Single Family Home Ownership


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Description

The Nebraska Investment Finance Authority (NIFA) was established by the Nebraska Legislature in 1983 to provide decent, safe and sanitary housing for low and moderate income persons of the State. Mortgages are funded through the sale of tax-exempt bonds which are obligations of NIFA (and not the State) and are repaid with money received from payment of mortgage loans. NIFA does not receive funding from State tax dollars.

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Homebuyer Eligibility

You must be a first-time homebuyer unless you are buying a home in a Targeted Area. In order to evidence that a home has not been previously owned, applicants must provide signed copies of their federal income tax returns for the three years prior to closing.

There are three exceptions, subject to program limits, to the first-time homebuyer requirement; if you lost your home due to legal action (divorce), natural disaster or required job relocation, you may still be eligible for NIFA funds.

  • The total gross annual income from all sources of all persons expected to live in the home must be less than the Income Limits. (Certain of the federal insurance or guarantee programs used by NIFA may prescribe lower income limits.)
  • You must plan on living in the residence you purchase and not renting it out for the life of the NIFA mortgage loan. If you cease to occupy the residence as your principal residence for a continuous period of one year or more, the interest on your mortgage loan may not be deductible for Federal Income Tax purposes.
  • You must have good credit and be able to afford the monthly payments of loan principal plus interest, taxes, hazard insurance, and if applicable, condominium fees, PUD fees and mortgage insurance. To estimate the monthly principal and interest payment, go to Loan Payment Calculator.
  • You must have enough savings for the required down payment and closing costs. Though the total of these costs varies, on the average the down payment will amount to approximately three to five percent of the purchase price of the home. In some circumstances, some closing costs might be included in the loan amount. See also, Home Buyer Assistance Program (HBA).

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Mortgage Description

  • The NIFA mortgage is a fixed-rate mortgage. Mortgage loan funds are obtained through the sale of mortgage revenue bonds. NIFA will announce its current interest rate from time to time. Interest rates are generally less than non-NIFA mortgage rates.
  • Qualifying NIFA loans must be insured by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Rural Development acting through the United States Department of Agriculture (USDA/RD) (formerly the Farmers Home Administration) and conventional loans.
  • There is no prepayment penalty.
  • Funds are not available for refinancing, other than refinancing a construction period loan or similar temporary initial financing of 24 months or less.

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Eligible Residences

  • NIFA loans have a maximum purchase price limit.
  • Single family homes, Qualified Condominium Units and two to four family dwellings where one unit is occupied by the mortgagor are acceptable. If two or more units, the residence must have been constructed and initially occupied as a residence at least five years before the mortgage is executed.
  • No more than 15 percent of the total area of the home can be used in a trade or business. The home cannot be used as a rental or recreational property during the lifetime of the mortgage.
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Fees and Taxes

  • Applicants should expect to pay the cost of an appraisal and credit report at the time of application or shortly thereafter. An additional origination fee and discount will be charged at closing. Either the seller of the home or the borrower may pay the origination fee and discount. Contact a participating lender for a good faith estimate of fees and costs.
  • All NIFA mortgages must be either FHA insured, VA guaranteed, USDA/RD guaranteed or fit within the current designated conventional loan parameters.

    -For a FHA loan, you may be charged an up-front insurance premium and monthly insurance premium.

    -For a VA loan, a funding fee may be included in your closing costs.

    -For a USDA/RD loan, you may be charged an up-front guarantee fee.

    -For a conventional loan, you may be charged a monthly primary mortgage insurance (PMI) premium.

  • The seller of the home is required to pay at closing a warehouse and tax service fee that changes from time to time.
  • The federal government has established maximum statutory loan limits which may limit the amount of money which can be borrowed and may require a larger down payment. Please contact a participating lender for specific loan amount restrictions.
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Potential Recapture Tax

  • A Federal Recapture Tax (additional federal income tax) may be due to the Internal Revenue Service if a home financed with a NIFA loan is sold at a gain within the first nine years of ownership.
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Loan Assumptions

  • NIFA mortgage loans are generally assumable. The current servicing lender must process and approve an assumption.
  • Buyers who wish to assume a NIFA loan on a home that is in a "Non-Targeted Area" cannot have owned their principal residence during the three previous years.
  • Loan assumptions require that the buyer of the house meet credit qualifications.
  • The gross monthly income of all occupants cannot exceed the applicable "Income Limits" at the time of the assumption.
  • The purchase price of the home cannot exceed the applicable "Purchase Price" limits at the time of the assumption.
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What Do You Do First?

