The Nebraska Investment Finance Authority (NIFA) helps moderate- and low-income people buy homes. Specifically, NIFA works with lenders to offer competitive interest rates and down payment assistance. Here’s everything you need to know about getting a NIFA loan.
The Best Mortgage Lenders for NIFA Loans:
What is a NIFA Loan?
- Military Home: The Military Home program offers a 30-year fixed-rate mortgage at a competitive interest rate. Active service members must meet NIFA’s definition of a first time homebuyer. Qualified veterans and spouses don’t have to be first time homebuyers. Veterans must submit a copy of their DD214 form to NIFA to determine whether they are eligible. Military Home mortgages can be VA mortgages, FHA mortgages or USDA mortgages.
- First Home: The First Home program also offers a 30-year fixed-rate mortgage. You must be a first time homebuyer to qualify. A First Home mortgage can be a conventional mortgage, an FHA mortgage or a USDA mortgage. If you qualify for a conventional mortgage, you will need to pay for mortgage insurance if you make a down payment of less than 20%.
- First Home Targeted: This program is similar to the First Home program. You don’t need to meet the first time homebuyer requirement for this program. To qualify, you must buy a home in a targeted area. Check out the targeted area map.
- Homebuyer Assistance Program: This is NIFA’s most robust program. It offers a first mortgage, which you use to purchase the home. It also provides a second mortgage, which you can use to pay your down payment and closing costs. The second mortgage can be up to 5% of the home’s purchase price. It’s paid off over 10 years and has a 1% interest rate. You need to meet the definition of a first time homebuyer to qualify.
Who is Eligible for a NIFA Loan?
In general, you must be a first time homebuyer to qualify for a NIFA loan. You can’t have owned a home for 3 years for NIFA to consider you a first time homebuyer. There are exceptions, though. You don’t need to be a first time homebuyer if you are a qualified veteran or purchase a home in a targeted area.
NIFA also grants other exceptions to the first time homebuyer requirement on a case-by-case basis. You will need to provide documentation to NIFA if you ask for an exception. NIFA might allow an exception if you lost your home due to a:
- Required job relocation
- Natural disaster
NIFA Loan Requirements
NIFA has other requirements for borrowers. Here are the other factors NIFA and its lenders will review.
- Household income: NIFA has maximum household income limits. It bases its limits on the size of the household and the location of the home. NIFA looks at the pretax income of everyone in the household who is 18 or older. NIFA’s household income limits are higher if you buy in a targeted area.
- Purchase price limits: NIFA also limits the purchase price of homes. The maximum purchase price for a 1-unit home in a non-targeted area is $283,000. The maximum in a targeted area is $346,000.
- Credit score and debt-to-income (DTI) ratio: NIFA also considers your credit score and your debt-to-income (DTI) ratio. Your credit score is a number lenders use as a summary of your credit history. Your DTI ratio is your total debt payments compared to your pre-tax income. Let’s say you have a credit score below 640. You may not be eligible for a NIFA loan. On the other hand, if you have a credit score of 640-659, you may qualify if you have a DTI ratio of 45% or less. A credit score of 660 or higher can get you a debt-to-income ratio of up to 50%.
- Homebuyer education: Everyone who repays a loan must attend a NIFA-approved homebuyer education class. These classes can be in person or online. NIFA works with nonprofit organizations to offer these classes. You can find in-person classes on the Nebraska Housing Developers Association website and online classes on the NIFA website.
A NIFA-approved lender can help you determine whether you meet requirements.
The Best Mortgage Lenders for a NIFA Loan
Ready to apply for a NIFA mortgage? Here are the 5 best mortgage companies for a NIFA loan, according to our research:
1. Best for Expertise: CharterWest Bank
CharterWest Bank started in Nebraska in 1985. Its commitment to customer service can be seen through NIFA’s loan specialists. CharterWest Bank is one of the few banks to have multiple specialists with star status.
NIFA awards star status to loan officers who have closed at least 6 NIFA loans in the previous year. NIFA loans require extra documentation, so it’s a good move to work with a bank that knows the ins and outs of the process.
