How to Buy a House in Nevada: 6 Steps

Purchasing a house is a major financial decision that requires careful consideration. In Nevada, the average home value is $445,357, which is higher than the national average of $362,481. This difference highlights the need for potential homebuyers to be financially prepared when considering a purchase in this state.

Understanding down payment assistance programs, mortgage types and Nevada-specific regulations and requirements can ensure a smooth journey toward homeownership in the Silver State. MoneyGeek has compiled pointers to help you navigate the homebuying process in Nevada, from saving the down payment and choosing the ideal location to finding the best financing option for your particular needs and credit history.

According to the U.S. Census Bureau, the homeowner vacancy rate in Nevada for the second quarter of 2024 was 0.7%. The homeowner vacancy rate measures the proportion of vacant homes for sale, indicating the balance between housing supply and demand.

A stable homeowner vacancy rate is 2%. Nevada's rate of 0.7% suggests there is not enough inventory on the market to satisfy homebuyer demand. This scenario often leads to a competitive housing market where buyers may face challenges in finding suitable homes. For homebuyers in Nevada, this means they should be prepared for potentially higher prices and quicker decision-making processes.

Before purchasing a house in Nevada, it's essential to examine your financial and credit history closely. A strong financial profile significantly enhances your chances of getting approved when applying for a mortgage.

Your credit score plays a pivotal role in determining the mortgage loans and interest rates you qualify for. A higher score increases your chances of securing a reasonable rate. According to Experian, the average credit score in Nevada is 702.

If you have a poor credit score, defined as below 580 on the FICO scale, obtaining mortgage approval may be challenging. Check the table below to see which mortgage type is ideal for you based on the minimum credit score requirements.

Source: Experian

Your debt-to-income ratio (DTI) is a key metric that helps lenders assess how much of your monthly income goes toward debt payments. This evaluation allows them to determine the amount of mortgage debt you can responsibly take on. According to Experian, the average mortgage debt in Nevada was $286,563 in the third quarter of 2023. Taking on this additional financial responsibility requires careful consideration of your current debts and income.

Your DTI calculation includes monthly debt payments such as housing costs, credit card payments, auto loans, student loans and other obligations. Use our debt-to-income ratio calculator below to see your front-end DTI, which measures the percentage of income going to housing costs, and back-end DTI, which includes all monthly debt payments. This tool will also help you calculate your total monthly debt payments.

Purchasing a house you cannot afford can lead to financial strain and stress. To avoid this common pitfall, consider using the 28% rule, which suggests that you should not spend more than 28% of your monthly income on your mortgage payment. By adhering to this guideline, you can ensure that your housing costs remain manageable and do not impede your ability to meet other financial obligations.

According to the U.S. Bureau of Labor Statistics, the median annual income in Nevada in April 2024 was $44,810. This translates to a gross monthly income of $3,734 before taxes. Applying the 28% rule, you should aim to keep your monthly mortgage payment at or below $1,046.

Use our mortgage calculator below to get a ballpark figure of your monthly mortgage payment in Nevada.

A down payment is the initial payment made when purchasing a house, typically set at 20% of the home's purchase price. This standard can be challenging for many buyers. In Nevada, with an average home value of $445,357, a 20% down payment amounts to $89,071. For homes priced above the average, like $460,000, the 20% down payment is $92,000.

Fortunately, saving up for a 20% down payment is not mandatory. Many mortgage options allow for smaller down payments. For instance, VA loans require no down payment, while FHA loans require just 3.5%.

If you decide to put down less than 20%, your lender might require you to take out private mortgage insurance. You can use our PMI calculator to estimate your monthly premium based on your credit score and down payment.

Nevada offers several down payment assistance programs that can make homeownership a reality for many potential buyers. These programs aim to alleviate the financial burden of a down payment, making it easier for individuals and families to purchase a home. Refer to the table below for more information on the available down payment assistance programs in Nevada offered by the Nevada Housing Division (NHD).

Finding the right location in Nevada involves evaluating several factors. Consider the average house price, which can vary significantly across the state. Proximity to family, friends, work or school is another crucial factor. Access to public transportation, parks, restaurants and shopping centers can enhance your lifestyle and convenience.

The cost of living also affects your decision when choosing your new home. According to the Missouri Economic Research and Information Center (MERIC), Nevada's cost of living index in the first quarter of 2024 was 102.7, which is slightly above the national average of 100. When selecting the right location, consider the following essential expenses:

• Food
• Health care
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Check out the table below to see some cities in Nevada and their average home values based on recent data. You can also use our cost of living calculator to help you estimate how much you'll need to pay for all the essentials in different locations.

Source: Zillow

Working with a real estate agent can greatly speed up your house hunt in Nevada. They provide the advice you need, handle the paperwork efficiently and give you access to an expanded list of property options you wouldn't have alone. They can also recommend other service providers like title companies and inspectors to assist you in buying your home in Nevada.

When finding a real estate agent, do your due diligence and interview agents with experience in the neighborhoods you're interested in. Consider the following tips:

• Find someone compatible with your needs and personality
• Verify the agent's credentials, training and licensure
• Ensure they have in-depth knowledge of the area
• Shop around for agents and compare their rates

You can also use the license holder search tool from the Nevada Real Estate Division to find or verify real estate agents in Nevada.

