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Buying your first home in the Salt Lake metro area is exciting – but it can also feel overwhelming when you start looking at the prices and numbers. Don’t worry, you’re not alone. In this blog post, we’ll break down what smart home budgeting looks like for a first-time buyer in Salt Lake County and nearby areas. We’ll cover everything from local home prices and mortgage trends to monthly payment expectations and saving tips. Grab a snack, get comfortable, and let’s dive in!
If you’ve peeked at Zillow or driven around Salt Lake neighborhoods, you might have noticed that finding a house under $350,000 is tough. Yes, entry-level homes do exist in the low-to-mid $300K range – often condos, fixer-uppers, or homes farther from downtown. However, the reality is that many first-time buyers here end up shopping closer to the $400K-$450K range for a home that meets their needs.
Salt Lake County’s housing market is pricey. In fact, the area has been ranked among the least affordable for new homebuyers in recent years. The median home sale price in the Salt Lake area was around $530,000 to $550,000 as of mid-2024. That means half of homes sold for more than that price! With prices so high, trying to stick to the low $300Ks can severely limit your options.
Why do we suggest aiming for ~$450,000 as an ideal budget? Consider this: Utah’s own first-time buyer assistance program caps new construction home purchases at $450,000 for eligibility. In other words, the state considers a $450K home a reasonable maximum for first-timers using assistance. Many starter single-family homes (especially new builds) in Salt Lake County fall in this mid-$400K range. By budgeting around $450K, you’ll have a wider selection of move-in-ready homes and townhouses to choose from, rather than only old or very small units. While it is possible to find something under $350K, be prepared for fierce competition on those lower-priced listings. The extra budget breathing room can make your house hunt less frustrating.
What are other first-time buyers up to? Knowing current trends can help you stay competitive and informed. Here are a few big trends we’re seeing among first-time homebuyers in the Salt Lake area:
Choosing New Construction: A lot of first-timers are flocking to new construction developments. Why? New homes often come with modern features, warranties, and sometimes builder incentives (like covering closing costs or throwing in upgrades). Utah’s government is even nudging this trend by encouraging first-time buyers to purchase new builds – the state’s assistance program specifically applies to new construction homes up to $450K. New communities in places like Herriman, South Jordan, and Daybreak are popular options for those who don’t mind being a bit outside of downtown Salt Lake County to get a brand-new home.
**Mortgage Rate **Buydowns: With mortgage interest rates higher now than they’ve been in years, savvy buyers are looking for ways to lower their rate – at least temporarily. One strategy is an interest rate “buydown.” This is where you or the seller pay an upfront cost to reduce your mortgage rate for the first couple of years. For example, some local home builders are advertising 2/1 buydown deals, offering beginning rates as low as ~4.75% for the first year even though the standard 30-year rate might be around 6-7%. That can significantly shrink your initial monthly payment. It’s a good option to explore if you need some breathing room in your budget for the first few years of homeownership (especially if you expect rates might drop and you could refinance later).
Considering 40-Year Mortgages: Yes, you read that right – 40-year home loans are a thing (though not a super common thing). The idea of a 40-year mortgage is to stretch out the loan term even longer than the traditional 30 years, which can reduce your monthly payment a bit. In today’s expensive housing market, some first-time buyers are curious about this option as a way to afford the home they want. Having ten extra years to pay does lower the monthly bill, but keep in mind you’ll pay a lot more interest in the long run. Also, 40-year loans aren’t widely offered by mainstream lenders – they’re typically niche products. Most first-timers end up with 30-year fixed mortgages, but it’s good to know what’s out there.
Let’s talk monthly payments – because at the end of the day, your monthly housing cost is what determines if you can comfortably afford a home. For a typical first-time buyer in Salt Lake County, what does that payment look like?
Let’s assume you buy around $450,000 using a 3.5% down FHA loan. That’s a down payment of just $15,750. Your loan amount would be roughly $434,250. Based on current interest rates (hovering around 6.25–6.75% for FHA loans), your monthly breakdown would look something like this:
Principal & Interest: About $2,700 to $2,900/month depending on your exact rate.
Mortgage Insurance (MIP): FHA loans require monthly mortgage insurance. Expect roughly $250/month.
Property Taxes & Homeowners Insurance: These will add another $300–$400/month, depending on location and home value.
All-in, you’re looking at a total monthly payment around $3,000 – $3,300/month.
Want to plug in your own numbers and explore different scenarios? Here’s a mortgage calculator to help you get a more personalized estimate.
