation and provides a specific loan amount for which you qualify. In contrast, prequalification is a preliminary assessment based on self-reported information and does not guarantee loan approval.

Home inspections are highly recommended in Utah because they objectively evaluate a property's condition. Inspectors typically examine structural components, electrical systems, plumbing, HVAC units and roofing. The inspection report includes a summary of findings, photos and repair recommendations. This information can help you negotiate repairs or price adjustments with the seller.

For example, if an inspection reveals major issues such as foundation cracks or a failing roof, it can lower the property's appraisal value or affect your mortgage approval. In such cases, you might decide to rescind your offer.

Utah does not regulate home inspections or require home inspectors to obtain a license. However, many home inspectors voluntarily pursue certifications from national organizations such as the American Society of Home Inspectors (ASHI) or the International Association of Certified Home Inspectors (InterNACHI).

If you're looking for a home inspector in Utah, ensure they are licensed, even though the state does not require it. Check what other clients have said about them and ask for references.

Home appraisals provide an unbiased estimate of a property's market value, ensuring that buyers pay a fair price and lenders can confidently issue a loan. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the 2023 median appraisal cost was $500.

While inspections and appraisals are integral to the homebuying process, they serve different purposes. A home appraisal determines the property's value, while a home inspection assesses the home's condition, identifying potential issues that might need attention. Lenders require appraisals to ensure the property's value supports the loan, safeguarding their investment.

Closing is the final step in buying a house, marking the official transfer of ownership and the moment you receive the keys. Your lender must provide a closing disclosure document three days before the official closing. This document outlines your loan terms, monthly payments and closing costs. It's also wise to plan a final walk-through of the property with your real estate agent near closing day to ensure everything is in order.

Closing day involves reviewing and completing numerous documents to finalize your home purchase. Some of the key documents you will need to sign include:

• Final loan application: This document confirms the terms of your mortgage loan and verifies your financial details as agreed upon with your lender. By signing, you agree to the loan terms and conditions as outlined.
• Deed transfer: This legal document officially transfers property ownership from the seller to you. It is essential for establishing your legal ownership of the home.
• Promissory mortgage note: This is a written promise to repay the mortgage loan under specified terms. It outlines the loan amount, interest rate and repayment schedule.
• Homeowners insurance: [Homeowners insurance in Utah](https://www.moneygeek.com/insurance/homeowners/best-homeowners-insurance-utah) provides financial protection against damage to your home and personal liability.

Closing costs are fees incurred during the finalization of a home purchase. In Utah, the average closing cost amount to $5,563, as reported by NAR. These costs encompass several fees:

• Appraisal fee: This fee covers the assessment of the property's value by a professional appraiser.
• Title search and insurance fee: This fee ensures the property's title is clear of any liens or disputes, protecting both the buyer and lender.
• Escrow deposit: Funds are held in escrow to cover property taxes and insurance premiums.
• Prepaid costs: These are upfront payments for future expenses like homeowner's insurance and property taxes.
• Other closing costs: This category includes other fees such as attorney fees and recording fees.

Learning about the different first-time homebuyer programs in Utah can help you achieve homeownership faster.

Buying a house in Utah involves a significant financial commitment that can last for years. To kickstart your journey, we answered some frequently asked questions about buying a house in Utah.