Navigating the homebuying process in Nevada involves finding a mortgage that fits your budget. Options include conventional, jumbo, FHA, VA and USDA loans. You can choose from 10-year, 15-year, 20-year or 30-year terms and decide whether a fixed-rate mortgage or an adjustable-rate mortgage (ARM) suits you best. Selecting the right financing option can enhance your approval chances and lead to significant savings over time.

Interest rates on a mortgage can change daily due to factors like the type of mortgage, the lender, and the economy. While interest rates represent the cost of borrowing, the annual percentage rate (APR) includes additional fees and costs, showing the true cost of borrowing.

As of October 2024, the APR for a 30-year fixed conforming loan in Nevada is 6.09%, while the APR for a 30-year fixed rate FHA loan is 7.88%. Check the table below to see the current mortgage rates in Nevada by mortgage type.

In Nevada, getting pre-approved for a mortgage is a key step in the homebuying process. This step involves a lender evaluating your financial background to determine the amount they are willing to lend. A pre-approval letter is then issued, which can strengthen your offer when negotiating with sellers. This letter is typically valid for 60 to 90 days, giving you a window to find a home within your budget.

To get pre-approved, you will need to submit several documents, including:

• Proof of income, such as pay stubs or tax returns
• Credit history reports
• Identification, like a driver's license or passport
• Bank statements
• Information on any outstanding debts

While both pre-approval and prequalification involve assessing your financial situation, they differ significantly. Prequalification is a preliminary step based on self-reported financial information, offering an estimate of what you might qualify for. In contrast, pre-approval involves a more detailed examination of your financial records, providing a more accurate loan amount.

Home inspections are highly recommended in the homebuying process in Nevada as they provide valuable insights into a property's condition. Inspectors typically examine critical areas such as the roof, foundation, plumbing, electrical systems and HVAC. The inspection report includes detailed findings on these components, helping buyers make informed decisions.

For example, if an inspection reveals major issues like a faulty foundation or outdated electrical systems, it can significantly affect the home's appraisal value. This may lead to a lower appraisal than the purchase price, impacting financing options. In such cases, buyers might decide to rescind their offer based on the inspection results, avoiding potential future expenses related to repairs.

The Real Estate Division of the Nevada Department of Business and Industry regulates home inspections in Nevada. Home inspectors in the state must adhere to specific standards of practice and a code of ethics outlined by the Real Estate Division. This ensures that inspections are conducted in a professional and consistent manner.

If you're looking for a home inspector in Nevada, make sure they are licensed. It's also wise to check what previous clients have said by reading online reviews and asking for references. You can use the Nevada Real Estate Division's license look-up tool to find or verify licensed home inspectors.

Home appraisals provide an unbiased estimate of a property's market value. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the median appraisal cost in 2023 was $500.

While both inspections and appraisals are essential in the homebuying process, they serve different purposes. A home appraisal determines the property's value, whereas a home inspection assesses its condition. Lenders require appraisals to ensure that the property's value supports the loan amount they are offering, reducing their financial risk.

Closing is the final step in buying a house in Nevada, marking the transfer of ownership and the moment you receive the keys to your new property. Your lender must provide a closing disclosure document three days before the official closing. This document outlines your loan terms, projected monthly payments and closing costs. Plan a final walk-through with your real estate agent near closing day to ensure the property is in the expected condition.

On closing day, you'll review and complete numerous documents that finalize your home purchase. These documents ensure all legal and financial aspects of the transaction are properly addressed.

• Final loan application: This document confirms the details of your mortgage, ensuring that all information is accurate and up-to-date. It's your opportunity to verify the terms of your loan before signing.
• Deed transfer: This legal document transfers ownership of the property from the seller to you, establishing your rights as the new homeowner.
• Promissory mortgage note: This note is your legal promise to repay the mortgage loan according to the agreed terms. It outlines the repayment schedule and interest rate.
• Homeowners insurance: Homeowners insurance in Nevada protects your new home against risks such as fire, theft and natural disasters. It provides a safety net to cover potential damages, ensuring your investment is safeguarded.

Closing costs are fees paid at the end of a real estate transaction, covering various services required to finalize the purchase of a home. According to NAR, the average closing costs in Nevada are $4,939. These costs typically include several fees:

• Appraisal fee: This fee pays for a professional appraiser who determines the property's market value.
• Title search and insurance fee: This fee covers the cost of researching the property’s title history to ensure there are no liens or claims against it and provides insurance to protect against future claims.
• Escrow deposit: This deposit is held by a third-party escrow account to cover future property taxes and insurance premiums.
• Prepaid costs: These are upfront payments for items like homeowners insurance and property taxes.
• Other closing costs: This category includes various additional fees, such as loan origination fees and recording fees.

If you are a first-time homebuyer, learning the different first-time homebuyer programs in Nevada can also help you achieve homeownership faster.

Buying a house in Nevada is a long-term financial commitment. We answered some frequently asked questions about buying a house in the Silver State to kickstart your homebuyer journey.