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Nevada first-time home buyer programs

Nevada is so much more than 24-hour parties in Las Vegas. In fact, it’s one of the fastest-growing states in the country. But if getting a mortgage or paying a down payment is holding you back, check out the state and federal first-time home buyer programs that are available. Sponsored by the federal government and Nevada Housing Division, each one makes it easier and more affordable to achieve the American Dream. Best of all, they’re available to all kinds of Americans with different lifestyle and financial situations. Read up on your options, then consult a financial advisor through the SmartAsset advisor matching tool to help differentiate which first-time home buyer program is best for you.

Federal First-Time Homebuyer Programs

FHA Loans

Pros – Don’t need a high credit score to qualify
– Low down payment needed
Cons – Higher down payments for lower credit scores
Eligibility – Credit score of at least 500
– Down payment of at least 3.5%
Best For – Any Nevadan lacking adequate savings for a down payment

The Federal Housing Administration (FHA) program is one of the most popular first-time homebuyer programs in Nevada. While backed by the FHA, loans are distributed by external lenders throughout the state. The biggest benefit by far is the reduced down payment requirement.

Rather than the standard 20%, borrowers only need to provide 3.5% of the home’s value at closing. Better yet, FHA loan requirements are minimal, so almost anyone can qualify. You need a FICO® credit score of 580 to receive the down payment perk in its full glory, but if your score falls between 500 and 580, you can get a FHA loan by making a down payment closer to 10%.

USDA Loans

Pros – Don’t need a high credit score to qualify
– No down payment needed
Cons – Only available in select areas
– Only available to those that can’t get a conventional mortgage
Eligibility – Home in an eligible area
– Income within 115% of the local median
Best For – Low- and mid-income Nevadans willing to live in a rural part of the state

The United States Department of Agriculture (USDA) sponsors the “Section 502 Single Family Housing Guaranteed Loan Program,” which provides favorable lending conditions to low- and moderate-income earners. Also known as USDA mortgages, these loans were created to attract new homebuyers to rural and semi-rural communities.

Applicants must prove that they have been unable to secure a conventional mortgage. So long as you have proof and a decent credit history, you won’t have to pay any down payment at all. If your score falls a bit lower on the spectrum (500-580), you could still qualify. You will just have to pay a down payment closer to 10%.

VA Loans

Pros – No down payment needed
– Won’t have to get private mortgage insurance
– Usually comes with reduced closing costs
Cons – Must pay VA funding fee
– Long application process
Eligibility – Credit score of at least 620
– Military members and veterans, their spouses, or other beneficiaries
Best For – Nevada veterans that can’t afford a down payment

To show the federal government’s appreciation for our armed servicemen, the Department of Veterans Affairs (VA) developed VA loans. The department insures these loans but they’re actually distributed by third-party lenders.

The biggest perk here is also low down payment. Most buyers will actually be eligible for a loan worth 100% of their home’s value. In other words, no down payment. Plus, since the VA backs part of your risk, you will not have to get private mortgage insurance (PMI), which is usually required for down payments lower than 20% and can be very costly. VA loans also tend to come with low closing costs, leaving even more money in your wallet.

To qualify, you will need a credit score of 620 or higher. You’ll also need to contribute 1.25% to 2.4% of your home’s value into the VA fund, depending on the size of your down payment – should you choose to make one at all.

NADL

Pros – No down payment needed
– Won’t have to get private mortgage insurance
– Usually comes with reduced closing costs
– Reduced, fixed rate
– Don’t need a high credit score to qualify
Cons – Only available in select areas
Eligibility – Home in an eligible territory
– Military members and veterans of Native American descent, their spouses, or other beneficiaries
Best For – Native American veterans without a strong credit score

The VA also sponsors Native American Direct Loans (NADL), which provide Native American veterans with the tools they need to buy a home. As with VA loans, NADL loans don’t require any sort of down payment, any private mortgage insurance, or usual closing costs.