The seller of the home may require the buyer to be either pre-qualified or pre-approved for a loan. You may want to contact a participating lender to assist you in determining what you can afford and whether you meet NIFA's Homebuyer Eligibility requirements. Keep in mind that your monthly mortgage payment, including property taxes and insurance premiums, should not exceed 29% of your gross monthly income.

  1. Enter Into A Purchase Agreement With The Seller. This is a contract that states you will buy the home by a certain date and for a specific price. Make sure the agreement gives you enough time to close the loan and that closing is subject to obtaining NIFA financing. As mentioned previously, the seller is required to pay a warehouse and tax service fee at closing.
  2. Obtain Copies Of Your Past Three Years Federal Income Tax Returns. Although you can apply for your NIFA loan without your tax returns, you cannot close your loan without this information. Your lender can assist you in completing request forms to the IRS for copies of your returns if you cannot locate them.
  3. Apply For Your NIFA Loan At A Participating Lender. NIFA does not take or process your loan application. Here, you will find the Mortgage Lenders participating in our program. These lenders will take your application and assist you throughout the home buying process.
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Home Buyer Assistance Program (HBA)

  • Buyer must qualify for a regular NIFA Single Family Program Mortgage.
  • Down payment and closing cost assistance provided by NIFA totaling 4.25 % of the first mortgage amount.
  • Buyer is required to execute a second mortgage for the amount of the assistance.
  • The second mortgage bears no interest and repayment is required only if buyer pays off first mortgage prior to the expiration of 11 years. (Actual amount of second mortgage that must be re-paid declines over time from year 1 to year 11.)
  • Buyer is required to contribute a minimum of $500 from buyer's own funds or from gift funds.
  • Buyer must comply with income and purchase price limits and first time home buyer requirements.
  • HBA loans are assumable under certain conditions.
  • Current HBA interest rate is 6.56%
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Current Income Limits

Non-Targeted Areas:

                 1-2 Family Members   3+ Family Members
Lincoln MSA             $62,600         $71,990
Omaha MSA               $64,400         $74,060
All Other               $55,100         $63,365


Targeted Areas:
                 1-2 Family Members   3+ Family Members
Lincoln MSA             $75,120         $87,640
Omaha MSA               $77,280         $90,160
All Other               $66,120         $77,140

Lincoln MSA - Lancaster County
Omaha MSA - Douglas, Cass, Sarpy, and Washington Counties

Click here for a Targeted area map of Lincoln or Omaha.

For assistance on calculating a monthly mortgage payment, please go to Loan Payment Calculator

Last Updated: Feb. 20, 2001

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Interest Rates, Origination Fee, Points

Regular Program (non-targeted):
Interest rate           5.76% per annum
Origination Fee         1.00% one-time upfront
Points                   .75% one-time upfront
Regular Program (targeted):
Interest rate           5.76% per annum
Origination Fee         1.00% one-time upfront
Points                   .75% one-time upfront
Homebuyer Assistance (HBA) Program: 
Interest rate           6.56% per annum
Origination Fee         1.00% one-time upfront
Points                   .75% one-time upfront
This is not an advertisement for credit as defined in Regulation Z.
For assistance on calculating a monthly mortgage payment, please go to 
Loan Payment Calculator or contact a NIFA participating lender for Annual 
Percentage Rate ("APR") information.

* For most current interest rate, please call NIFA at (402)-434-3900.

Effective Date: August 1, 2002

Last Updated: August 8, 2002

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Current Purchase Price Limits

Non-Targeted Areas:

                        Existing        New
Lincoln MSA             $117,000        $130,000
Omaha MSA               $117,000        $130,000
All Other Areas         $ 88,000        $130,000 
 
Targeted Areas:

                        Existing        New
Lincoln MSA 	        $143,000	$158,000 
Omaha MSA	        $143,000 	$158,000 
Thomas County 		$108,000	$158,000 

Lincoln MSA - Lancaster County 
Omaha MSA - Douglas, Cass, Sarpy, and Washington Counties

Click here for a Targeted area map of Lincoln or Omaha.

For assistance on calculating a monthly mortgage payment, please go to Loan Payment Calculator

Last Updated: April 23, 2002

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Homebuyer Eligibility - NIFA Target Area

You do not have to be a first-time homebuyer if you are buying a home in a Targeted Area. Income and purchase price limits are higher. The property must still be owner occupied.

Click here for a Targeted Area map of Lincoln or Omaha.

