The FHA Loan: A Strategic Tool

What is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). This insurance protects the lender, which allows them to offer strategic advantages to buyers—namely, lower credit score requirements and a minimal down payment.

It's a powerful tool for first-time buyers who don't meet the strict criteria for a conventional loan. The home must be your primary residence, and it must pass an FHA-approved appraisal to verify its value and condition.

FHA Strategic Highlights

• Loan Limit: The FHA loan limit for a single-family home in the Las Vegas area is currently $557,750.
• Down Payment: Requires as little as 3.5% of the purchase price, opening the door for many buyers.
• DPA Compatibility: FHA loans are designed to be combined with Down Payment Assistance (DPA) programs, creating a strategy to buy with little to no money down.
• Credit Flexibility: More flexible than conventional loans. Most programs start around a 580 credit score for 3.5% down — and with 10% down, some can go into the lower 500s.

Key Strategic Questions

• How does DPA work with an FHA loan? A major benefit of an FHA loan is its design to be combined with DPA programs. This strategy can cover your down payment and/or closing costs, potentially allowing you to buy with very little money out of pocket.
• Can I get rid of my FHA mortgage insurance? Unless you put down 10% or more, FHA mortgage insurance (MIP) lasts for the life of the loan. The only strategic way to remove it is to refinance into a conventional loan once you have sufficient equity.
• What are the strategic trade-offs of an FHA loan? The advantage is leverage: lower credit and down payment requirements get you in the game. The trade-off is the mortgage insurance (MIP) and a stricter appraisal process that ensures the home is a sound asset.