First-time Las Vegas homebuyer? Here are 9 first-time homebuyer loans and programs you really should check out.
The reality of being a first-time Las Vegas homebuyer is that it’s challenging to navigate one of the toughest real estate markets in modern history. The inventory of available homes in the Las Vegas valley is especially tight. When the recession ended new home builders completely missed the mark here in Las Vegas and overbuilt h9omes priced $400,000 to $700,000 and underbuilt homes priced from $250,000 to $400,000. Builders had little choice. The escalating cost of building supplies and raw land costs prompted new home builders to focus on higher-end homes that are more profitable for them. Unfortunately, the demand in Las Vegas is for affordable first-time homes. Adding to the problem is the fact that speculators are buying up resale homes to flip them for a quick profit.
With more than 40% of first-time homebuyers carrying student loan debt, and the average first-time homebuyer age rising to an all-time high of 32 years old, the real estate market can be a confusing place. LasVegasRealEstate.com to the rescue! There are many first-time homebuyer programs, including loans and grants, available. Bottom line, if you are considering the purchase of your first home, you want to try and use one of these very helpful programs or grants.
Here are the nine national programs, grants, and loans for first-time homebuyers that can get you into a place of your own without a 20% down payment or an 800+ credit score.
9 first-time Las Vegas homebuyer loans and programs
- VA loan program: A loan backed by the U.S. Department of Veteran Affairs that allows no down payment for military personnel, veterans and their families.
- Fannie Mae or Freddie Mac loan program: Conventional loans backed by Fannie Mae or Freddie Mac require 3 percent down. This loan program is good for first-time Las Vegas homebuyers with a strong credit score.
- FHA loan program: A loan insured by the Federal Housing Administration. This loan program is good for first-time Las Vegas homebuyers with low credit scores and little money saved for a down payment.
- USDA loan program: A loan program 100% guaranteed by the U.S. Department of Agriculture for lower-income borrowers in eligible rural areas.
- Good Neighbor Next Door buyer aid program: A HUD program that provides housing aid for law enforcement officers, firefighters, emergency medical technicians, and teachers.
- HomePath ReadyBuyer Program: A program that provides 3% in closing cost assistance to first-time Las Vegas homebuyers. Buyers using this program must complete an educational course and buy a foreclosed Fannie Mae property.
- Energy-efficient mortgage program: Backed by VA or FHA loan programs and allows buyers to combine the cost of energy-efficient upgrades onto a primary loan upfront.
- FHA Section 203(k) loan program: The buyer can borrow the funds needed to pay for home improvement projects and roll the costs into one FHA loan with your primary mortgage.
- Local first-time Las Vegas homebuyer programs and grants: The State of Nevada and the Cities of Las Vegas, North Las Vegas, and Henderson offer first-time buyer programs and grants for down payment or closing cost assistance.
1. VA Loan Program
VA loans are a good deal for eligible borrowers because they come with lower interest rates than most other loan types and require no down payment. A funding fee is required on VA loans, but that fee can be rolled into your loan costs and some service members may be exempt from paying it. Many U.S. Military members (active duty and veterans) are eligible for loans backed by the U.S. Department of Veterans Affairs, or VA.
VA loan perks include no PMI or minimum credit score. VA loans are best for active-duty military members, veterans, and their spouses.
2. Fannie Mae or Freddie Mac loan program
These government-sponsored enterprises, or GSEs, set borrowing guidelines for loans they’re willing to buy from conventional lenders on the secondary mortgage market.
Both programs require a minimum down payment of 3%. Homebuyers also need a minimum credit score of 620 (or higher, depending on the lender) and a clean financial and credit history to qualify. Fannie Mae accepts a debt-to-income ratio as high as 50% in some cases. PMI is still required as part of this loan because you are putting less than 20% down, but you can get it canceled once your loan-to-value ratio drops below 80%.
The Fannie Mae and Freddie Mac loan programs are best for borrowers with strong credit but can only make a minimum down payment.
