FHA Loans in Las Vegas
What is an FHA loan and who can qualify?
FHA loans are designed to help people who have less qualifications than others to buy a home. FHA (Federal Housing Administration), a part of HUD, insures these loans. Most loans require higher down payments but, not FHA. FHA loans require a down payment of a minimum of 3.5%. FHA loans are popular among first-time homebuyers to get the Las Vegas home you dream of!
The lowest credit scores you may have with this loan is 500. Keep in mind, with this score you will have to put down a higher down payment which is usually 10%. If your credit score is 580 or over, then the typically down payment will be the 3.5%. Furthermore, this loan is only for primary occupancy. You cannot get this loan for an investment or a rental property. Also, if you have a bankruptcy then you must be two years out of it in order to qualify. If you have any previous foreclosures, it must be three years since it was removed in order to qualify. Keep in mind, if you are delinquent on any student loans or your income taxes you will not be able to qualify for FHA loans.
If you have any questions about whether you qualify for an FHA Loan, call your Las Vegas Mortgage Broker today!
Benefits of FHA Loans
How does an FHA loan work?
First things first, with FHA loans you must have mortgage insurance. Mortgage insurance is paid to the Federal Housing Administration in order to insure your loan. This is a requirement and all FHA loans require it. You will need to pay an Upfront Mortgage Insurance Premium (UFMIP) and a monthly premium as well. Depending on the purchase price of your home, the UFMIP will be 1.75% of your loan amount.
For example, if your purchase price is $300,000, you put 3.75% down, and your loan amount is $288,750 then your UFMIP (1.75%) will be $5,053.13. Your UFMIP is going to be in your loan amount so, you do not have to pay it in your closing costs. Your loan amount will be $293,802, which includes the UFMIP. The monthly premium is based off your down payment. If you decide to do a 3.5% down payment then your monthly rate will be 0.85%, which would be $204.53. If you decide to do a 5% or more down payment then your monthly rate would be 0.80%, which would be $192.50. These monthly costs would be added to your monthly payment. Your monthly payment and all other expenses will decide your debt-to-income ratio.
DTI (debt-to-income) ratio is an important factor when trying to get a mortgage. You want to make sure that your ratio does not exceed the maximum. For example, if the max DTI ratio is 56.99% and your income is $4,000 per month then your monthly expenses cannot exceed $2,279.60. If your ratio exceeds the maximum then, you will no longer qualify for an FHA loan.
Your Las Vegas Mortgage Broker can help you calculate your ratio and what you can afford, call us today!
Breaking down your FHA loan payment
Most important questions to be asked:
Your mortgage payment is a breakdown of all your costs, including taxes, insurance, principal, interest, homeowner's association and if applicable, mortgage insurance. Your loan amount will be the first thing your mortgage broker will calculate. With a 3.5% down payment and a purchase price of $250,000, your down payment would be $8,750. You can then calculate your payment after the loan amount is decided.
Your main mortgage payment will consist of principal and interest. Your loan amount, interest rate and APR (annual percentage rate) will determine principal and interest. If you are purchasing a home for $250,000 and your current interest rate is 4.5% then your principal and interest payment would be $1,243.77. Next, your hazard insurance will be included in your monthly payment unless you decide to opt-out of impounds. If you decided to opt-out of impounds that would mean you would be responsible for paying insurance and taxes on your home. If you decide to do impounds and have an escrow account, it would be paid for you.
Your hazard insurance will be a monthly premium which can range from $30-$100. Your insurance representative will base your premium amount off of the size of the home and what coverage it needs. In the same way, the county you are buying in will determine your taxes payment. The mortgage insurance will be based off the loan amount of the home at a flat rate of 0.85% or 0.80%. If you are putting a down payment of 5% or more then, your rate will be 0.80%. If you are putting a down payment of 3.5% then, your rate will be 0.85%. In this instance, our loan amount is $245,471 so, the monthly mortgage insurance premium will be $170.89.
If you have any questions regarding an estimated payment, contact your mortgage broker today.
Here is a breakdown of mortgage payment:
These numbers are given as examples and are not guaranteed. Rates are subject to change.
FHA Streamline Refinances
Do you already have an FHA loan? You can refinance your loan and save some money! This program is designed to save you money on your current monthly payment. It is easy to qualify and does not require income, assets, or any sort of verification. You don't have to qualify with a credit score or an appraisal. There are some requirements for an FHA Streamline. Your mortgage must be current, which means it cannot have a late in the last 6 months. You may not have more than one late in the last year. Also, you must have made the last 6 months of payments in order to qualify. This is referred to as "seasoning", which also means it needs to be 210 days old.
Some of the benefits of an FHA Streamline Refinance:
If this sounds like the program for you, contact your mortgage broker today! We would be happy to answer any questions you may have.