Home Financing Options | Antony R. B. Augay

Navigating Home Financing

Securing the right financing is one of the most critical aspects of your home buying journey. The mortgage you choose will impact your financial well-being for years to come, making it essential to understand all your options.

This comprehensive guide will help you understand the various financing options available to homebuyers in Las Vegas, from conventional loans to government-backed programs and specialized financing solutions. Armed with this knowledge, you'll be better equipped to make informed decisions that align with your financial goals.

Remember that mortgage programs and interest rates change over time, but the fundamental concepts and qualification requirements remain relatively consistent. As your real estate expert, I maintain relationships with reputable lenders who can provide you with current rates and programs when you're ready to move forward.

15-30

Year Mortgage Terms

20%

Standard Down Payment

3-6%

Typical Closing Costs

Nevada Assistance Programs
Understanding Credit Requirements
Interest Rates & Terms
Mortgage Calculators

The Mortgage Pre-Approval Process

An essential first step in your home buying journey

1

Gather Your Financial Documents

Before applying for pre-approval, collect the following documents:

Proof of Income: Pay stubs from the last 30 days, W-2 forms from the past two years, and tax returns from the past two years
Proof of Assets: Bank statements, investment account statements, and retirement account statements from the past 60 days
Identification: Valid driver's license or passport and your Social Security number
Employment Verification: Contact information for current and previous employers (past two years)
Additional Documents: Divorce decrees, child support orders, gift letters, or bankruptcy discharge papers if applicable

2

Choose Lenders to Compare

It's wise to shop around and compare offers from multiple lenders:

Traditional Banks: Often provide personalized service and may offer discounts for existing customers
Credit Unions: Typically offer competitive rates and lower fees for members
Mortgage Brokers: Access multiple lenders and can help find specialized loan programs
Online Lenders: May offer convenience and competitive rates but less personalized service

Pro Tip: Submit all applications within a 14-day period to minimize the impact on your credit score. Credit bureaus typically count multiple mortgage inquiries within this timeframe as a single inquiry.

3

Complete Applications

The lender will require information about:

Personal Information: Legal name, date of birth, marital status, and contact information
Income Details: Current employment information, salary, and other income sources
Asset Information: Bank accounts, investments, and retirement accounts
Debt Obligations: Existing loans, credit card balances, and other financial commitments
Financial History: Previous addresses, employment history, and explanation of any credit issues

4

Credit Check and Financial Assessment

The lender will evaluate your financial profile:

Credit Score Review: Lenders will pull your credit report and evaluate your credit score and history
Debt-to-Income (DTI) Ratio: Calculation of your monthly debt payments divided by your gross monthly income (typically aiming for 43% or less)
Income Stability: Evaluation of your employment history and income consistency
Asset Verification: Confirmation of down payment funds and reserves

5

Receive Pre-Approval Letter

If you qualify, the lender will issue a pre-approval letter that typically includes:

Maximum Loan Amount: The highest loan amount you qualify for based on your financial profile
Interest Rate Estimate: An approximation of the rate you might receive (not guaranteed until rate lock)
Loan Type: The specific mortgage program you've been pre-approved for
Expiration Date: Most pre-approvals are valid for 60-90 days

Note: Pre-approval doesn't guarantee final loan approval. The property you choose must also meet the lender's requirements, and your financial situation must remain stable until closing.

Pre-Qualification vs. Pre-Approval

Pre-Qualification

Quick, informal evaluation
Based on self-reported information
No documentation verification
No credit check
Provides rough estimate of what you might qualify for
Useful for initial planning

Pre-Approval

Thorough, formal evaluation
Requires documentation submission
Includes verification of income, assets, and employment
Includes comprehensive credit check
Results in a conditional commitment letter
Essential for serious home shopping

In Las Vegas's competitive real estate market, sellers typically won't consider offers without a pre-approval letter. Pre-qualification is not sufficient for making offers.

Conventional Loans

Traditional mortgage options not backed by government agencies

What Are Conventional Loans?

Conventional loans are mortgage loans that are not insured or guaranteed by a government agency. They follow guidelines set by Fannie Mae and Freddie Mac, government-sponsored enterprises that purchase and guarantee mortgages. Conventional loans typically offer competitive terms for borrowers with strong credit and financial profiles.

Types of Conventional Loans

Conforming Loans

These loans meet the guidelines established by Fannie Mae and Freddie Mac, including maximum loan limits ($726,200 for single-family homes in Clark County for 2023, though this limit adjusts annually).

Non-Conforming Loans

These loans exceed the conforming loan limits or don't meet other standard guidelines. Jumbo loans are the most common type of non-conforming loan (see Jumbo Loans section).