What really sets NADLs apart is the reduced, set interest rate. To make things even better, borrowers do not need a strong credit history to qualify. Homes must be located on allotted lands, Alaska Native corporations, Pacific Island territories or federally-recognized trusts, though.

Good Neighbor Next Door Program

Pros – Significant discount on home cost
Cons – Only available in select areas
Eligibility – Remain in home at least three years
– Police officers, firefighters, emergency medical technicians or teachers
Best For – Public servants without enough savings to afford a home

The Housing and Urban Development (HUD) started the Good Neighbor Next Door Program to thank police officers, firefighters, emergency medical technicians, and teachers for their contributions to the community. More of a discount than a loan, participants receive a 50% reduction on the price of their home.

Only homes in HUD-designated “revitalization” areas and buyers who agree to live in the home for at least three years are eligible. Once the three years are up, you can sell the home and retain any equity and profit. If you still need a loan on the remaining 50% of the home, HUD encourages you to apply for a conventional, FHA, or VA loan.

Fannie Mae and Freddie Mac

Pros – Multiple loan types available
– Don’t need any credit history to qualify
– Low down payment needed
– Cancellable private mortgage insurance
Cons – Higher rates than other federal programs
Eligibility – Income within local median
Best For – Nevadans that don’t qualify for other federal programs.

Other federal homebuyer programs are a partnership between an organization and a third-party lender. Fannie Mae and Freddie Mac, on the other hand, are government-sponsored mortgage providers. They are similar entities, but offer different programs with a range of benefits that first-time homebuyers can appreciate.

The HomeReady® loan from Fannie Mae helps low- or moderate-income buyers secure a mortgage without paying a high down payment. To qualify, you must have a minimum credit score of 620 and provide just 3% of the home’s value at closing. Though you will need to get private mortgage insurance, you can cancel it once you’ve accrued 20% equity in your new home.

The popular Home Possible 97% LTV programs from Freddie Mac also comes with a low down payment and cancelable PMI. It’s also more flexible than a HomeReady loan. With a Home Possible loan, you can choose both the length (15 or 30 years) and terms (5/5, 5/1, 7/1 or 10/1 adjustable-rate) of the loan. You do not even need any credit to qualify.

Nevada First-Time Homebuyer Programs

Nevada first-time home buyer programs

The Nevada Housing Division (NHD) started the Home is Possible program to help Nevadans that have not owned a home in the past three years. Rather than lending money directly, the NHD certifies lenders that administer the program’s offerings. All mortgages from NHD lenders are 30-year, fixed-rate loans with competitive interest rates. Each program comes with different credit score and other eligibility requirements. Some also have income and purchase price limits. To ensure they are ready for the responsibility, all first-time homebuyers must take a homeownership class prior to closing on a NHD mortgage.

Home is Possible

Pros – Reduced interest rates
– A second, forgivable loan worth up to 5% of the original mortgage
Cons – Must pay one-time application fee
Eligibility – Credit score of at least 640
– Household income below $98,500
– Home price below $484,350
– Must take homeownership class
Best For – Low- and mid-income Nevadans that can’t afford a down payment

On top of attractive interest rates on an NHD loan, the standard Home Is Possible (HIP) program offers first-time (and repeat) homebuyers a second loan worth up to 5% of the original mortgage amount to help cover the down payment and closing costs.

Better yet, you don’t have to repay the second loan if your home is still your primary residence after three years. Buyers must have a credit score of 640 or above, meet income and purchase price limits, and complete a NHD-approved homeownership course to qualify. Though there is a $675 one-time fee, this is a small sacrifice to save thousands of dollars in the long-term. 