Smart home budgeting starts well before you actually buy a house. It’s all about getting your finances in shape so that when you pull the trigger on that Salt Lake home, you’re financially comfortable. Here are some crucial budgeting tips for first-time buyers:
Save for a Down Payment: The more you put down, the less you have to borrow (and the lower your monthly payment). Many first-time buyers in Utah put down around 3% to 5%, but aim higher if you can. Traditional wisdom suggests 20% down to avoid PMI – that’s $90,000 on a $450K home, which is steep for most newbies. Thankfully, you don’t need that much. Some loans only require 3% down
(about $13,500 on $450K), or 3.5% for FHA. Utah also has down payment assistance programs if you qualify. For example, Salt Lake City offers up to $40,000 in down payment help via a forgivable loan
– a huge leg up if you meet the criteria. Start saving early, set aside a portion of each paycheck, and keep that down payment fund sacred (don’t dip into it unless absolutely necessary).
Budget for Closing Costs: A common surprise for first-timers is the chunk of money needed for closing costs. These are the fees and pre-paid expenses (like taxes, insurance, title fees, lender fees, etc.) due when you finalize the home purchase. Closing costs in Utah typically run about 2% to 5% of the loan amount
. On a $400,000 loan, that’s roughly $8,000 to $20,000. The actual amount will vary, but don’t forget to save for this! Sometimes you can negotiate for the seller to contribute to your closing costs, or if you’re using a Utah Housing loan or other program, they might reduce this burden. But it’s best to be prepared to pay your own. You don’t want to be scrambling to come up with cash at the last minute.
Keep an Emergency Reserve: Imagine you close on your house and two months later the water heater breaks. Homeownership comes with unexpected expenses, so you want to have a financial cushion. In fact, many lenders require you to have some cash reserves – often at least two months’ worth of mortgage payments saved up, after you pay your down payment and closing costs
. It’s a good practice to build an emergency fund of 3–6 months of living expenses (if you haven’t already) before buying. This ensures that you won’t be completely tapped out if something goes wrong. The last thing you want is to buy a home and then go into credit card debt for a surprise repair. So, if your future mortgage is ~$3,000/month, try to have at least $6,000+ in the bank as a safety net after closing. You’ll sleep better, trust me.
Practice Your New Budget: One trick some first-time buyers use is “practicing” their mortgage payment in advance. For example, if you currently pay $1,800 in rent and expect your home will cost $2,800/month, start setting aside that extra $1,000 now. This accomplishes two things: (1) It helps you adjust to the new spending level before you’re locked in, and (2) it grows your savings faster. Consider it a trial run for homeownership budgeting.
Don’t Forget Upfront and Ongoing Extras: Aside from the big stuff like down payment and closing costs, remember there are other expenses in buying a home. Home inspections (usually a few hundred dollars) happen during the purchase process and are paid out-of-pocket. Moving costs, new furniture, maybe a coat of paint or minor fixes – it can add up. Plus, once you own the home, plan for ongoing costs like utilities (which might be higher than in an apartment), possibly HOA fees if it’s a condo or in a community, and maintenance (budget at least 1% of the home price per year for upkeep). Build these into your plan so you’re not caught off guard
You might be wondering, what’s the market like out there? and are there any breaks for first-time buyers? The Salt Lake metro housing market has been hot the past few years, but it’s showing some signs of normalizing. Here are a few local conditions to keep in mind:
High Prices, High Demand: As we mentioned, Salt Lake City has very high home prices relative to incomes, making it challenging for first-timers. The area saw a huge run-up in prices (Utah’s average home price jumped ~75% from 2018 to 2023 deseret.com). Even so, people keep moving in due to the strong economy and job market, so demand remains solid. This means you might still face competition (multiple offers) on well-priced homes. One recent buyer described seeing six offers on a house within three days fox13now.com– the market moves fast! The silver lining is that inventory (the number of homes for sale) has increased somewhat, giving buyers a bit more choice than during the frenzied pandemic years.deseret.com.
Interest Rates Remain a Factor: Mortgage rates are higher now (hovering around 6.3% – 7% for a 30-year fixed as of early 2025 citycreekmortgage.com) compared to the rock-bottom rates of a couple years ago. This does affect your affordability. The Fed is signaling rates will stay relatively steady into 2025fox13now.com, so it’s wise to plan for current rates when budgeting, rather than hoping they’ll drop drastically. If they do fall, that’s gravy – you can refinance. But make sure you’re comfortable buying even if rates stay where they are. The good news: because rates are up, home sellers have started offering incentives to attract buyers (we discussed rate buydowns above). You might find a motivated seller who’s willing to negotiate on price or pay some of your closing costs in this environment, especially if their home has been on the market a while.
