How to Buy a House in Nevada: A Homebuyer’s Guide

Due to the sheer amount of home options and the different factors to consider, finding the right home may feel overwhelming. To simplify the process and gain expert advice, we recommend using a real estate agent. They can help you find the best place to buy a house in Nevada.

If you're at a loss for where to begin, ask those closest to you for recommendations. MoneyGeek also provided a list of important characteristics and qualifications to look for in a successful real estate agent:

• Highly knowledgeable about the local real estate market
• Licensed and verifiable experience
• Responsive and communicative
• High ratings and reviews from former clients

The ideal real estate agent for you ultimately depends on your preferences and priorities, but taking the time to find the right one for your situation can make the homebuying process less stressful.

The cost of living in Nevada varies greatly between cities. For instance, the average consumer can expect to spend more of their income in Las Vegas than in Reno, on basic expenses like food, housing and utilities.

It's important to consider not only the cost of the home itself but also the cost of living in a certain region. This is especially true when you’re trying to find the cheapest place to live in Nevada rather than the cheapest place to buy a home in Nevada.

When deciding on a suitable place to live, it's important to factor in some of the following costs:

• Food
• Education and healthcare
• Utilities (electricity, water, etc.)
• Education
• Entertainment
• Transportation
• Insurance rates
• Property taxes

MoneyGeek's cost of living calculator gives you an idea of how different areas compare to one another in terms of living costs, so you can learn about the cheapest places to buy a house in Nevada.

According to data from the Missouri Economic Research and Information Center, the cost of living index in Nevada is 101.9, indicating it’s more expensive to live in Nevada than the average state in the U.S. Despite this, it’s still possible to reduce your overall cost by living in a less expensive area.

For instance, the cost of living is lower in suburban and rural areas but access to services like hospitals, schools, public transportation and malls may be limited. The cost of living in a city may be higher, but you get access to excellent public services and entertainment.

It’s important to factor in the cost of living and home price because they aren’t necessarily correlated. For instance, Las Vegas has a lower typical home value and higher cost of living, whereas Reno has a higher typical home value and lower cost of living. Because of this, it’s essential to find a balance between property price and the cost of living.

Mortgage rates vary based on the type of mortgage loan you select. For example, VA home loans offer lower rates than conventional loans, for those that meet its eligibility criteria.

Rates will also vary by lender and other personal factors like your credit score and history, income and DTI ratio.

The following are the average interest rates for various types of mortgages in Nevada:

• Conventional home loans: 5.6% to 7.0%
• VA loans: 5.5% to 5.9%
• USDA loans: 1.0% to 3.5% for low- and very-low-income borrowers
• FHA loans: 6.1% to 6.3%

It's important to remember that the average annual percentage rate (APR) regularly fluctuates and might vary between lenders and cities.

Prior to purchasing a home, it’s crucial to make sure you can afford the monthly mortgage payments. The best way to decide between a regular mortgage and a government-backed mortgage is to compare interest rates.

A helpful tool, like MoneyGeek's mortgage calculator, helps estimate your monthly payments and itemizes your payment into principal, interest, taxes and insurance. Rates for both conventional and FHA loans can be compared to help you select the best one for your circumstances.

Once you have an estimate in hand, you may shop around and compare factors, such as down payment requirements, APR, available loan size and other conditions from various lenders. If you are a first-time buyer needing additional help, research your possible loan options.

Mortgage lenders offer different terms and have unique eligibility requirements. Knowing your financial situation will help you sort through different lenders and only apply with those whose qualifications you meet. When evaluating your mortgage application, lenders usually consider the following elements:

• Credit score: Although not all lenders have a minimum credit score requirement, most will favor applicants with at least a fair credit score or higher. Your credit score also impacts the terms you receive, so having a high credit score is essential.
• Gross income: Lenders use your income to assess your ability to repay your mortgage.
• DTI ratio: Your DTI ratio indicates the percentage of your income that is used to pay existing debt. A lower DTI is indicative of less existing debt and an increased ability to repay your loan.
• Down payment: The ability to make a down payment indicates to the lender that you are not a high-risk borrower.

If you currently don’t meet a lender’s requirements, you should improve your application first to increase the likelihood that it will be approved.

The down payment required depends on the type of mortgage you qualify for. To apply for a traditional loan, borrowers must make a down payment of at least 20%. However, those who qualify for USDA and VA loans may receive financing with no upfront cost. FHA loans need a minimum down payment of 3.5%.

Once you’ve identified which mortgage types that you qualify for, you should calculate your ideal down payment amount. Making a large down payment will reduce the amount you pay each month, and in some cases, prompt lenders to provide a lower interest rate on your loan.

Mortgage insurance, a measure that safeguards lenders in the event a borrower defaults on their loan, is another element prospective homeowners should take into account.

Mortgage insurance is required for low-down-payment mortgages, like FHA and USDA loans. Mortgage insurance is also required for applicants that make a downpayment of less than 20%. However, VA loans do not require mortgage insurance.

With conventional loans, you may be required to make monthly payments towards private mortgage insurance (PMI). After a few years of timely payments, some borrowers may be allowed to cancel this insurance.

Some potential buyers may not be able to afford a 20% down payment. Fortunately, Nevada offers a few programs that provide down payment assistance.

• Home is Possible Program (HIP): The Home is Possible (HIP) program in Nevada enables veterans, teachers and first-time homebuyers to get mortgages with interest-free down-payment assistance and a competitive interest rate.
• Home at Last: This program offers loans at moderate rates, with or without down payment assistance. With its down payment assistance options, no interest or payments are required.

