FHA barely had any market share in Southern Nevada a few years ago because the conventional product was generally offering home loans with better terms. And then comes the mother of all housing slumps that manhandles the conventional mortgage segment and gives FHA another chance to show what it can do. And it's rising to the occasion.
Much of the real estate activity in Las Vegas is now at the lower end of the market where prices are truly affordable, be it a single-family home or a condo or a townhouse. Values have been mercilessly rolled back to the levels of the late 1990s. This has presented the first-time home buyer, someone who hasn't owned a home in the past three years, an opportunity of a lifetime and they are taking advantage of it.
Here is where FHA steps forward. It offers loan programs with more flexible underwriting criteria, that is credit and income guidelines, than its counterpart, the conventional product does. Eligibility is possible with less than perfect credit. A borrower can get a loan for as little as 3.5% down, a nice inducement for a first-time buyer. And to make it even more palatable, the funds can be gifted by a family member, a friend or an employer. FHA allows up to 6% seller contributions toward closing costs, another possible money saver. Basically, these two features alone could lead into home ownership without any money down. Not bad. Moreover, the much talked-about $8,000 tax credit needs to be included in this equation, giving it even more kick.
FHA, however, is not limited to first-time or low income buyers. Currently the loan limit here in Las Vegas, Clark County, is $400,000 and in today's adjusted price structure that covers a surprisingly large portion of the real estate marketplace. Keep in mind that FHA home loans are government-insured. In any case, the HUD agency is nicely filling the void left by the struggling conventional sector.