FHA Loans Las Vegas
FHA loans are mortgages insured by the FHA (Federal Housing Administration), an agency with the U.S. Department of Housing and Urban Development. This ensures that the lender is protected from any loss if the borrower defaults on the loan. This also allows for lower downpayment requirements and less rigorous lending standards. These loans carry two different types of mortgage insurance premiums: the upfront premium, which is 1.75% of the loan amount and paid right after the borrower gets the loan or financed into the loan amount, and the annual premium, a monthly payment that is dependent on the amount borrowed and the initial LTV (loan-to-value) ratio.
Benefits of FHA Loans
Lenders will typically offer lower interest rates and more flexible qualification requirements since there is insurance in place with FHA loans. Loans are typically available for credit scores above 500 but the FHA may make exceptions in certain situations for applicants who have a "nontraditional credit history" or "insufficient credit". Lenders may also offer some relief to borrowers with an FHA loan who have endured a serious financial hardship and are struggling to make payments. This may include a temporary period of forbearance, a modification to the loan that would lower the interest rate or extend the payback period, or even a deferral of part of the loan balance at no interest.
Typically, the FHA requires a minimum downpayment of 3.5% of the home purchase price. They also allow the home seller, lender or builders to cover some of the closing costs such as title expenses, appraisals, or credit reports. This is often used as an incentive for the borrower to commit to a purchase. Despite this, the lender will often charge a slightly higher interest rate if they agree to pay the closing costs.
The FHA also has a unique loan product called a 203(k) for borrowers in need of extra cash for property improvements or repairs. An advantage to this product is that the loan amount is not based on the current appraised value of the home but on the projected value after the improvements or repairs are completed. A "streamlined" 203(k) is also available which allows for borrowers to take out up to $35,000 for nonstructural renovations such as replacing fixtures and cabinets or painting.
How to get an FHA Loan
Since the FHA is not a lender itself but an insurer, in order to get an FHA Loan borrowers need to find an FHA-approved lender to acquire the loan from. Not all FHA-approved lenders offer the same interest rate and costs on the same loan. Get in touch with us today to learn about our unbeatable FHA loans!