If you aren’t eligible for either of these loans but are a first-time homebuyer, Nevada has first-time homebuyer assistance programs that you might qualify for.

In Nevada, you typically need to provide the following to apply for a mortgage:

• W-2 forms
• Tax returns
• Identity information, including Social Security number and Photo ID
• Investment statements
• Bank account statements
• Pay stubs
• Other mortgage statements
• Debt-related documents

Additional documentation may be required, depending on the mortgage you're applying for. You should ask your lender what is required so that you can bring the appropriate paperwork. Depending on your circumstances, you may be needed to provide further documentation. For instance, those who are self-employed may need to provide additional documents like profit and loss statements.

Mortgage pre-approval is a time-sensitive step in the homebuying process. It can take up to ten days to get pre-approved for a loan, depending on the lender you select. After you’ve been pre-approved, you’ll receive a letter stating your maximum loan amount. Typically, pre-approval letters are only valid for 30 to 90 days. Because of this, it’s important that you only apply for pre-approval when you're ready to make a purchase. After this time period has ended, your pre-approval letter will no longer be valid and you’ll have to reapply.

A pre-approval letter indicates the amount a lender is prepared to offer you. It also indicates to sellers that you're a serious buyer who can afford a mortgage. While there is no limit to the amount of pre-approval letters you can get, lenders complete a hard credit check that negatively impacts your credit score each time you apply. Because of this, you’ll want to minimize the amount of times you apply for a pre-approval letter.

Typically, a pre-approval letter comprises the following information:

• Maximum loan amount
• Loan type
• Loan term
• Mortgage monthly payment
• Annual percentage rate

Though these terms are usually included in a pre-approval letter, the details provided to you may vary depending on the lender.

While your pre-approval letter is valid (30 to 60 days after you receive it), you can strengthen your financial profile and negotiate with the lender for more favorable terms.

It’s important to only hire a licensed home inspector in Nevada. If you hire a qualified inspector, you'll have access to a thorough report that will help you decide whether or not to move forward with the purchase.

Ensure that your inspectors follow a home inspection checklist that includes, at a minimum, the following items to rule out potentially dangerous construction flaws, safety issues or other significant damages:

• Roof
• Foundation
• Windows and doors
• Surrounding grounds
• Attic and basement
• Exteriors and interiors
• Heating and cooling systems
• Plumbing system
• Electrical system
• Major appliances

In addition, there are specialized house inspections that focus on the home's foundation, mold and sewage, and the presence of pests or wood-destroying organisms (WDO).

When buying a property in Nevada, it’s not required by state law to have your home inspected prior to closing. However, certain cities and counties in the state may mandate it. Additionally, your prospective house may call for extra, more specialized inspections.

As a result, it’s important to inquire about the scope of the inspection with your home inspector. In general, the cost of a home inspection varies between $100 and $700, depending on the extent of the services provided.

When buying a house in the state of Nevada, it’s crucial to have it appraised. The appraiser will determine the property's worth in light of its current market conditions. Appraisal values take into account the results of the home inspection and the local housing market.

The appraiser will provide the buyer with a written report detailing their findings. This report also gives the mortgage lender a better idea of the home’s actual value. Through an appraisal, lenders reduce the risk of loan default from borrowers who take on more debt than their house is worth.

The process of preparing your closing paperwork might take some time. It’s important that you thoroughly review all documents prior to signing them to have a better understanding of your loan. Typically, you’ll be required to sign the following documents to close your mortgage:

• Loan application: You must sign the original loan application to verify the accuracy of your information. Any modifications to your financial standing, like a change in income, must be communicated to the lender.
• Closing disclosure: This disclaimer outlines the conditions of your loan. The law mandates that you get the closing disclosure at least three working days prior to the mortgage closing.
• Homeowners insurance policy: A homeowners insurance coverage will financially protect you from losses to the structure and contents of your house.
• Title insurance policy and survey: This document ensures that the property is free from liens and can be lawfully owned.

Again, before signing any documents, be careful to read the fine print. This will avoid the chances of overlooking minor but crucial elements that might cost you more in the long run. If you come across any new terminology, we advise that you ask your lender for clarification.

Typically, closing costs range between 2% and 5% of your home’s purchase price, based on variables like the lender, the location, your personal profile and other factors. You can expect the following closing costs for a home loan:

• Origination fee: Some lenders impose an origination fee, which is a percentage of the loan amount paid to the lender for originating your loan.
• Escrow: The funds required for property taxes, homeowner's insurance, mortgage insurance and annual funding fees.
• Title search charges: You are responsible for the fees of the title search, which verifies that the property is legitimately in your name.
• Lender fees: You will be responsible for paying the lender's expenses, including appraisal costs and credit report checks.
• Third-party fees: As the buyer, you will incur additional third-party expenditures, such as inspection fees and legal fees, homeowner association transfer fees and other costs.
• Home inspection charges: To assess a property's condition, you may need to engage a qualified home inspector.
• Homeowners insurance: This insurance protects homeowners against damages to their homes and belongings, as well as liabilities arising from certain accidents that could potentially happen on the property.

After you’ve identified your ideal location, calculated mortgage rates, gathered the necessary paperwork, received a pre-approval letter, completed a home inspection and finalized the deal, you’ll be a legal homeowner in Nevada!

Next, as a homeowner, you should responsibly manage your monthly mortgage payments and your overall financial situation. Creating a “rainy day fund” and budgeting for routine home maintenance (for cleaning and repairs and maintenance of mechanical and electrical systems) are just two of the many obligations that come with being a homeowner. Paying a higher initial deposit will help lower your monthly payment.