These days the banks have tightened their lending practices for home mortgages. If you don't have enough cash for a 20% down payment on your las Vegas home, finding a mortgage for the home you want to buy here in southern Nevada can be a challenge. Even if you are able to find a lender willing to give you a mortgage with less money down, don't make the mistake of thinking all of your work is behind you. Now, you'll need to get private mortgage insurance (PMI), which protects lenders by paying off your loan if you default - and that might be harder than you think.
Back when lenders were more reckless with their practices, it was common for mortgage insurers to accept any borrower the banks were willing to finance. Today, a record number of those low down payment loans are now in default and insurers are losing billions of dollars. This has caused them to enact tighter standards than most banks, and has resulted in them insuring fewer loans. It is not unheard of now for borrowers to be approved for a mortgage, but rejected for PMI because of a low credit score or high debt-to-income ratios. Other restrictions related to the property and the loan type apply, as well.
If you are looking for a home and will require PMI, you might be disqualified if you have:
• a low credit score - insurers are typically requiring a score over 720
• a down payment less than 10% of the loan amount for a single family home/15% for a condo
• a debt-to-income ratio above 45%
If you are unable to qualify for PMI because you don't have 20% to put down on a home, you might still be able to qualify for a mortgage through the federal government. FHA loans are offered to borrowers with a higher debt-to-income ratio and credit scores as low as 580, and VA loans are available to veterans.
Are you ready to buy a home in Henderson or Las Vegas and already have a mortgage pre-approved? Give me, Yonas Woldu a call.- I'm your real estate expert in the Las Vegas valley! Also visit my Vegas Real Property website and the new AskYonas website.
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