For New York residents, there are a number of federal- and state-level programs that are designed for first-time homebuyers. These programs can focus on easy-to-meet down payment requirements, specific home locations, low interest rates and more. A few offerings even cater to specific types of homebuyers, like veterans, teachers or people with lower credit. Regardless of your situation, though, you should be able to find an offering that will help you achieve your dream of becoming a homeowner.
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Federal First-Time Homebuyer Programs
|Cons||– Insurance premiums
– Long appraisal process
|Eligibility||– Have a credit score of at least 500|
|Best For||– Individuals with low-to-moderate income and a low credit score|
If your income or credit score hinders you from obtaining a mortgage through conventional means, consider FHA loans. The Federal Housing Administration (FHA) works with lenders throughout New York to help make home ownership a reality for all. In fact, it’s one of the most popular New York first-time homebuyer programs.
You can qualify for an FHA loan with a FICO credit score of at least 500. And a score of 580 can usually earn you the best rates. In addition, these loans require a down payment of 3.5%. To give you a better view of that ratio, conventional mortgages typically require down payments of around 20% of the home’s value. Lenders that issue FHA loans allow pretty generous terms when it comes to income and credit requirements. You can still secure an FHA loan if you’ve gone through bankruptcy.
Regardless of credit history, you’d be responsible for loan premiums in order to protect the lender in the event you default. You can pay these on a monthly basis or up-front. The FHA also typically sets a strict appraisal and property inspection process. Terms may vary among lenders, so make sure you shop around for the right match.
|Cons||– Area restrictions and income limits
– Larger down payments and interest if your credit score falls below 580
|Eligibility||– Live in USDA designated area
– Make property primary residence
– Adjusted household income can’t be more than 115% of the area median income in most cases
|Best For||– Individuals with low to moderate income who want to move to rural New York or certain suburban communities|
Not many people think of rural communities when they hear “New York.” But the Empire State is home to several rural areas surrounded by pristine lakes and mountain tops. If you want to live among these vibrant sights, the USDA loan program could be a good match.
The U.S. Department of Agriculture established the USDA loan program to bring more people to America’s countryside, so they can revitalize local economies. But several suburban areas near the Big Apple also fall under the USDA’s definition of “rural” New York.
What are the benefits? Besides the comfort of being away from New York’s noisy metropolis, you can usually secure a USDA loan with zero down payment if your FICO credit score is at least 620. To qualify, however, your household income can’t exceed 115% of the median income for the designated area you plan to live in. Household income generally means the combined earned income of all adults who plan to live in the home.
Furthermore, your lender will consider your debt-to-income ratio to determine how much you can borrow. Typically, your monthly total housing costs can’t be more than 29% of your monthly gross income. But because USDA loan terms tend to be generous across the board, you’d have to pay a low up-front insurance premium. And although these loans are backed by the USDA, they are issued by traditional lenders throughout New York. So be sure to shop around for the best mortgage lenders in New York.
|Cons||– VA funding fee can be high|
|Eligibility||– Be a U.S. military veteran or current service member who meets basic VA loan requirements. Spouses and certain beneficiaries of eligible individuals may qualify as well|
|Best For||– Veterans or service members with adequate credit scores and low-to-moderate income|
If you’re a U.S. military member looking to buy a home, the first New York first-time homebuyer program you should cross off your list is the VA loan program.
To ease the path to home ownership for America’s heroes, the United States Department of Veterans Affairs created VA loans. Most veterans and current service members are eligible for these low-interest mortgages. And options with zero down payments are available. The VA backs these loans, but traditional mortgage lenders throughout New york issue them. Plus, the VA sets a limit on how much these lenders can charge in closing costs, which are common among nearly all types of mortgages. Lenders also allow lax rules when it comes to income and credit score requirements.
In addition, taking out a VA loan doesn’t require you to buy private mortgage insurance (PMI) to protect the lender in the event you default. This is a standard piece to nearly all other mortgages.
However, your lender will charge a VA funding fee. The rate varies based on factors such as your military service and whether you’ve taken out a VA loan before. In addition, the appraisal process tied to VA loans usually stretches longer than that of traditional mortgages.
Good Neighbor Next Door Program
|Cons||– Open to very niche group
– Discount only applies to homes in designated areas
|Eligibility||– Be a K-12 teacher, EMT, police officer or firefighter
– Make property your primary residence for at least three years
– Move to a revitalization area
|Best For||– Eligible public servants with low-to-moderate income|
New York owes a lot to its teachers, police officers, firefighters and emergency medical technicians (EMTs). However, not all areas in the Empire State house enough of these professionals. To change that, The Department of Housing and Urban Development (HUD) created the Good Neighbor Next Door Program (formerly Teacher Next Door program).
Although the program doesn’t offer mortgages, it provides a flat 50% off discount off the listing price of a home in a revitalization area. New York houses some of these zones.
However, you’d likely face a competitive application process. You must undergo a preapproval evaluation from a Good Neighbor Next Door agent. Discounts are also handed out following a random lottery when multiple eligible people apply for a single listing.
Fannie Mae/Freddie Mac
|Cons||– Must meet strict income limits unless property is in low-income census tracts|
|Eligibility||– Meet income and house size requirements unless you’re moving into a low-income census tract|
|Best For||– Individuals who can’t qualify for mortgages elsewhere|
Fannie Mae and Freddie Mac stand as two of the largest players in the mortgage industry. Created by the federal government, these entities also support loans for low- to moderate-income Americans who don’t have the best credit.
