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Henderson, NV First Time Home Buyer

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Henderson, NV – First Time Home Buyer Programs

Are you looking to purchase your first home? Our first time home buyer loans in Henderson, NV might be the perfect solution to help you obtain the financing you need to purchase the home you desire.  We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

Henderson, NV – First Time Home Buyer Loans

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit, as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
  • FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
  • USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan.  You can view the FHA loan limits for Nevada, on this page.  The conforming loan limits, which are applicable to conventional and VA loans, is $484,350.  If you want to buy a more expensive home than what these limits will allow, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.

The above 5 types of loans are the main first time home buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

For most borrowers, the decision will be between an FHA and conventional loan.  You can read more below about the requirements for each type of loan.  When you get pre-approved it simultaneously checks your eligibility for all home loans, including what loan terms and interest rates are offered for each mortgage available to you.

FHA Loans for First Time Home Buyers 

For many applicants, including those that do not qualify for a conventional loan, will likely find an FHA loan to be the best loan option.  The current basic requirements to obtain an FHA loan are outlined below.

FHA Loan Requirements:

  • Credit – Some FHA lenders are known to allow a 580 FICO score.  All of our home loan products require a 620 credit score.  Some other aspects of credit that are evaluated are past bankruptcies, foreclosures, tax liens, and judgements.  You can read more about the FHA credit requirements, here.
  • Down Payment – FHA loans are famous for only requiring 3.5% down.  This money can be borrowed from family or friends, or a down payment assistance program.  In some cases, someone may qualify for an FHA loan, but must pay a higher down payment.  Most that qualify for FHA, qualify for a 3.5% down payment.
  • Employment – FHA loans require 2 years of verifiable employment history.  It is acceptable to have changed jobs in some instances, especially if you have stayed in the same line of work or industry.  The employment requirements are not very strict, just as long as you show evidence of 2 years history of reliable employment.
  • Debt-to-Income – The most important aspect of your income is not the total amount, but what percentage of your income is used to pay debts.  This is known as your “debt-to-income ratio”.  FHA loans allow a maximum DTI ratio of 43%, which includes your new mortgage payment, and any auto loans, credit cards, or other types of debts that show on credit (such as student loans and personal loans).  The maximum amount your mortgage payment can be compared to your monthly income is 29%.  You can learn more about FHA income guidelines, here.
  • Property – The property must meet “minimum property standards“.  This includes basic standards of living conditions that must be met, which ensures both a safe and healthy home to live in, and to ensure the FHA/HUD that if the home were to foreclose that it has a decent chance of being resold by due to providing a quality living space (the FHA insures the mortgage, if it defaults and forecloses, HUD is responsible to sell the home, so they only insure homes that meet specified standards.
  • Mortgage Insurance – All FHA loans are required to carry mortgage insurance.  For FHA loans, this is known as “Mortgage Insurance Premiums” or “MIP”.  There are two different types of FHA MIP (upfront and monthly), which you can calculate how much FHA mortgage insurance costs using our FHA mortgage insurance and mortgage payment calculator.

There are certainly both advantages and disadvantages to FHA loans.  The advantages would be the easier qualification guidelines, low down payment option, competitive interest rates, and other appreciable aspects such as loan assumability.  The only significant disadvantage would be costly mortgage insurance.

Conventional Loans for First Time Home Buyers

Conventional loans offer better loan terms for borrowers who have good or excellent credit history and/or that can place a larger down payment down on a home.  They are also often the best for certain borrowers who want a small down payment.  We can help you see what you qualify for and compare loan options.

Conventional Loan Requirements

  • Credit – A 620 credit score or higher is required to qualify.  However, to be eligible for a low down payment and the lowest rates, a 680 or higher is needed.  Additionally, no bankruptcies or foreclosures within the last 3 years is permissible.
  • Down Payment – The down payment requirements for a conventional loan vary from borrower to borrower.  Down payments as well as 3% exist for conventional loans, but often require 5% as the minimum down payment requirement.  Some that qualify for a conventional loan will be required to pay a higher down payment percentage.  If you have high credit and meet all other requirements, you should fall in the 3-5% range for minimum down payment requirements.   The only way to know for certain is to apply.
  • Employment – 2 years of verifiable employment is required for a conventional loan.  The required documentation to verify employment and income is pay stubs, W-2s, and tax returns.
  • Debt-to-Income – Maximum debt-to-income ratio of 29% and 45%.  The 29% represents the maximum percentage of your  monthly income that your mortgage payment can be.  The 45% represents the maximum percentage of your monthly income that your mortgage payment combined with all other reported monthly debt obligations may be.  This would include debts such as auto loans, credit cards, personal debts, and student loans.
  • Mortgage Insurance – Any loan over an 80% LTV will require mortgage insurance.  One aspect of conventional loans that is better than FHA loans is that if you put 20% down (or refinance at a future date when you have 20% equity), you do not have to pay mortgage insurance.  FHA loans require mortgage insurance to be paid regardless of LTV.