Fixed-Rate Mortgages

The interest rate remains constant throughout the loan term, typically 15, 20, or 30 years. This provides payment stability and predictability.

Adjustable-Rate Mortgages (ARMs)

The interest rate is fixed for an initial period (commonly 5, 7, or 10 years), then adjusts periodically based on market indices. ARMs typically start with lower rates than fixed-rate mortgages but carry the risk of rate increases later.

Conventional Loan Requirements

Credit Score: Typically 620 minimum (better terms with 740+)
Down Payment: Minimum 3% for some programs, typically 5-20%
Debt-to-Income Ratio: Generally 43% maximum
PMI: Required if down payment is less than 20%
Loan Limits: Subject to conforming loan limits

Advantages and Considerations of Conventional Loans

Advantages

Competitive interest rates for qualified borrowers
PMI can be canceled once you reach 20% equity
More flexible property types (condos, investment properties, second homes)
Various term options (15, 20, or 30 years)
Potential for lower mortgage insurance costs compared to FHA loans
Faster approval process compared to some government-backed loans

Considerations

Stricter credit requirements compared to government-backed loans
Higher down payment requirements than FHA or VA loans
May have higher interest rates for borrowers with lower credit scores
Income and debt documentation requirements can be stringent
Less flexibility for borrowers with previous credit issues
PMI is required for down payments less than 20%

Government-Backed Loans

Mortgage options insured or guaranteed by federal agencies

FHA Loans

Insured by the Federal Housing Administration, FHA loans are designed to help borrowers with lower credit scores or limited down payment funds:

Credit Score: Minimum 580 for 3.5% down payment; 500-579 for 10% down payment
Down Payment: As low as 3.5% with qualifying credit score
Debt-to-Income Ratio: Generally up to 43%, but can go higher with compensating factors
Mortgage Insurance: Upfront premium (1.75% of loan amount) and annual premium (0.55-1.05% of loan amount)
Loan Limits: $472,030 for single-family homes in Clark County (2023)

Ideal for: First-time homebuyers, borrowers with limited savings or lower credit scores, those recovering from past credit issues

VA Loans

Guaranteed by the Department of Veterans Affairs, VA loans offer excellent benefits for eligible service members, veterans, and surviving spouses:

Credit Score: No official minimum from VA, but lenders typically require 620+
Down Payment: No down payment required in most cases
Debt-to-Income Ratio: Preferred 41% or less, but can be higher with compensating factors
Funding Fee: 1.4-3.6% of loan amount (can be waived for those with service-connected disabilities)
No Monthly Mortgage Insurance: Significant cost savings compared to other low-down-payment options

Ideal for: Eligible veterans, active-duty service members, and qualifying spouses looking to maximize purchasing power

USDA Loans

Guaranteed by the United States Department of Agriculture, USDA loans promote homeownership in designated rural and suburban areas:

Credit Score: Typically 640+ for streamlined processing; lower scores may be considered
Down Payment: No down payment required
Income Limits: Must not exceed 115% of the area median income
Property Location: Must be in a USDA-eligible area (parts of Henderson and North Las Vegas may qualify)
Guarantee Fee: 1% upfront fee and 0.35% annual fee based on the loan balance

Ideal for: Moderate-income borrowers looking to purchase in eligible suburban or rural areas around Las Vegas

Government Loan Comparison

Feature	FHA Loan	VA Loan	USDA Loan
Eligibility	All qualified borrowers	Veterans, active duty, eligible spouses	Income-qualified buyers in eligible areas
Down Payment	3.5% (580+ credit) 10% (500-579 credit)	0%	0%
Mortgage Insurance	Upfront + Annual (Life of loan)	None (Funding fee instead)	Upfront + Annual
Credit Flexibility	High	Medium	Medium
Property Restrictions	Primary residence only	Primary residence only	Location restricted Primary residence only
Best For	Lower credit scores Limited down payment	Military community No down payment	Rural/suburban buyers No down payment

Jumbo Loans

Financing solutions for high-value properties

What Are Jumbo Loans?

Jumbo loans are mortgage products designed for properties with values that exceed the conforming loan limits set by Fannie Mae and Freddie Mac. In Las Vegas, any loan amount over $726,200 (for 2023) for a single-family home is considered a jumbo loan. These loans are particularly relevant for luxury properties in premium neighborhoods like Summerlin, Henderson, and Southern Highlands.