3. FHA loan program
If you haven’t saved a 20% down payment don’t let that deter you from buying a home. Insured by the Federal Housing Administration, FHA loans typically come with smaller down payments and lower credit score requirements than most conventional loans. First-time Las Vegas homebuyers can buy a home with a minimum credit score of 580 and as little as 3.5% down or a credit score of 500-579 with at least 10% down.
FHA loans are best for buyers with low credit and smaller down payments.
4. USDA loan program
The U.S. Department of Agriculture, or USDA, guarantees loans for some rural homes and you can get 100% financing. This doesn’t mean you have to buy a farm or sleep in a barn with your livestock, but you do have to buy a home in a USDA-eligible area. Yes, we have USDA-eligible areas in Southern Nevada.
USDA loans also have income limits based on where you live, meaning they’re geared towards borrowers who earn lower to moderate incomes. Typically, you need a credit score of 640 or higher to qualify for a streamlined USDA loan. If your score falls short, you’ll have to provide extra documentation on your payment history to get an approval. The USDA loan program is best for borrowers with lower or moderate incomes purchasing a home in USDA-eligible rural areas.
5. Good Neighbor Next Door buyer aid program
The Good Neighbor Next Door program is sponsored by the U.S. Department of Housing and Urban Development (HUD). It provides housing aid for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th-grade teachers.
Through this program, you can receive a discount of 50% on a home’s listed price in regions known as “revitalization areas.” Using the program’s website, you can search for properties available in Nevada. You must commit to living in the home for at least 36 months to qualify. The Good Neighbor Next Door program is best for teachers, law enforcement, firefighters and emergency medical technicians.
6. HomePath ReadyBuyer Program
Fannie Mae’s HomePath ReadyBuyer program is geared toward first-time buyers interested in foreclosed homes that are owned by Fannie Mae. After taking a required online homebuying education course, eligible borrowers can receive up to 3% in closing cost assistance toward the purchase of a HomePath property. The trick is finding a HomePath property in Las Vegas, which might be a challenge since foreclosures account for a significantly smaller chunk of active listings today. The HomePath ReadyBuyer program is best for borrowers with a lower credit score who are open to the idea of purchasing a foreclosed home.
7. Energy-efficient mortgage program
Making a home more energy-efficient is good for the environment, and good for your wallet by lowering your utility bills. Making green upgrades can be costly, but you can get an energy-efficient mortgage, or EEM loan, that’s insured through the FHA or VA programs.
An EEM loan lets you tack the cost of energy-efficient upgrades (examples include new insulation, a better HVAC system or double-paned windows) onto your primary loan upfront – all without a larger down payment. An EEM loan is best for homebuyers who want to make their home more energy-efficient but lack up-front cash for upgrades.
8. FHA Section 203(k) loan program
If you think a fixer-upper is sexy and you want a challenge but don’t have the extra money to pay for renovations, an FHA Section 203(k) loan is worth a look.
Backed by the FHA, the loan calculates the home’s value after improvements have been made. You can then borrow the funds needed to pay for home improvement projects and roll the costs into one loan with your primary loan amount. You’ll need a down payment of at least 3.%%, and improvements must cost more than $5,000. The FHA Section 203(k) loan is best for homebuyers interested in purchasing a fixer-upper but who don’t have a lot of cash to make major home improvements.
9. Local first-time Las Vegas homebuyer programs and grants
In an effort to attract new residents, Nevada and Las Vegas, North Las Vegas, and Henderson offer first-time homebuyers grants and programs. The aid comes in the form of grants that don’t have to be repaid or low-interest loans with deferred repayment to cover down payment or closing costs. Some programs may have income limits, too. Before buying a home, check Southern Nevada’s housing authority website for more information. Local first-time homebuyer programs and grants are best for first-time homebuyers who need closing cost or down payment assistance.
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If you are interested in learning more about these 9 programs or just want to talk to a lender to find out if you are eligible for any of the first-time homebuyer programs available in Las Vegas, North Las Vegas, or Henderson we recommend you talk with our Preferred Partner: Lender. These folks have been helping people buy their first home for years and we recommend them highly.
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