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NIFA - Nebraska Investment Finance Authority
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Single Family
Frequently Asked Questions

1. What are the benefits of a NIFA loan when compared to a non-NIFA loan?
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Generally, the main benefit of the NIFA bond program is a lower fixed rate mortgage loan, resulting in interest savings on the loan over the 30-year mortgage term. The program also offers low down payment requirements and limits the amount of closing costs that may be charged by the originating lender.


2. What is a “first-time homebuyer”?
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A “first-time homebuyer” is a person who has not held an ownership interest in his or her principal residence within the past three years.


3. Are all persons living in the home required to be a first-time homebuyer?
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All occupying borrowers who sign the Note must be a first-time hombuyer. A non-purchasing spouse who occupies the property must also be a first time-homebuyer. This requirement does not apply to any non-purchasing occupants who are 18 years of age and older.


4. Are there any exceptions to the first-time homebuyer requirement?
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Yes. NIFA may be able to grant an exception if a buyer lost their previous home by either a divorce, forced job relocation or natural disaster.


5. Does owning a mobile home disqualify me as a first-time homebuyer?
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Not necessarily. If the mobile home was not permanently anchored to the real property on which it was located and the wheels, road gear and other components have not been removed from the mobile home, you may still qualify as a first-time homebuyer.


6. What are the benefits of buying a property in a targeted area?
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If the property is located in a targeted area, the buyer is not required to be a first-time homebuyer and higher maximum income and purchase price limits apply. The property is still required to be owner-occupied for the term of the NIFA mortgage.


7. What sources of income are used to qualify a buyer for the program?
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NIFA is required to use all sources of income for persons who are 18 years and older that will be occupying the home as their principal residence. This would include, but is not limited to, part-time income, overtime income, bonus income, net rental income, unemployment income and interest income derived from family assets exceeding $5,000. The total household income cannot exceed NIFA’s maximum income limits for the applicable family size.


8. What is the down payment required to obtain a NIFA loan?
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Generally, a 3% down payment is required. NIFA offers some loan products that require little or no down payment depending on the location of the property and buyer eligibility.


9. Does NIFA have a down payment assistance program?
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Yes. NIFA provides assistance in an amount up to 3.00% of the purchase price. This may be used for down payment or closing costs charged by the lender. The second mortgage loan will bear interest at a rate of 3%. The borrower is required to contribute a $1,000 minimum investment and execute a second mortgage.


10. Are loan payments required on the second mortgage?
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Yes, monthly payments of principal and interest will begin on the first day of the second month following loan closing. The term for the second mortgage will be 84 months (7 years). You may prepay the loan at any time, without penalty.


11. Can the home financed under the program be used as a rental property?
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No. The buyer is required to occupy the property within 60 days of closing and the property must remain owner-occupied for the life of the 30-year mortgage term.


12. Can the property be used for business purposes?
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Generally, no; however, up to 15% of the total square footage of the home may be used to operate a business or trade. This would include using the property for home day care purposes.


13. Is a duplex an eligible property under the program?
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Yes. The program provides financing on 2-4 unit dwellings that meet specific purchase price limits. At least one of the units must remain occupied by the owner of the units as long as the NIFA loan remains outstanding. The units cannot be newly constructed and must be in existence at least five years before the mortgage is executed.


14. Where does a buyer apply for a NIFA loan?
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Lending institutions located throughout the state of Nebraska originate all loans under the program. A list of participating lenders may be obtained on the NIFA website.


15. How long does it take from application to loan closing?
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The loan closing process may vary depending upon certain circumstances. Generally, it takes between 30-60 days to process a loan.


16. Does a buyer need good credit to qualify for a NIFA loan?
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Yes. All persons executing the promissory note are required to have a satisfactory credit record.


17. Is homebuyer education required by NIFA?
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Yes, homebuyer education is required for all NIFA programs. While it is recommended that all borrowers take a face-to-face, REACH-approved hombuyer education class, for many programs it is acceptable to take on-line education. However, some programs do require the face-to-face, REACH-approved homebuyer education class to qualify for the loan.


18. What kinds of penalties apply when the home is sold or the loan is prepaid?
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NIFA loans do not carry a prepayment penalty. There is a potential IRS recapture tax that is in effect during the first nine years of the loan. If the home is sold for a gain within the initial nine-year period, a recapture tax may be due the IRS, depending upon certain circumstances. However, for all loans closed on or after June 1, 2004, and financed through the Single Family Bond Program, NIFA will reimburse any homebuyer who sells his or her home and is required to pay the federal recapture tax. See Recapture Tax Reimbursement.


19. Can NIFA funds be used to refinance an existing loan?
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No. Only loans to finance a home being purchased by a first-time homebuyer are permitted under the program. The only exception is for short-term interim construction loans that have a term of 24 months or less.





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Nebraska Investment Finance Authority
200 Commerce CourtBullet1230 'O' StreetBulletLincoln, NE 68508
Phone: 402-434-3900Bullet800-204-NIFA (6432)
Fax: 402-434-3921BulletE-mail: info@nifa.org