Jumbo Loan Requirements

Credit Score: Typically 700+ (720+ for best terms), though some lenders may accept 680+
Down Payment: Usually 10-20%, though some programs may require up to 30% for very high loan amounts
Debt-to-Income Ratio: Generally 43% maximum, though some lenders prefer 36% or lower
Reserves: Typically 6-12 months of mortgage payments in liquid assets
Documentation: Extensive income and asset verification, including tax returns, bank statements, and investment accounts

Types of Jumbo Loans

Fixed-Rate Jumbo Loans

Similar to conventional fixed-rate mortgages but for higher loan amounts. Terms typically include 15, 20, and 30 years with stable monthly payments throughout the loan term.

Adjustable-Rate Jumbo Loans

Feature an initial fixed-rate period (typically 5, 7, or 10 years), after which the rate adjusts periodically. Often start with lower rates than fixed-rate jumbo loans but carry interest rate risk after the fixed period.

Interest-Only Jumbo Loans

Allow borrowers to pay only interest for an initial period (typically 5-10 years), resulting in lower initial payments. After the interest-only period, payments increase to include principal repayment.

Las Vegas Luxury Markets

Areas where jumbo loans are commonly used:

The Ridges (Summerlin): Luxury homes often $2M+
MacDonald Highlands (Henderson): Exclusive properties with views
Southern Highlands: Upscale golf course community
Ascaya: Custom luxury homes on hillside lots
The Summit Club: Ultra-luxury residences

Advantages and Considerations of Jumbo Loans

Advantages

Access to financing for luxury properties and higher-value homes
Competitive interest rates for well-qualified borrowers
Variety of loan terms and structures to suit different financial strategies
Single loan solution instead of multiple loans or complicated financing
Potential tax benefits on larger mortgage interest payments (consult tax advisor)
No mortgage insurance requirement (typical with 20%+ down payment)

Considerations

Stricter qualification requirements (credit, income, assets)
Larger down payment requirements than conventional loans
More extensive documentation and verification process
Higher closing costs due to larger loan amounts
Potentially longer approval and closing timelines
Limited secondary market for jumbo loans, making rates and terms more variable

Nevada Housing Assistance Programs

State-specific programs to help Las Vegas homebuyers

Nevada Housing Division Programs

The Nevada Housing Division (NHD) offers several programs designed to make homeownership more accessible and affordable for Nevada residents. These programs are especially valuable for first-time homebuyers and those with moderate incomes.

Home Is Possible (HIP)

The flagship down payment assistance program from the Nevada Housing Division:

Down Payment Assistance: Up to 4% of the loan amount
Eligibility: Income below $105,000, credit score 640+, purchase price below $548,250
Requirement: Must complete a homebuyer education course
Special Note: Not limited to first-time homebuyers

Home Is Possible For First-Time Homebuyers

A specialized program with enhanced benefits for first-time homebuyers:

Tax Credit: Up to $2,000 annually via Mortgage Credit Certificate (MCC)
Down Payment Assistance: Up to 4% of loan amount
Eligibility: Must not have owned a home in the past three years
Requirements: Income and purchase price limits apply, 660+ credit score

Home Is Possible For Heroes

Designed specifically for veterans, active military, and surviving spouses:

Benefit: Below-market interest rate, plus down payment assistance
Eligibility: Military affiliation, income below $105,000, credit score 640+
Note: Can be combined with VA loan benefits for enhanced advantages

Home Is Possible For Teachers

Targeted assistance for licensed, full-time K-12 teachers:

Down Payment Assistance: Up to $7,500
Eligibility: Must be a licensed K-12 teacher in Nevada public schools
Requirement: Must purchase in a USDA-eligible rural area or HUD-designated area

Local Down Payment Assistance

Additional programs available in Clark County:

Southern Nevada Regional Housing Authority: Various assistance programs for low-income buyers
City of Las Vegas: Neighborhood Stabilization Program for eligible areas
Nevada Rural Housing Authority: Home At Last program for areas outside Las Vegas city limits

Check Current NHD Program Terms

Homebuyer Education Requirement

Most assistance programs require completion of a HUD-approved homebuyer education course. These courses typically cost $15-$50 and can often be completed online. Topics covered include budgeting, credit management, mortgage options, and the home buying process. As your real estate professional, I can recommend approved course providers when you're ready to pursue these programs.

