Nebraska First-Time Home Buying Assistance Programs & Grants for 2022

Nebraska First-Time Home Buying Guide

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    By Susan Guillory

    (Last Updated – 08/2022)

    Considering buying a home in Nebraska? Now is a great time to do so. Currently, the housing market in the Cornhusker State is holding steady. The median price of a home there is $280,400, and most homes sell for their listing price. There are also bargains to be had: About 26% of houses have sold for less than the asking price, according to Redfin, a real estate brokerage that analyzes housing market data.

    The first-time homebuyer in Nebraska can also get financial assistance through state programs. Here’s what you need to know as you start your home shopping.

    Recommended: The SoFi Guide to First Time Home Buying

    Who Is Considered a First-Time Homebuyer in Nebraska?

    The definition is broader than you might realize. If you haven’t owned a house in Nebraska in the last three years, you qualify as a first-time home buyer.

    3 Nebraska Programs for First-Time Homebuyers

    There are several low-interest mortgage loans and closing cost assistance programs available to eligible first-time buyers.

    1. NIFA: Homebuyer Assistance Program

    This program can help you buy a home with an investment of just $1,000. It includes a first and second mortgage. The first mortgage includes down payment and closing cost assistance and has higher interest. The second loan has a maximum of 5% of the purchase price, up to $10,000, and has a repayment period of 10 years with 1% interest.

    In addition to first-time buyers, the program is available to veterans and those purchasing a home located in a target area in one of these counties: Adams, Douglas, Jefferson, Lancaster, or Scotts Bluff.

    To find out if you qualify, contact a participating lender .

    2. NIFA: First Home Program

    The First Home Program can help first-time buyers who don’t need down payment and closing cost assistance get a loan. You must meet certain income purchase price. requirements.

    3. NIFA: Military Home Program

    If you are an active member of the military and a first-time home buyer in Nebraska, you may qualify for this loan program . Veterans and spouses of veterans are also eligible.

    Recommended: Understanding Mortgage Basics

    How to Apply to Nebraska Programs for First-Time Homebuyers

    To apply for the mortgage and assistance programs we’ve covered, reach out to a participating lender to start the process.

    Federal Programs for First-Time Homebuyers

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers with FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

    FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. You can learn more about FHA loans in general and FHA lending limits by area.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    The Home Possible mortgage is for buyers who have a credit score of at least 660.

    Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

    Fannie Mae HomeReady Mortgages

    Fannie Mae, or formally, the Federal National Mortgage Association, is a publicly traded government-sponsored enterprise that dates back to the Great Depression.

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Unlike an FHA loan, the 97 LTV loan has no upfront mortgage insurance fee and does have cancellable mortgage insurance. The loan is for just one-unit single-family homes, co-ops, condos, and planned unit developments.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. For most applicants, there is a one-time funding fee that can be rolled into the mortgage.

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee. For more information, email [email protected].

    U.S. Department of Agriculture (USDA) Loans

    No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

    HUD Good Neighbor Next Door Program

    This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

    First-Time Homebuyer Stats for 2022

    Here’s some interesting information about first-time buyers in the U.S, as well data specific to Nebraska.

    •  First time home buyers nationwide: 34% of all home buyers

    •  Median age of first-time home buyers in U.S.: 33

    •  Average down payment in Nebraska (20%): $23,650

    •  Average home price in Nebraska: $280,400

    •  Average credit score of a home buyer in Nebraska: 721

    Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. After reading up on how to choose a mortgage term, check out these tips on how to lower your mortgage payment:

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

    Finally, this home affordability calculator can help determine how much home you can afford.

    The Takeaway

    Thanks to a steady housing market, this is a great time for the first-time buyer to purchase a home in Nebraska. Qualified buyers will also find programs offering low-interest mortgages and assistance with down payment and closing costs.

    Make your dream of being a homeowner come true with SoFi’s competitive mortgage rates and down payments as low as 3% for qualifying first-time homebuyers.

    View your rate


    FAQ

    Should I take first-time homebuyer classes?

    Yes! Good information is key to a successful home-buying experience for anyone, but especially for newcomers, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help. Indeed they are required for some government-sponsored loan programs.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Often they do. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications. That’s why it’s important to take all possible steps to improve your credit standing before you go house hunting.

    Is there a first-time homebuyer tax credit in Nebraska?

    Yes, there is a mortgage credit certificate program for first-time homeowners and those who buy in certain areas in Nebraska. With it, you can claim a portion of your mortgage interest as a tax credit, up to $2,000.

    Is there a first-time veteran homebuyer assistance program in Nebraska?

    Yes. NIFA offers a Military Home Program with low-interest loans to active military members and qualified veterans.

    What credit score do I need for first-time homebuyer assistance in Nebraska?

    It depends on the program. For example, the FHA program requires a minimum credit score of 500 to qualify.

    What is the average age of first-time homebuyers in Nebraska?

    Data specific to Nebraska is hard to come by, but the median age of first-time homebuyers in the U.S is 33.


    Photo credit: iStock/halbergman
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