The Pros and Cons of Different Home Loan Options in Las Vegas

If you are getting ready to buy a house, getting a loan to help pay for the house is likely on your list. There are a variety of home loan options in Las Vegas available for prospective homeowners. Loans vary in duration, cost, qualifications, and more, so you’ll want to learn about the options available first before you get a loan for your house.

Understanding the Different Kinds of Mortgages

Mortgages are some of the home loans available in Las Vegas. Mortgages are a type of loan. There are different options available for mortgages that you can get, just as there are different loans that you can get, so you will want to know all about your options before settling on a loan.

Some of the most common loan categories include:

VA loans
FHA loans
USDA loans

Along with the specialty loan categories above, you can also choose your loan based on the interest rate structure. Some of the options include an adjustable-rate mortgage, a traditional one-year adjustable-rate mortgage (ARM), hybrid ARMs, and balloon mortgages. You can also get home loans for your rental properties.

VA Loans

Veterans Affairs (VA) loans are backed by the US Department of Veterans Affairs. These loans are designed for veterans and active US military members. Essentially, they will help both active military personnel and veterans buy affordable homes without requiring the usual 20% down payment. Instead, a zero-down payment is required, and no private mortgage insurance (PMI) is tacked onto the cost of the loan, which can add a significant amount to the loan.

Another advantage of a VA loan is that is no minimum credit requirement. The interest rates you can get with these loans are lower than the interest rates you might get with other loans, and there is a higher debt-to-income permitted with VA loans. However, some limitations to these loans include that they are only available for active duty military personnel, reservists, and military veterans. An upfront VA funding fee is required to secure the loan, and you can expect a slower closing time of up to 2-5 days longer than you might get with other loans.

FHA Loans

Federal Housing Administration (FHA) home loans also have a lower down payment compared to most loans. With an FHA loan, you typically need to put down just 3.5% for your down payment. The rates you get with this loan are better than with most conventional loans if you have a less-than-optimal credit score. With the typical FHA loan, you will get an APR of 3.978%. If you have a credit score of at least 580, less than the optimal 620 for conventional loans, you can get a loan with a down payment of 3.5%. If you have an even lower credit score of 500, you can still get an FHA loan if you make a down payment of at least 10%. The mortgage rates you pay for an FHA loan will also be lower. You can expect a 1.75% upfront mortgage insurance premium and a rate of 0.45% to 1.05% annually.

While there are many advantages to getting an FHA loan if you qualify based on your financial circumstances, there are also some potential downfalls to consider. If you make a down payment of less than the 20% standard, your mortgage insurance payments will last for the duration of the loan, which means you will have higher average mortgage rates in Las Vegas than if you made a higher down payment. Also, there are limitations on the type of home that you can get with an FHA loan. You can get a single-family residence with an FHA loan, but some housing types, including condos, do not qualify for the loan. Additionally, there are owner-occupancy percentage limits to an FHA loan. If you take out an FHA loan, you must only take out the loan for an owner-occupied home. The loan cannot be used on a vacation home or an investment property. Another consideration is that there may be different loan limits depending on where you live and take out a loan. Mortgage brokers in Las Vegas can inform you of the loan rates you must pay if you are buying a home in the Las Vegas area.

FHA loans are among the most popular of all the loans you can get for your home. These loans retain their popularity for a few reasons, including that they are fairly easy to qualify for. One of the unique qualities of FHA loans is that they are available if you accept money as a gift. Applicants can accept all of the money they use for a down payment from a gift source that comes from a friend, relative, employer, or charitable group. Gifts can also come from a government homebuyer program. Although you need a Social Security number for many purchases, it is not required for an FHA loan.

USDA Loans

The US Department of Agriculture (USDA) supports home loans in Las Vegas for homes based on qualifying needs, including purchasing a home in a rural area. In fact, one requirement to get a USDA loan in the first place is that the home you’re buying must be located in a rural area. While many loans have a minimum income requirement, USDA loans are the opposite. They are designed for lower-income households and have a maximum upper limit for income. Since USDA loans are given to people with lower incomes, they also come with an added mandatory monthly expense called mortgage insurance. This insurance is tacked onto the amount that you owe on the loan, which is the principal plus interest, every month. While some loans are available for various housing types, USDA loans are only permitted to be used on a single-family residence. The type of housing structure you want to get is essential when you’re thinking about your home loan options in Las Vegas.

Conventional Loans

Unlike many specialty loans, conventional home loans in Las Vegas are not backed by the government. Instead, they are issued by private lenders. Conventional loans are available through more lenders, which increases your chance of favorable mortgage rates in Las Vegas. They may also be used to purchase second homes along with primary residences.

Consider Rates

Home loans in Las Vegas have different rate structures. You can get a loan with either a fixed or an adjustable rate. An adjustable-rate mortgage is structured so that you have a set, predetermined initial interest payment, but your interest payments can change afterward. One of the most common home loan options in Las Vegas is a one-year adjustable-rate mortgage (ARM), which means that the interest rate on your mortgage can change once annually on the anniversary of when you took out the loan. An ARM is considered to be a riskier type of loan because the interest rate is subject to change, which means that it can increase instead of decrease over time, which means you’ll need to make higher monthly payments. It is also possible to get a hybrid ARM, which is a loan with a fixed interest rate for a longer period, but then the interest rate can change after that.