Understanding Credit Requirements

How your credit profile impacts your mortgage options

Credit Score Impact

Your credit score is one of the most critical factors in determining your mortgage options and terms. In Las Vegas's competitive market, understanding how your score affects your possibilities is essential:

Credit Score Range	Available Options	Rate Impact
760+	All loan types; best terms for conventional and jumbo loans	Lowest rates available
700-759	All loan types; good terms for conventional loans	+0.25% to 0.5%
680-699	Most conventional loans; good terms for FHA/VA	+0.5% to 0.75%
620-679	FHA, VA, some conventional with higher down payment	+0.75% to 1.5%
580-619	FHA with 3.5% down; VA with additional scrutiny	+1.5% to 2.5%
500-579	Limited to FHA with 10% down payment	+2.5% or higher

Note: Rate impacts are approximate and based on current market conditions. Actual rates will vary by lender and other factors.

Improving Your Credit for Homebuying

Quick Improvements (1-3 Months)

Pay down credit card balances: Aim for less than 30% of available limits
Avoid applying for new credit: Each application can temporarily lower your score
Check for errors on credit reports: Dispute inaccuracies at annualcreditreport.com
Make all payments on time: Set up auto-pay for minimum payments

Medium-Term Improvements (3-6 Months)

Pay down installment loans: Reduce overall debt burden
Keep old accounts open: Longer credit history improves scores
Diversify credit mix: Having both installment and revolving accounts helps
Become an authorized user: On a responsible person's long-standing account

Long-Term Improvements (6+ Months)

Maintain consistent payment history: Time heals past credit issues
Reduce total debt load: Lower debt-to-income ratio improves mortgage options
Address collections and charge-offs: Negotiate payoffs or payment plans
Establish credit: If thin file, consider credit-builder loans or secured cards

Avoid "credit repair" companies that promise quick fixes for a fee. Most legitimate credit improvement strategies can be implemented on your own at no cost.

Other Factors Affecting Mortgage Approval

Debt-to-Income (DTI) Ratio

Your DTI ratio is calculated by dividing your total monthly debt payments by your gross monthly income. Lenders use two ratios:

Front-End Ratio: Housing costs ÷ Monthly income (target: under 28%)
Back-End Ratio: All debt payments ÷ Monthly income (target: under 43%)

Higher ratios may require compensating factors like excellent credit or substantial reserves.

Employment History

Lenders typically look for:

Two+ years in the same field (career changes may require explanation)
Stable or increasing income over time
For self-employed: Two years of tax returns showing consistent income
For commission-based: Documentation of average income over time

Recent graduates or those with job gaps may need additional documentation.

Down Payment Sources

Acceptable sources include:

Savings or checking accounts (seasoned funds preferred)
Investment account proceeds
Gift funds (with proper documentation)
Retirement account withdrawals (with documentation)
Down payment assistance programs

Cash deposits without proper sourcing documentation may be questioned.

Property Considerations

The property itself must qualify for the loan:

Property must appraise at or above purchase price
Property must meet minimum condition standards
For condos: HOA must meet lender requirements
Property type must be eligible for loan program
Any unique features (e.g., solar panels) properly documented

Interest Rates & Loan Terms

Understanding the factors that affect your mortgage costs

Factors That Influence Your Interest Rate

Understanding what influences mortgage rates can help you secure the best possible terms. Here are the key factors that affect the interest rate you'll be offered:

Borrower-Specific Factors

Credit Score: Higher scores typically result in lower rates
Down Payment: Larger down payments generally lead to better rates
Loan-to-Value Ratio: Lower LTV (loan amount divided by property value) can improve rates
Debt-to-Income Ratio: Lower DTI ratios may qualify for better rates
Loan Purpose: Primary residence loans typically have lower rates than investment properties
Property Type: Single-family homes often receive better rates than condos or multi-family properties

Market-Related Factors

Federal Reserve Policy: The Fed's actions on interest rates influence mortgage markets
Economic Indicators: Inflation rates, employment reports, and GDP growth affect rates
Bond Market: Mortgage rates often correlate with 10-year Treasury bond yields
Housing Market Conditions: Supply and demand in the real estate market
Global Economic Events: International economic conditions can impact domestic rates

Loan Characteristic Factors

Loan Term: Shorter terms (15-year vs. 30-year) typically offer lower rates
Loan Type: Conventional, FHA, VA, and jumbo loans have different rate structures
Fixed vs. Adjustable: ARMs often start with lower rates than fixed-rate mortgages
Points and Credits: Paying points can lower your rate; taking credits can increase it
Loan Amount: Jumbo loans typically have higher rates than conforming loans

Rate Lock Considerations

When you're ready to proceed with a loan, you'll need to decide when to lock your rate:

Standard Lock Periods: Typically 30, 45, or 60 days
Extended Locks: Available for 90+ days, usually at additional cost
Float-Down Option: Some lenders offer the ability to capture a lower rate if rates fall during your lock period (usually for a fee)
Lock Expiration: If closing is delayed beyond your lock expiration, extension fees may apply