If you feel confident you have great credit, or wish to place a large down payment on a home, a conventional loan will likely be your best home loan option.  We would be happy to help you get a pre-approval for any loan that you qualify for.  You can then compare loan terms such as down payment, interest rate, mortgage insurance, and monthly payment.

To learn more about conventional loans, visit this page.

Would You Like a Free Consultation to Learn More or to Apply?

Henderson, NV – Down Payment Assistance Programs 

Henderson is eligible for both a local and statewide down payment assistance program.  This includes the Henderson First-Time Homebuyer Program, and the Nevada Home is Possible Program.

Henderson First-Time Homebuyer Program –

The City of Henderson offers a unique incentive to first time buyers.  This includes up to $10,000 or 6% of the purchase price (whichever is less) to use for the down payment and closing costs.  This money must comes in the form of an interest free loan.  It does not require payments, but when you sell the home or refinance, it must be paid off.

Requirements – 

  • Have either lived or worked in Henderson for at least one year prior to applying.
  • Complete a homebuyer education course.
  • Income is below 80% of the median average.
  • The home must be located within the city limits of Henderson.
  • You must contribute at least $1,500 towards the purchase, which can be applied to the down payment or closing costs.

To learn more, you can email the City of Henderson Neighborhood Services Department at: COHHousing@cityofhenderson.com, or reach them by phone at: 702-267-2000.  You also may learn more about the program on the City of Henderson website, found here.  If you would like our assistance in helping you see if you qualify for the program, we would be glad to help.

Nevada Home is Possible –

Nevada offers a remarkable down payment assistance grant of up to 5% of the purchase price.  An example would be a $250,000 would allow you to receive $12,500 in assistance.  This money does not ever have to be repaid and can be used for your down payment and/or loan costs.  You must be a first time home buyer (or have not owned any real estate in the last 3 years).  The home must not cost more than $400,000, and you must personally occupy it (primary residences only, no investment properties).  The maximum income allowed is $98,500.  You can learn more about the Nevada Home is Possible Program on the Nevada Housing Division website.

Nevada First Time Home Buyer Tax Credits

The Mortgage Credit Certification (MCC) tax credit provides you an opportunity to reduce your tax bill, as well as enhance your home loan application by reducing your debt-to-income ratios.  How this works, is you can deduct up to $2,000 off your federal tax bill each year.  The MCC allows up to 30% of your annual interest to be eliminated (with the cap being at $2,000).  Some great news, is this can be used in addition to standard mortgage interest deductions!

Frequently Asked Questions About Buying Your First Home

How much do I need for a down payment?
It depends on the type of loan you want.  USDA and VA loans often will not require any down payment.  FHA loans require a 3.5% down payment.  Conventional loans typically require either 3% or 5%.  If you receive down payment assistance, you may not need any money for your down payment.

What is the maximum loan amount that I can qualify for?
The amount that you will be allowed to borrow will depend mostly on your income, as well as the particular type of loan you are interested in. There are maximum loan limits for each type of mortgage program which are set at the county level. Conforming loan limits are the maximum loan amounts allowed for conventional mortgages.  FHA loans have their own loan limits.  This is not necessarily how much you can borrow though, but the maximum amount allowed in your location.  The amount that you can personal qualify for will be based upon your income, and how much debt you have.  For most loans, your monthly mortgage payment, along with your monthly debts may not exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Do you have first time home buyer loans for bad credit?
Yes, we offer mortgage options for borrowers with bad credit. This includes FHA loans for bad credit, which you can possibly be approved with a credit score as low as 500. However, a 580 credit score is required for the 3.5% down payment. If your credit score is between 500-579, then you will need to put 10% down.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS, and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments, and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.

Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.

Have more questions about buying your first home?  Give us a call at 1-800-731-3560.

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