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Participating Lenders - as of November 1, 2001

City

Participating Lenders

Phone Number

ATKINSON First Western Bank (402) 925-5200
BEATRICE First National Bank - Beatrice* (402) 223-4041
BELLEVUE Fort Calhoun State Bank (402) 291-9595
BELLWOOD Bank of The Valley* (402) 538-3025
CHADRON First National Bank - Chadron (308) 432-5552
COLUMBUS BankFirst-Columbus* (402) 563-4555
  First National Bank - Columbus* (800) 456-7735
  Major Mortgage* (402) 564-1200
COZAD Security First Bank* (308) 784-4400
  Cozad State Bank & Trust (308) 784-2000
  First Bank & Trust Company (308) 784-2515
ELGIN Bank of Elgin (402) 843-2228
FREMONT First State Bank (402) 721-2500
  Fremont National Bank (402) 753-2221
GERING First State Bank* (308) 436-5011
  Valley Bank & Trust* (308) 436-6043
GRAND ISLAND Equitable Building & Loan Assoc. (308) 382-3136
  Five Points Bank (308) 384-4840
  Home Federal - Grand Island (308) 382-4000
  United Nebraska Bank* (308) 381-8900
HASTINGS Hastings State Bank (402) 463-0505
KEARNEY Kearney State Bank (308) 236-5411
  Nebraska National Bank (308) 237-7711
  Platte Valley State Bank (800) 967-2464
LAUREL Security National Bank* (402) 256-3247
LEXINGTON Home Federal - Lexington* (308) 324-2331
  Pinnacle Bank - Lexington (308) 324-5686
LINCOLN Burlington Credit Union (402) 464-8347
  Community Mortgage (402) 441-3200
  Cornhusker Bank (402) 434-2223
  Countrywide Home Loans (402) 434-3939
  Lincoln Federal Savings* (800) 333-2158
  Pinnacle Bank - Lincoln (402) 434-3100
  Security Federal Savings* (402) 474-4444
  TierOne Bank* (402) 479-0580
  Union Bank & Trust* (402) 323-1128
  Union Mortgage* (402) 323-1596
  US Bank* (402) 484-4407
  West Gate Bank (402) 434-3483
 LOUP CITY Sherman County Bank (308) 745-1500
MADISON Madison County Bank* (402) 454-6511
McCOOK AmFirst Bank (308) 345-1555
  McCook National Bank (308) 345-4240
MILFORD Farmers & Merchants Bank* (402) 761-7600
NEBRASKA CITY Otoe County Bank (402) 873-3388
  Professional Mortgage Services (402) 873-7794
NORFOLK BankFirst-Norfolk (402) 371-8005
  Elkhorn Valley Bank (402) 371-0722
NORTH PLATTE American Mortgage Company (308) 532-4400
  First National Bank - N. Platte* (308) 532-1000
OGALLALA Adams Bank & Trust* (308) 284-4071
OMAHA American National Bank*  (402) 255-5103
  Cendant Mortgage (800) 446-0963
  Commercial Federal Bank (402) 827-2800
  Countrywide Home Loans* (402) 493-2889
  Equitable Mortgage Corp. (402) 758-9000
  First American Savings* (402) 393-3500
  First Mortgage Company* (402) 493-7600
  First National Bank - Omaha* (402) 341-0500
  First Horizon Home Loan (402) 333-4920
  Gateway Community Bank (402) 334-0300
  GMAC Mortgage* (402) 493-6101
  Great Western Bank (402) 554-7355
  Home Town Mortgage (402) 334-2427
  Mortgage Loans of America (402) 333-5432
  Nebraska State Bank (402) 571-2300
  Omaha State Bank (402) 334-4193
  Premier Mortgage* (402) 397-3333
  Residential Mortgage* (402) 333-7900
  Security National Bank (402) 334-9669
  The Mortgage Group (800) 569-5712
  Union Mortgage Omaha, Inc. (402) 333-3328
  US Bank Home Mortgage* (402) 457-7426
  Wells Fargo Home Mortgage* (402) 536-2922
PAPILLION Bank of Nebraska* (402) 935-5000
PIERCE Midwest Bank* (402) 329-6221
PLATTSMOUTH Cass County Bank (402) 296-3774
SCOTTSBLUFF Platte Valley National Bank* (308) 635-3006
SIDNEY Sidney Federal Savings (308) 254-2401
SOUTH SIOUX CITY Dakota County State Bank (402) 494-4215
  First Federal Bank (402) 494-1975
  Siouxland Federal Credit Union (402) 494-2073
 ST. PAUL Howard County Bank* (308) 754-5400
STUART Tri County Bank (402) 924-3861
WAVERLY Horizon Bank (402) 786-2555
YORK Cornerstone Bank* (402) 363-7411
  York State Bank* (402) 362-4411


*These lenders have offices in more than one city.

NIFA funds are available on a first-come, first-served basis to eligible borrowers throughout the State of Nebraska. For further information on loan application procedures and your eligibility under the program, contact any of participating lenders listed above.

