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New York First-Time Homebuyer Programs

As a first-time homebuyer, you may already be concerned about the high costs of buying a home in New York.

The good news is New York offers three assistance programs for first-time buyers that can either help you get a more affordable mortgage or help pay for a down payment, closing costs or mortgage insurance premiums.

In the guide that follows, you’ll find both general information on New York’s assistance program and details on specific programs.

New York first-time homebuyer programs

First-time homebuyer programs in New York are administered through The State Of New York Mortgage Agency (SONYMA). SONYMA works with participating lenders to provide fixed-rate mortgages to low- and moderate-income New York residents.

To be eligible for a SONYMA loan, you need to have not owned a home for the past three years.  You also cannot own a vacation or investment home. SONYMA will waive the first-time homebuyer requirements for veterans and for those purchasing a home in a federally designated, targeted area. To find targeted areas, visit this website and type in the address of the home that interests you.

Eligibility for New York assistance

SONYMA programs have specific eligibility requirements. You must, for example, meet income limit requirements, which vary by program, and certain credit underwriting requirements. These requirements are:

  • You must have a steady job
  • You must have enough cash, savings or other assets to cover your required share of a down payment and/or closing costs
  • You must have enough income to cover mortgage and other debt payments
  • You must have a good credit history

What about credit scores? In that respect, SONYMA is unusual: Unlike other state agencies that help homebuyers, it doesn’t have minimum credit score requirements. It does, however, require that a primary borrower have at least three credit references that have been established for at least 18 months. These credit references can be traditional, such as a credit card, or nontraditional, such as your history of paying utility bills or car insurance.

SONYMA has one other eligibility requirement: You must use your SONYMA-purchased home as your primary residence.

Achieving the Dream

Features

  • 30-year mortgages with low, fixed rates
  • No points (mortgage fees are often calculated in points)
  • Financing for up to 97% of the property value (90% for three- and four-family units and 95% for cooperative apartments)
  • Interest rate lock for 120 days for existing housing
  • Interest rate lock for 240 days for properties being rehabilitated or that are under construction
  • No prepayment penalties
  • Down payment assistance, up to $15,000

Eligibility

  • Borrowers must contribute at least 1% of property value to home purchase
  • Income requirements apply and vary by region
  • Purchase price limits also apply and vary by area
  • Noncommercial properties only
  • Eligible: Any one-family home; two-, three- or four-family home at least five years old and used only as a residence during the past five years
  • Also eligible: Two-family homes in target areas built in past five years
  • Properties must be on five acres or less and have at least 500 square feet of living space (exceptions considered on case-by-case basis)
  • Applicants must complete a homebuyer education course

How it works

To apply for the Achieving the Dream program, first visit the SONYMA webpage for homebuyers. There you’ll be able to access other links for information about all SONYMA mortgages, including Achieving the Dream. You’ll also be able to compare this particular mortgage to the SONYMA Low Interest Rate loan described below.

At the SONYMA website, you’ll also see a list of all SONYMA participating lenders. They may be able to help you pre-qualify for a mortgage. By pre-qualifying, you’ll know the price range you can afford, which saves time while home shopping.

Low Interest Rate

Features

  • Competitive, fixed-rate, 30-year mortgage
  • No points (mortgage fees are often calculated in points)
  • Financing for up to 97% of the property value (90% for three- and four-family units and 95% for cooperative apartments)
  • Interest rate lock for 120 days for existing housing
  • No prepayment penalties
  • Down payment assistance, up to $15,000

Eligibility

  • Borrowers must contribute at least 1% of the property value to the home purchase (3% for three- and four-family homes and cooperative apartments)
  • Income limits vary according to region
  • Purchase price limits also vary according to region
  • Noncommercial properties only
  • Eligible: Any one-family home; two-, three- or four-family home at least five years old, with all units in the same building and used only as a residence during past five years
  • Also eligible: Two-family homes in target areas built in past five years
  • Properties must be on five acres or less and have at least 500 square feet living space (exceptions considered on case-by-case basis)
  • Applicants may need to take a homebuyer education course (see more below)

How it works

As with the Achieving the Dream mortgage described above, anyone considering a SONYMA Low Interest Rate mortgage first needs to contact a participating lender to see if they pre-qualify.  Make sure to take relevant financial information for your appointment, including your three most recent tax returns, recent pay stubs and bank statements.

For this loan, you may need to take a homebuyer education course if your cash contribution to the mortgage is less than 5%, your combined loan-to-value (LTV) ratio is more than 100%, you are financing more than 95% of the property value or using a down payment assistance loan.

For some buyers, a SONYMA Achieving the Dream loan might be a better option than the Low Interest Rate mortgage. To compare both types of loans, go here.

Down Payment Assistance Loan

Features

  • 0% interest rate loan that works like a second mortgage
  • Can be used toward a down payment, closing costs or mortgage insurance premiums
  • No monthly payments
  • $1,000 minimum loan amount
  • Maximum loan is $3,000 or 3% of the home purchase price up to $15,000 (whichever is higher)
  • No cash back option
  • Forgiven after 10 years of homeownership
  • If home is sold within 10 years, may need to be repaid, but forgiven if proceeds aren’t enough to cover loan amount

Eligibility

  • Must be used with a SONYMA mortgage
  • Borrowers must contribute at least 1% of the property value (3% for cooperative apartments and three- to four-family homes)
  • Loan amount can’t be more than your expenses
  • Down payment assistance cannot be subordinated to another mortgage, which may complicate future efforts by you to refinance or get a home equity loan

How it works

Unfortunately, not every SONYMA participating lender offers the down payment assistance loan program. To find a participating lender, visit SONYMA’s list here and confirm with the lender that they participate when you call to make an appointment. Also know that this loan will bump up your mortgage rate by 0.375%, so your monthly payment will be higher than it would be without the down payment assistance loan.

National first-time homebuyer programs

SONYMA’s programs can make buying your first home much more affordable, but there are national assistance programs too, such as FHA loans, VA loans and loans through the USDA.

A lender may be able to help you determine whether you might be a better fit for a different first-time homebuyer program. You can also find more about national first-time homebuyer programs by reviewing our guide.

 

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