Persistence pays off for first-time homebuyers

Like many first-time homebuyers trying to find a house in the current market, Grace and Brody Riecken were ready to throw in the towel. After getting married in 2021, the couple immediately started looking for a home in Omaha, Nebraska. They put their homeownership dream on hold, however, after putting in a dozen offers – and coming up empty handed. “We were extremely discouraged to the point where we were thinking, ‘Maybe homeownership isn't going to work for us,’” Grace Riecken said.

Although they reluctantly settled into renting, the desire to own a home stayed firmly rooted in their minds. And when they heard that a mutual friend was getting ready to sell, they jumped on the opportunity.

The friendship connection gave the Rieckens an inside track on a home that was a great fit – the right location, the perfect size and, importantly, in their price range. The challenge now was the financing.

“It was updated and nicer than anything we had lived in before,” Riecken said. "That’s when I thought it wasn’t even going to be possible financially.” Her next call was to Autumn Dillon, a U.S. Bank mortgage loan officer (MLO) whom she had met through a business networking group.

A ‘freakishly smooth’ process

Grace and Brody laid out their financial situation for Dillon. Combined, the couple was generating sufficient income, but they didn’t have much cash for the down payment.

“She said we were in a lot better financial position than others. She was like, ‘You’ve got this. We’re getting you that house!’” Riecken said. “And from there it was smooth sailing, freakishly smooth, almost so that I still can’t believe I’m standing in a house that I own right now.”

There were hoops to jump through, but Dillon was there to help. She explained their options and connected them with helpful resources, including a down payment assistance program.

“I told Autumn straight up that I don't know anything about this stuff, and she provided me with every and any resource I needed,” said Riecken. Dillon sent detailed emails that outlined the different loan options with an analysis that showed what the monthly payments would be and what would be needed for the down payment. She also connected the Rieckens with a first-time homebuyer education program.

Getting ready for when the perfect home comes along

Like Grace and Brody, many buyers don’t think it’s possible to own a home unless they’re in a perfect financial situation. In fact, fears that homeownership is not attainable are keeping many first-time buyers on the sidelines. According to data from the National Association of Realtors (NAR), first-time buyers represented 32% of all buyers in 2023, which is down from the historical average of 38%.¹

A low inventory of homes for sale and competition from other buyers remain sizable obstacles. “That can be something that discourages people from moving forward,” said Dillon. “But it doesn't mean that the right house isn't out there. That’s why you want to meet with a loan officer and be prepared when that right house comes along.”

An MLO pulls the pieces together

An experienced MLO can help dispel misconceptions about the homebuying process. One such misconception: FHA loans are the only option for first-time homebuyers. In fact, a variety of loan options may be available based on the buyer’s circumstances and qualifications, including:

• Conventional fixed-rate loans: for buyers with higher credit scores. Fixed interest rate loans feature predictable monthly payments and a flexible down payment.
• Federal Housing Administration (FHA) loans: for buyers with lower credit scores and limited savings. FHA loans offer consistent rates, low down payment requirements and flexible qualification guidelines.
• Veterans Affairs (VA) loans: for active-duty military members, veterans and their spouses. With a VA loan, eligible buyers can take advantage of low or no down payment options, no mortgage insurance requirement and flexible qualification guidelines.
• United States Department of Agriculture (USDA) loans: for buyers with lower to moderate incomes in eligible rural areas. USDA loans don’t require a down payment, and typically have low interest rates and more flexible credit requirements than conventional mortgages.
• The American Dream loan from U.S. Bank: for borrowers with an income equal to or below the median income in the area they want to buy a home, or purchasing a property in a low-to-moderate income census tract. An American Dream loan offers low down payment options and down payment assistance up to either $5,000 or 3% of the purchase price up to $10,000 – whichever is greater.

Identifying down payment assistance resources

First-time homebuyers often look at financing as a big hurdle – especially coming up with the down payment. Many people still think a 20% down payment is necessary to qualify for a mortgage. But, various down payment assistance programs are available through government and state housing financing agencies.

“The misconception out there is, ‘It's going to cost me tens of thousands of dollars to buy a home,’ but we can get people into homes for as little as $1,000 out of pocket,” said Dillon.

Grace and Brody were able to utilize a homebuyer assistance program offered by the Nebraska Investment Finance Authority (NIFA), which provides qualifying buyers up to 5% of the purchase price at 1% interest for 10 years. Often, borrowers use that money toward the down payment, and a small percentage can also be used to pay for closing costs.

When it comes to getting help with mortgage loan down payments, Dillon said options are plentiful. “It's just about finding a loan officer that specializes in first-time homebuyers and making those available to you.”

Depending on your location, hundreds of down payment assistance programs may be available to you. Some of the most common include:

• Second mortgages with 0% interest
• Grants, which are not required to be repaid
• Loans that may be deferred, due upon sale, refinance or payoff of first mortgage
• Loans that may be forgiven, typically a second mortgage with 0% interest that’s forgiven over a specific number of years if the borrower remains in the home for that amount of time
• Mortgage Credit Certificates (MCCs), an annual federal income tax credit² that helps offset interest expenses

And don’t forget gifts from family members and friends. While this may not be a formal down payment assistance program, it is a common form of assistance for many first-time homebuyers.

Leaning on an MLO’s expertise

For Grace and Brody, working with an experienced MLO was key to getting the necessary financing to buy their home. Dillon provided information on conventional and FHA loan products, as well as the U.S. Bank American Dream loan, with a side-by-side analysis to show which products might be a good option for them. The U.S. Bank client portal also made it convenient to send documents and stay informed on progress and next steps.

“My husband and I, we’re not even 25 yet. We can’t even rent a car without special insurance, and we’re still figuring things out,” said Riecken. She added that Dillon was patient when answering questions and explaining options. This helped to develop trust that the couple wasn’t going to end up trapped in a loan they couldn’t afford. “She was extremely important throughout the whole process,” Riecken said.

Dillon’s advice for homebuyers is to talk with an MLO early in the process. “You don’t have to be ready to buy today,” she said. “But sitting down and talking to a loan officer is a great idea, because we can point you in a direction to get you on your path to homeownership.”