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Loan Qualification Issues

Common Reasons Buyers are Denied Loan Approval

  • DELINQUENT PAST OR PRESENT CREDIT OBLIGATIONS:
    An important aspect of qualifying for a home loan is a buyer's credit record. When a buyer talks to a lending institution about obtaining a loan to purchase a home, one of the first questions the lender will ask is if your credit record is in good standing. Underwriting requirements vary depending upon the type of loan the buyer is seeking (i.e. FHA, VA, RD or Conventional). Generally, a buyer's credit must be in good standing for the past 12-24 month period. If a delinquency has occurred during that time period, a buyer may be required to re-establish their credit and go back to apply for a loan. There are some situations where a written explanation addressing what caused the late payment is acceptable. The buyer must be able to show that the reason was beyond their control, such as medical bills, loss of job, etc. A credit counseling agency is a good resource to use if a buyer needs help with managing their finances.
  • EXCESSIVE OBLIGATIONS IN RELATION TO INCOME & INSUFFICIENT INCOME (DEBT RATIOS):
    When determining the maximum amount of a loan that the buyer may qualify for, the lender relies upon established debt ratios. Debt ratios vary depending upon the type of loan. There are two ratios involved called a housing expense ratio and a total debt ratio. Generally, the housing expense ratio cannot exceed 29% and the total debt ratio cannot exceed 41%. The calculation method is based upon a buyer's monthly gross income. The projected house payment is divided by the monthly gross income. For the total debt ratio, the house payment plus all other monthly payments is divided by the gross monthly income. In a lot of cases, low to moderate income buyers hurt their chances of qualifying for a loan when there is a car payment or several credit card balances that are outstanding. An option may be to either refinance the debt to lower the monthly payment or add a co-signer to the loan.
  • INSUFFICIENT FUNDS TO CLOSE:
    A buyer must be able to show that they have enough money to cover down payment and closing costs. A buyer cannot take out a loan from a bank to borrow money in order to cover these expenses. This is usually the biggest obstacle for a first time buyer. NIFA has available a Home Buyer Assistance (HBA) program that will help the buyer with these expenses or gift funds may be obtained from a relative as long as a gift affidavit is signed by the relative.
  • LENGTH OF EMPLOYMENT:
    One factor involved with the underwriting process includes a buyer's job stability. Generally, the buyer must have held the same job or stayed in the same line of profession for a period of two years. A recent college graduate may not be required to meet the two year test. It is not looked upon favorably for a buyer to switch jobs frequently even though their income is increasing. A buyer may add a co-signer if necessary.
  • INSUFFICIENT CREDIT HISTORY:
    The first qualification issue covered was a buyer's credit record and how late payments can cause problems. Another factor with a buyer's credit record is lack of credit due to cash payments made on purchases. Even though this may seem like a good situation, the lender is looking for a history of payments made over a period of time. In some cases, the lender can use non-traditional types of credit such as utilities. If a potential buyer has been living with their parents, it would be a good idea to open up a revolving charge account or obtain an installment loan to establish their credit record.
  • FORECLOSURE, REPOSSESSION, COLLECTION ACTION OR JUDGEMENT:
    A buyer may be denied for a loan due to a recent foreclosure, repossession or bankruptcy. On a bankruptcy, a buyer would not be eligible for a loan until a minimum of 2 years and in some cases a minimum of 3-4 years has passed since the bankruptcy was discharged. Another factor that a lender looks at is the reason that caused the bankruptcy. A buyer's credit record must be in excellent standing over the 2-4 year period since the bankruptcy was discharged. A collection action or outstanding judgement could also prevent a loan from being approved. An outstanding judgement would be required to be paid in full.
  • INSUFFICIENT VALUE OR COLLATERAL:
    Some properties that are being purchased are older and may require specific repairs in order to meet underwriting conditions. The lender is going to require an appraisal of the subject property. The appraiser may require that certain repairs be completed before the loan can be closed. The property must also have an appraised value that is equal to or more than the negotiated purchase price. If the property has an appraised value below the purchase price (low appraisal), the lender will not approve the loan unless the purchase price is renegotiated with the seller. There could also be a problem if the seller only agreed to pay for a certain amount towards repairs and the buyer is either unwilling or unable to come up with the funds to cover the additional repairs.
  • PENDING LEGAL ACTION (DIVORCE SITUATION):
    If there is a pending legal action such as a divorce and the divorce has not yet satisfied the required waiting period, the lender will require both parties to sign the Deed of Trust as required by law. There are some cases where one party refuses to sign the Deed of Trust. The lender will not be able to approve the loan without both signatures. If the waiting period has expired, only the buyer is required to sign.
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Copyright 2000 Nebraska Investment Finance Authority. All Rights Reserved.