NHD Mortgage Credit Certificate

Pros – Reduced federal tax bill
– Lasts the entire lifetime of the loan until repayment, refinancing, or sale
Cons – Most borrowers must pay program and application fees
Eligibility – FHA, VA, USDA, NHD, or conventional mortgage participant
– Must take homeownership class
Best For – Any first-time homebuyer in Nevada that want to save on their annual tax bill

In addition to loan and down payment assistance programs, the Nevada Housing Division provides eligible homebuyers with a Mortgage Credit Certificate (MCC). Through this program, buyers receive an annual federal tax reduction of up to 30% of the interest paid on their mortgage with a maximum of $2,000 a year.

Borrowers can claim the credit every year for the life of the loan so long as the home remains their primary residence. That usually means about $2,000 a year and tens of thousands of dollars saved over time. There is a one-time fee of $795 and a $300 lender application fee, but this is a small obstacle to achieve serious long-term savings. Fees are waived for qualified veterans.

Home is Possible for Heroes

Pros – Reduced interest rates
– A second, forgivable loan
– Potential to combine with a federal tax credit
Cons – Must pay one-time application fee
Eligibility – Federal loan participant
– Credit score of at least 640
– Household income below $98,500
– Home price below $484,350
– Military members and veterans, their spouses, or other beneficiaries
– Must take homeownership class
Best For – Low- and mid-income Nevadans that can’t afford a down payment

Home is Possible for Heroes helps the Nevada Housing Division express thanks to the service men and women that defend our nation’s values. It gives military personnel and veterans more buying power and an opportunity to experience the benefits of homeownership for less.

In addition to a 30-year, fixed-rate mortgage with below-market interest rates, Home is Possible for Heroes can be combined with an MCC. Since the certificate’s $795 fee is waved for military members and vets, there’s no reason not to take advantage of both.

The 640 credit score minimum, homeownership class requirement, and income and purchase price limits associated with the standard Home is Possible program all remain. There’s also a one-time fee of $675

Home is Possible for Teachers

Pros – Reduced interest rates
– A second, forgivable loan worth up to $7,500
– Potential to combine with a federal tax credit
Cons – Must pay one-time application fee
Eligibility – Federal loan participant
– Credit score of at least 660 for FHA or 640 for VA, USDA
– Household income below $98,500
– Home price below $484,350
– Full-time K-12 public school teacher
– Must take homeownership class
Best For – Low- and mid-income Nevadans that can’t afford a down payment

The Home is Possible for Teachers program is very similar to the Home is Possible for Heroes program. Instead of a 5% down payment assistance grant, it provides a grant of $7,500 for down payment and closing costs. The grant is forgivable if your home is still your primary residence after five years. The Nevada Housing Division tells homebuyers to think of it like extra credit for teachers.

Like Home is Possible for Heroes, it can be combined with the MCC. The certificate’s $795 fee will not be waived, but it will be discounted. There is still a one-time fee of $675 for the Home is Possible mortgage and the credit score minimum is 660 rather than 640, but it’s a small price to pay for lifelong savings.

Tips for Handling a Mortgage

Nevada first-time home buyer programs

  • Don’t leave any expense out of your homeowner budget. That means both the obvious, like a down payment and monthly mortgage payments, and the often forgotten, such as moving and closing costs, homeowner’s insurance, property taxes and maintenance costs. This way you’ll have all your bases covered in planning your financial future.
  • It’s always worthwhile to get an expert’s opinion. Like a medical procedure, purchasing a home is a big deal. SmartAsset financial advisor matching tool can pair you with financial advisors in your area that have experience dealing with situations like these.

Photo credit: ©iStock.com/FatCamera, ©iStock.com/LPETTET, ©iStock.com/Tinpixels

Liz Smith Liz Smith is a graduate of New York University and has been passionate about helping people make better financial decisions since her college days. Liz has been writing for SmartAsset for more than four years. Her areas of expertise include retirement, credit cards and savings. She also focuses on all money issues for millennials. Liz's articles have been featured across the web, including on AOL Finance, Business Insider and WNBC. The biggest personal finance mistake she sees people making: not contributing to retirement early in their careers.
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