Nevada First Time Home Buyer Programs and Grants-Overview

Who can qualify for Nevada first-time homebuyer programs?

The requirement for not owning a home for the past three years has been withdrawn for Home is Possible, and Home is Possible for Heroes and Teachers. The only requirement is that the applicant doesn't own a home at the time of closing.

Other requirements that all programs have in common are taking and completing the HUD-approved First-Time Home Buyer Education Class. Then Las Vegas first-time homebuyers are assigned a certified housing counselor who will guide them throughout the process. Additionally, the applicant must use the unit as a primary residence and obviously must meet standard underwriting requirements.

Nevada Housing Division Las Vegas first-time homebuyer programs

What are the best Nevada first-time homebuyer programs?  Home is Possible is the main program, and it comes in 3 flavors.

Home is Possible

Home is Possible for Nevada is currently the best program and offers 5% of the loan value, which is usable for the down payment and closing costs and is forgivable after only three years if the applicant stays in the home. In addition, they claim that this program offers an attractive 30-year interest rate as well. However, the interest rate is higher than typical mortgages, and buyers should consult their approved mortgage officers for the difference.

Qualifications:

All buyers who meet qualifications can qualify, but they may not own a home at the closing time and must live in the house as the primary residence.

For government loans (FHA, USDA, VA), the qualifying income must be less than $105,000.  For conventional loans, income limits vary, and you need to contact a loan officer who is approved for this program to learn more.

The home price should be less than $548,250

The minimum credit (FICO) score should be higher than 640.

Buyers have to pay a one-time application fee of $755, which you can pay at closing your deal.

Home is Possible for Heroes

Home is Possible for Heroes is for US Military Veterans and offers a below-market fixed interest rate 30-year loan that reduces the monthly mortgage payment. If you're a veteran who has been honorably discharged, or you are currently on active military duty or in the National Guard, this program is for you. Surviving spouses of military personnel qualify as well.

Home is Possible for Heroes can be combined with the Mortgage Credit Certificate (MCC) with program fees waived for more savings. However, buyers have to meet other restrictive conditions to do so.

Qualifications:

Qualifications are the same as the Home is Possible program except for financing that should be through VA or USDA loans only

Home is Possible for Teachers

Home is Possible for Teachers offers $7500 in bonus money to licensed full-time K-12 public school classroom teachers in Nevada.

This program offers below-market fixed interest rate 30-year loans. It can be combined with the Mortgage Credit Certificate (MCC) to provide additional savings.

Teachers must live in the home as a primary residence, and if they do so for five years, the bonus money will be forgiven. This program is NOT as good as the Home is Possible, and teachers are better off using the latter.

Qualifying conditions:

Applicants shall finance through a government-issued mortgage (no conventional loans), and the minimum credit score of 660 is required for an FHA loan and 640 for VA loans.

The borrower can own a home but should not own one at the time of closing.

The bonus money will be forgiven if the teacher stays in the unit for five years or more, while the same for Home is Possible is three years.

The qualifying income has to be less than $105,000, and the home price should be less than $548,250.

Teachers have to use a government-backed mortgage loan. Conventional loans are excluded

Teachers need to pay a one-time fee of $755 on the first mortgage.

Las Vegas Nevada first-time home buyers should buy a home rather than rent

Income Tax Credits through Mortgage Credit Certificate (MCC)

Las Vegas first-time homebuyers can combine the above programs with the Mortgage Credit Certificate (MCC) for additional savings. They can get a rebate of up to $2,000 annually with a Federal Income Tax credit of up to 20% of the interest paid, as well as a standard tax deduction on any remaining interest. MCC percentage is a rate the administering Housing Finance Agency (HFA) sets between 10 and 50 percent.

For example if the home price was $150,000 and the mortgage’s interest rate was at 4%, then

$150,000 (mortgage amount) x 4% (mortgage interest rate) x 20 percent (MCC percentage)
= $1,200 (eligible credit amount)

Then, the borrower would be able to claim $1,200 in credit on their annual tax return. In three years, this translates to $3600 additional savings.