2. Best for In-Person Service: Cornerstone Bank
Cornerstone Bank has branches throughout Nebraska so it’s easy to work with a loan officer in person. Cornerstone Bank is also based in Nebraska. You’ll find local expertise that you’re less likely to find in a big national bank. You can start a mortgage application online.
Once you submit your application, a loan officer will contact you to go over details. You can also apply for preapproval by contacting Cornerstone Bank.
3. Best for First Time Home Buyers: Union Bank & Trust
Union Bank & Trust is also a regional bank and it knows the needs of Nebraska residents. It’s also one of the best companies for first time homebuyers. Union Bank & Trust also has lots of educational materials in addition to local expertise.
You can explore its blog and videos or play around with its mortgage calculator but you can’t complete an application online. If you want to start an application, you’ll need to get in touch with a loan officer. Working with a dedicated loan officer can be a big help if this is your first mortgage.
4. Best Online Application: US Bank
Not everyone wants to deal with people. If you’d rather do most of the work on your mortgage online, US Bank is a great option. US Bank is a NIFA-approved lender with a national presence.
US Bank’s loan portal guides you through the online application process. You can also prequalify online to get a sense of your mortgage options. US Bank offers conventional mortgages, adjustable- and fixed-rate mortgages, FHA mortgages and VA mortgages in addition to NIFA loans.
5. Best for Low Credit Scores: Caliber Home Loans
NIFA has minimum credit score requirements. If you’re not sure about meeting those requirements, Caliber Home Loans might give you some options. Caliber Home Loans is a NIFA-approved lender and it offers other government-backed mortgages as well.
If those options aren’t a good fit, Caliber also has portfolio options. These mortgages might also have more flexible terms if you’re self-employed or if you’ve had a previous foreclosure.
Is a NIFA Loan Right for You?
A NIFA loan might be right for you if you’re a first time homebuyer. Not sure where to start? A homebuyer education class can be beneficial even if you don’t end up using a NIFA loan. These classes go over mortgage basics and help you learn how to navigate the real estate market.
Once you complete your homebuyer class, your next step is to contact lenders. It’s best to contact at least 3 lenders to ask for a quote. Let each lender know that you’re interested in a NIFA loan, but that you’re open to other options as well. A high-quality lender will help you review your options so you can decide which one is best for your needs.
Consider more than just the interest rate as you evaluate mortgage options. Look for any fees, including application or origination fees and down payment requirements. Review your options and choose the mortgage that’s best for your overall financial situation.
Frequently Asked Questions
1) Q: What are the different parts of Medicare?
Medicare has 4 parts named Parts A, B, C, and D. Part A provides hospitalization coverage while Part B provides outpatient coverage, like doctor visits. Parts A and B make up Medicare’s core coverages. Part C is provides private-market Medicare plans, called Medicare Advantage Plans. Part C coverage often includes additional benefits. Medicare Part D provides coverage for prescription drugs. Get a Medicare Insurance Quote through the top providers here.
2) Q: Is Medicare free?
Because there are 4 parts to Medicare, there can be different cost structures. Most people won’t have to pay for Medicare Part A (hospitalization). Eligibility for premium-free Part A is based on your work history during which you paid Medicare taxes. Many people do pay a monthly premium for Medicare Part B, however, which covers outpatient medical services, like doctor visits. Deductibles also apply to services covered under Medicare Parts A and B, so you’ll pay a part of the annual cost.
Medicare Parts C and D are optional coverages and have premium costs of their own. Medicare Part C refers to Medicare Advantage Plans that offer additional coverage in exchange for a monthly premium. Part D, the prescription plan, reduces the cost of medications but also requires a monthly premium. Subsidies may be available for low income households to help reduce overall Medicare costs.
3) Q: Do I need to sign up for Medicare?
If you signed up for Social Security before age 65, you were enrolled in Medicare automatically but benefits will begin at age 65. In most cases, there are penalties for not enrolling at age 65, so it pays to sign up on time. Click here to get a medicare quote in minutes from the best providers.
If you have employer coverage, you may be able to delay Medicare coverage while your work plan is still in force. However, the size of the employer determines whether you’ll pay a penalty for not enrolling at age 65. Employees (and their spouses) of companies that offer group health insurance to 20 or more people are usually exempt from late sign-up penalties if they are covered by the employer’s plan.
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