One of the biggest misconceptions I hear from buyers is: “I need 20% down to buy a home.”
That’s not true — especially for first-time buyers.
So let’s walk through a realistic FHA example using today’s numbers, because affordability is about monthly payment, not just home price.
Example: FHA Loan on a $500,000 Home in Las Vegas
FHA allows a minimum down payment of 3.5%, which can significantly lower the upfront cash needed.
Here’s the scenario:
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Purchase price: $500,000
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FHA down payment (3.5%): $17,500
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Base loan amount: $482,500
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Upfront FHA mortgage insurance (1.75%): ~$8,444
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Total loan amount (after UFMIP): ~$490,944
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30-year FHA interest rate: ~6.00% (FHA rates are often slightly lower than conventional)
Estimated Monthly Payment Breakdown (FHA)
Let’s break this into real monthly numbers buyers actually pay:
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Principal & Interest: ~$2,945/month
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FHA monthly mortgage insurance (0.55% annually): ~$221/month
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Property taxes (Las Vegas average): ~$200/month
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Homeowners insurance: ~$125/month
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HOA (very common here): ~$100–150/month
Estimated total monthly housing cost:
~$3,590–$3,640 per month
This is a realistic FHA payment for a $500K home in today’s market.
What Income Do You Need? (Using the 50-30-20 Rule)
Using the 50-30-20 budgeting principle:
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50% of take-home pay → needs (housing, food, transportation, utilities)
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30% → wants
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20% → savings / debt reduction
If housing is about $3,600/month, ideally that should stay within the needs category.
That means:
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Net monthly income target: ~$7,200
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Estimated gross monthly income (before taxes): ~$9,500–$10,000
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Estimated gross annual income: ~$114,000–$120,000
This also lines up with traditional lending guidance that housing should stay near 30% of gross income for long-term comfort.
Why FHA Can Make Sense (and When It Doesn’t)
FHA loans are powerful because:
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Much lower upfront cash required
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More flexible credit guidelines
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Easier entry into homeownership
But they also come with:
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Monthly mortgage insurance for the life of the loan
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Higher total monthly payment compared to 20% down
That’s why FHA is often best as a starting strategy, not always a forever loan. Many buyers refinance into conventional loans later when equity and rates allow.
The Big Takeaway
A $500,000 home in Las Vegas can be attainable with FHA financing — but the monthly payment is meaningfully higher than a 20%-down scenario.
That’s why planning matters.
Two buyers can buy the same home and have completely different financial experiences depending on:
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Loan type
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Down payment
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Monthly comfort level
Knowing these numbers before you shop is what keeps buyers confident instead of stressed.
If you want, I can run your exact numbers — FHA vs conventional, different down payments, and today’s rates — and help you decide what truly makes sense for your budget and lifestyle.
Just reply or reach out anytime.
Dale Abella, Las Vegas Realtor
Call/Text 702-765-0736