MCC Program has a flat fee of $795, along with a lender application fee of $300. But if combined with Home is Possible, a $400 discount is offered.

Qualifications:

The definition of the first-time homeowner applies. Applicants shouldn't own a home for the past three years unless they are qualified veterans.

Qualification for the MCC programs is more restrictive than the above programs, and homebuyers will have a hard time finding single-family homes priced less than $271,000. Income levels are lower as well.

Qualifications for the MCC programNon-targeted areasTargeted areas
Families of two or less income$62, 243$73,200
Families of three or more income$71,580 $85,400
Home price$271,084$331,325

Applicants should finance through FHA, VA loans only. Conventional loans are not allowed.

The City of Henderson Neighborhood Services First-time Homebuyer Program

The City of Henderson Neighborhood Services offers an interest-free deferred loan of $45,000. In addition, $10,000, or 6%, whichever is less, goes toward the down payment and closing costs and the other $35,000 toward repairs.

This program is for Henderson's first-time homeowners who want additional savings by purchasing a fixer-upper to remodel to their taste.

Applicants must have lived or worked in Henderson for one (1) year before applying and must not have owned a home in the past three years. In addition, the borrower should hold less than $25,000 in assets.

They must contribute $1,500 of their funds toward the purchase of the home.

Single-family homes, condos, and townhouses qualify, but the maximum price should be less than $257,450.

A FICO score of higher than 640 is required.

This program doesn't charge interest or monthly payments, but it must be paid back when the home is sold or is no longer the borrower's primary residence.

Federal first-time Homebuyer programs through government-backed mortgages

Given that homebuyers seeking down payment or mortgage assistance usually can't afford a 20% down payment, the Federal Government has provided some remedies for this situation.

FHA Loans :

FHA loans are distributed by third-party banks but are backed by FHA. The required down payment is 3.5%, with a credit score of 580 or more. Those with a lower FICO score need a 10% down payment.

FHA allows up to 43% debt to income ratio, which is higher than what conventional loans allow.

FHA loans can be applied to properties that have up to four units (fourplexes).

The Private Mortgage Insurance (PMI), which is necessary with a down payment that is lower than 20% is cheaper for FHA loans than conventional mortgages.

CONS:

The bad part is that the borrower has to pay 1.75% of the loan as Private Mortgage Insurance for the life of the loan. The way out is to refinance with a conventional loan when the equity in residence reaches 20%.

VA Loan:

VA loans are backed by the Department of Veteran Administration (VA) to help US military veterans become homeowners. This loan has two significant advantages over the FHA loans.

One is that most Veterans do not have to put down any down payment nor pay the costly Private Mortgage Insurance (PMI) for the life of the mortgage. The closing costs are lower as well. However, veterans have to pay a fee to the VA.

Fannie Mae and Freddie Mac:

If first-time home buyers meet the requirements set by Fannie Mae or Freddie Mac, they can get a mortgage with a 3% down payment. However, in this case, the PMI is cancellable when the home equity reaches 20%.

Avoiding the Re-Capture Tax

Important: If homebuyers sell all or some of their interest in their residence before it is forgiven, they have to pay recapture tax, which for Home is Possible is three years before being forgiven.

Making offers and financing the property

Nevada first-time home buyer deals take longer to close, which is a disadvantage if your Realtor neglects to do one thing listed below.

Applicants who have passed all stages and become ready to buy are already underwritten-approved for the loan. The final approval of the mortgage is contingent on the appraisal of the property only. Being under-written approved removes much of the uncertainty about the deal's outcome and makes it as close to a cash offer as a financing deal can be.

Your Realtor should ensure that the seller and his listing agent understand this, which should more than make up for a longer escrow time and they may even get a discount.

Conclusion:

Lastly, those who want to take advantage of Las Vegas first-time homebuyer programs must use a mortgage officer and Realtor who are certified by the Nevada Housing Division to participate in these programs, and we are. If you think you can qualify and the majority of home buyers can, don't wait, pick up the phone and call us at 702-478-7800.

Nevada First Time Home Buyer Programs and Grants-Overview was last modified: June 24th, 2021 by masouds