Check Current Mortgage Rates

Comparing Loan Terms

Feature	15-Year Fixed	30-Year Fixed	5/1 ARM
Interest Rate	Lowest	Higher than 15-year	Initially lower, then variable
Monthly Payment	Highest	Lower than 15-year	Initially lowest, then variable
Total Interest Paid	Lowest	Highest	Variable (depends on rate changes)
Equity Building	Fastest	Slowest	Initially moderate
Risk Level	Low	Low	Higher (interest rate risk)
Best For	Higher income borrowers who want to pay off quickly	First-time buyers, those prioritizing lower payments	Short-term owners, expecting rate drops or income increases

Points and Credits System

Mortgage points and credits allow you to customize your loan terms:

Discount Points (Buying Down the Rate)

Each point costs 1% of your loan amount
Typically lowers your interest rate by 0.25%
Increases your closing costs
Makes sense if you plan to keep the loan long-term
Break-even point usually 5-7 years

Lender Credits (Raising the Rate)

Lender provides credit toward closing costs
Increases your interest rate slightly
Reduces your upfront costs
Makes sense for short-term homeownership
Better for cash-constrained buyers

Mortgage Calculators

Tools to help you estimate costs and payments

Essential Mortgage Calculators

Mortgage calculators are invaluable tools during your homebuying journey. They help you estimate payments, understand how different factors affect your loan, and compare scenarios to make informed decisions.

Monthly Payment Calculator

Estimate your monthly payment based on loan amount, interest rate, and term. This fundamental calculator helps you understand the basic affordability of different home price points and can be adjusted to include taxes and insurance.

Try Monthly Payment Calculator

Affordability Calculator

Determine how much house you can afford based on your income, debts, down payment, and interest rate. This calculator works backward from your financial situation to suggest a maximum home price, helping you set realistic expectations.

Try Affordability Calculator

Refinance Break-Even Calculator

If you're considering refinancing in the future, this calculator helps determine how long it will take for interest savings to offset refinancing costs, helping you decide if refinancing makes financial sense.

Try Refinance Calculator

Extra Payment Calculator

See how making additional principal payments can reduce your loan term and save interest costs. Even modest extra payments can significantly impact your mortgage over time.

Try Extra Payment Calculator

Quick Payment Estimator

Home Price ($)

Down Payment (%)

Interest Rate (%)

Loan Term (Years)

Principal & Interest

$2,027.96

Est. Property Tax & Insurance

$583.33

Total Monthly Payment

$2,611.29

This calculator provides estimates only. Actual payments may vary based on specific lender terms, property taxes, and insurance costs in your area.

Beyond the Calculator

While calculators provide helpful estimates, your actual loan options and costs will depend on:

Your specific financial situation
Current market conditions
The property you choose
Lender requirements and offerings

For the most accurate information, connect with a mortgage professional for pre-approval and custom scenarios.

Working with Mortgage Lenders

Finding the right financing partner for your home purchase

Types of Mortgage Providers

Banks

Advantages: Potential relationship discounts, direct lending, familiar brand
Considerations: Limited loan programs, may have stricter requirements
Best for: Existing customers, those who prefer in-person service

Credit Unions

Advantages: Typically lower rates and fees, member-focused service
Considerations: Need to qualify for membership, may have limited resources
Best for: Members, those seeking personalized service and competitive rates

Mortgage Brokers

Advantages: Access to multiple lenders, specialized knowledge, potentially better rates
Considerations: Additional broker fees in some cases, variable service quality
Best for: Those with unique situations, comparison shoppers

Online Lenders

Advantages: Often competitive rates, streamlined application process, convenience
Considerations: Less personal service, potential challenges with complex situations
Best for: Tech-savvy borrowers, straightforward loan scenarios

Choosing the Right Lender

Compare Key Factors

Interest Rates: Compare APR (Annual Percentage Rate), not just the base rate
Closing Costs: Review Loan Estimate documents for all fees
Loan Programs: Ensure lender offers programs that match your needs
Processing Time: Ask about average time to close and any potential delays
Customer Service: Assess responsiveness and communication quality

Questions to Ask Potential Lenders

What's your experience with [loan type] loans in Las Vegas?
How long does your pre-approval and closing process typically take?
What are your requirements for credit score, DTI, and down payment?
Do you offer rate locks? For how long and at what cost?
How do you handle communication during the loan process?
What fees can be negotiated or waived?

As your real estate professional, I maintain relationships with trusted local lenders who understand Las Vegas market conditions and can offer competitive terms. I'm happy to provide recommendations based on your specific financial situation and homebuying goals.