First-Time Buyer Programs: We touched on Utah’s programs, but it’s worth reiterating: there is help out there. Utah launched a First-Time Homebuyer Assistance Program in 2023 that provides a $20,000 loan to qualifying buyers to use toward down payment or closing costs senate.utah.g The catch is it’s for new construction homes up to $450K, and it functions as a second loan that you pay back when you sell or refinance. Additionally, Salt Lake City and some other cities/counties have their own down payment assistance funds (like the $40K forgivable loan we noted for SLC citycreekmortgage.com, and even up to $85K in Murray for those who qualify citycreekmortgage.com). Many of these programs have income limits and other requirements, so not everyone will qualify – but it’s definitely worth researching. Even a few thousand dollars of grant money can make a difference when you’re scraping together funds as a first-time buyer. Check out the Utah Housing Corporation and local housing non-profits for the latest on grants or no-interest loan programs. Free money (or cheap money) is always nice!
Builder Incentives and Perks: If you decide to go the new construction route, pay attention to special offers. Utah builders often run promotions like temporary rate buydowns, as mentioned, or they might throw in freebies – say, a finished backyard, upgraded appliances, or covering HOA dues for a year. For instance, one Utah builder was advertising an extra $20,000 credit for buyers to use toward rate buydowns or closing costs on certain homes symphonyhomes.com. Another offered certain townhomes with rates as low as 3.25% for the first year visionaryhomes.com. These incentives can change seasonally, but they’re worth factoring into your budget calculations. A builder’s incentive might effectively save you tens of thousands of dollars (either upfront or over the first couple of years). Just remember, nothing is truly “free” – the cost is usually built into the price of the home – but if it helps you afford the home comfortably, it’s a win.
Purchasing your first home is a big step, especially in a competitive market like Salt Lake. But with smart budgeting and the right guidance, it’s absolutely achievable. The key takeaways for budgeting: target a realistic price (around the mid-$400Ks for many buyers here), know that’ll mean about a ~$3K monthly payment, save diligently for your upfront costs, and take advantage of any programs or incentives you qualify for. Most importantly, don’t go it alone.
Buying a home, while exciting, comes with lots of questions and potential pitfalls. This is where leaning on local experts can make all the difference. The Alex Lehauli Group (ALG) is a trusted local resource for first-time buyers in the Salt Lake metro. They’ve helped people just like you navigate the process – from figuring out how much you can afford, to finding the right home, negotiating a good deal, and getting to closing without a hitch. In a market that moves fast, having a knowledgeable team on your side is priceless. As one recent first-time buyer put it, “We thought buying our first home would be a daunting task. But with the help of the team, we found a home we love without having to jump through hoops” utahhomesbyalex.com. That’s the kind of experience you want.
Ready to take the next step? If you’re thinking about buying your first home in or around Salt Lake City, reach out to us at ALG. We’re here to answer your questions, help you crunch the numbers, and turn that dream of homeownership into reality. Let’s chat about your goals and make a plan for your smart home purchase. Your future home is out there – and with the right budgeting and support, you’ll be moving in before you know it!
If possible, I always recommend aiming for at least 5% down, even if you qualify for a first-time buyer program. That extra buffer gives you more options and better loan terms. That said, with programs that help cover your down payment, it’s smart to have 1–2% of the purchase price saved to cover other costs like inspections, appraisals, and earnest money. You want to show sellers you’re serious — and have enough to get through the upfront part of the process without stress.
For our self-employed clients or anyone with variable income, we like to play it safe. We usually take your average monthly income over the past two years, subtract major recurring expenses (like a car payment), and then budget only about 50% of what’s left as your max monthly housing payment. That gives you some breathing room for slower months and keeps your finances solid even when business isn’t booming.
Honestly, it’s more than just having the money. You want to feel stable in your job, have some savings built up (not just for the house but for life), and feel confident committing to staying in one place for a few years. Financially, if you’ve got your debt under control, a realistic monthly budget, and enough saved for a down payment and emergency fund, that’s a strong sign. Mentally, if you’re ready to trade flexibility for building equity, and you’re cool with handling repairs or maintenance when stuff breaks — you’re likely in a good spot.
Alex Lehauli is a Salt Lake native with extensive knowledge of the Utah housing market. He is a top producer with multi-million dollar sales volume and has valuable skills in strategic marketing, negotiation and guiding clients. He is an associate broker at Black Diamond Realty and passionate about building lasting relationships as a trusted real estate resource.
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