Buy a Home with NIFA

Income documents needed to apply for a NIFA loan: 

• Borrower and Co-Borrower: 1-year of most recent federal tax returns are required.
• Non-Borrowing Spouse or Non-Borrowing Occupant: Most recent 3-year federal tax returns are required. If you do not have copies, your Participating Lender can order tax transcripts from the IRS.
• If you did not file your taxes for a specific reason, we’ll need an explanation for that as well.
• Copy of W-2’s for the most recent tax return.
  • Social Security award letter or VA disability letter.
• Paystubs:
  • Borrower, Co-Borrower and Non-Borrowing Spouse: 30 days consecutive paystubs for all full-time and part-time jobs
  • Non-Borrowing Occupant: Only required if taking title to the property.
  • If your paycheck stub does not show 30 consecutive days of pay, you will need to provide paycheck stubs for the last 30 days.
• Proof of child support or alimony (if received).
• Self-employed borrowers must provide a current YTD profit and loss statement.
• Copy of current bank statements for the recent 30-day period.
• Copy of most recent retirement and investment account statements.
• Copy of homebuyer education completion certificate.
• Copy of DD214 for qualified veterans.

Worried you’re missing important paperwork? Check out our Homebuyer Document checklist. 

The borrower on a NIFA loan has a potential for an IRS federal recapture tax during the first 9 years of the loan. This tax, if owed, is due in connection with the filing of their federal income tax return for the year in which the property was sold. Borrower's may be subject to a recapture tax if all of the following events occur: 

1. The home is sold within the first nine years; AND
2. The homeowner realizes a net gain on the sale of the home; AND
3. The homeowner’s adjusted gross income reported on their federal tax return at the time of the sale exceeds the IRS limit.

The maximum recapture tax amount is 6.25% of the original loan amount. The Participating Lender will provide a Recapture Tax Notice at the time of the loan application and again at closing. They should save a copy of the Notice received at closing as it provides important information that will be needed down the road.  If the home is sold before the end of nine (9) years, the borrower is responsible for completing IRS Form 8828 and including it with their federal tax return for the year the home was sold along with any recapture amount due.

Due to this potential IRS federal recapture tax, NIFA adopted a recapture tax reimbursement policy for all loans closed on and after June 1, 2004. To qualify for reimbursement of the amount of recapture tax paid by the borrower to the IRS, the borrower needs to submit the following information to NIFA's office no later than July 15th of the calendar year following the year in which the home was sold:

• Reimbursement Request Form
• IRS Form 4506T
• Copy of federal tax return for the year in which the home was sold

NIFA will pay the fees associated with the 4506 request to obtain a copy of the federal tax return direct from the IRS.  

Additional stipulations for reimbursement by NIFA for the amount of recapture tax paid by the borrower are:

• The NIFA-financed mortgage loan was outstanding at the time of the sale (i.e. the NIFA loan has not been refinanced)
• The reimbursement from NIFA will be limited to the actual amount of the recapture tax due and paid by the borrower (and will not include reimbursement for any fees, interest, expenses or penalties incurred)
• NIFA will not calculate the amount of the recapture tax owed; the borrower should seek assistance from their personal tax advisor or the IRS

The borrower can expect the reimbursement process to take 90-120 days depending on how long it takes the IRS to send the federal tax return to NIFA.