In fact, one of the most generous New York first-time homebuyer programs is Freddie Mac’s HomePossible initiative. You don’t even need a credit score to qualify for one of these low-interest loans. Down payment for the HomePossible 97 LTV is 3%. However, you must meet income limits which vary by area and are set annually. Your property options are also mostly limited to one- to four-unit homes, condos and planned-unit developments.
Nonetheless, Freddie Mac gives you some flexibility when it comes to paying off your debt. For instance, you can cover down payments with money from friends and family. This is not the case with nearly all conventional mortgages. Plus, you can cancel your PMI after you’ve paid at least 20% of the home’s appraised value. In addition, you can choose from different types of loans. HomePossible loans are available in fixed-rate options and as adjustable-rate mortgages (ARMs).
Fannie Mae sponsors a very similar program called HomeReady. However, you typically need a credit score of 600 to secure these loans with a 3% down payment. You also can’t make more than the median income for the area you wish to live in. However, Fannie Mae waives this requirement if your potential property rests in low-income census tracts.
|Cons||– Qualification open to a very niche group
– Loans can be used to purchase properties in select areas
|Eligibility||– Be a Native American veteran or belong to another select group. Spouses of eligible members may also qualify.|
|Best For||– Native American veterans with low-to-moderate income|
If you’re a Native American who honorably served the U.S. military, there is one New York first-time homebuyer program you definitely need to check out: the Native American Veteran Direct Loan (NADL) program.
The VA issues these loans directly to eligible Native American veterans and other recognized groups as well as their spouses. However, they must be used to purchase property on Federal Trust land and other recognized areas. These loans come with no down payment requirements and a fixed interest rate. The VA usually keeps closing costs lower than those of conventional mortgages. And the loan maximum lly sits at around $510,400 in most areas.
In addition, the VA allows quite liberal credit score and income requirements. Eligible applicants can take a loan out to purchase a single-family property, build or improve a home in a designated area.
New York First-Time Homebuyer Programs
What Is the State of New York Mortgage Agency (SONYMA)?
The State of New York Mortgage Agency (SONYMA) manages several first-time homebuyer programs. It works with lenders throughout the Empire State to offer mortgages for low-to-moderate income New Yorkers.
Most options carry 30-year, fixed-rate terms, with down payments dipping as low as 3% and interest terms to match. In addition, SONYMA offers Down Payment Assistance Loans (DAPLs). You can also combine your mortgage with grants and other subsidies.
Depending on the program you choose, you can use these mortgages to buy single-family homes, co-ops and condominiums. Each program has its own requirements. But you generally must meet the following qualifications.
- Take a SONYMA education course designed for first-time homebuyers
- Have a debt-to-income ratio of 45% of lower
- Have at least three lines of credit that have remained opened for at least 18 of the past 24 months (paid timely)
- Meet income and home value requirements depending on location and type of program you qualify for
- Prove minimum two-year employment history
Achieving the Dream Mortgage Program
|Cons||– PMI required for mortgages with down payments less than 20%
– Cash contribution worth 1% of property value required
|Eligibility||– Meet income and home purchase price requirements
– Prove adequate credit history, steady job and income
|Best For||– Low-to-moderate income New Yorkers|
If you qualify for the Achieving the Dream program, you can secure a 30-year mortgage with an interest rate from about 4.250% to 4.625% depending on your down payment, which can be as low as 3%.
To qualify for the Achieving the Dream loan, you must meet the following requirements:
- Be a first-time homebuyer (waived for eligible military veterans and people eyeing homes in federally designated target areas)
- Prove steady job and adequate credit history (non-traditional credit accepted)
- Meet income requirements based on location
- Consider home that meet’s SONYMA’s purchase price limits based on location
- Occupy home as permanent resident
However, you’d owe a cash contribution worth 1% of property value. And if your down payment falls below 20%, you’d need PMI.
Nonetheless, SONYMA allows you to take out a DPAL. You can use this to fund down payments, closing costs and even PMI. These collect zero interest and require no monthly payments. Moreover, SONYMA forgives these loans after 10 years if you keep your mortgage in good standing.
SONYMA sets DPAL limits to $3,000 or 3% of the home purchase price up to $15,000. However, DPALs can’t exceed full down payment and closing costs. Plus, a DPAL will slightly increase your mortgage interest rate.
To apply to this or other programs run by SONYMA, contact one of the 50 or more lenders scattered throughout the Empire State.
Homes for Veterans Program
|Cons||– Interest rates slightly higher than those tied to Achieving the Dream loans
– Cash contribution worth 1% of home purchase value required
|Eligibility||– Be a U.S. military veteran (discharged for reasons other than dishonorable) or active duty service member, a U.S. military member stationed in New York State regardless of discharge status or a first-time homebuyer who is an active duty or honorably discharged National Guardsman or reservist|
|Best For||– U.S. military veterans or active duty personnel with low to moderate income|
SONYMA partners with the VA to run the Homes for Veterans Program. These mortgages are designed to help more U.S. military veterans and active duty personnel achieve the American dream of owning a home.
SONYMA also allows eligible borrowers to take out DPALs. However, this program also requires a cash contribution equal to 1% of the property value.
In addition, applicants must provide the following documentation to apply:
- Certificate of Release or Discharge from Active Duty (DD214) or Report of Separation and Record of Service (NGB Form 22)
- Leave and Earning Statement (Required for active duty personnel)
- Military ID Card (Required for active duty personnel)
- Military Veteran’s Eligibility Affidavit (SONYMA Form 243 – Required for eligible veterans who aren’t first-time homebuyers)
ENERGY STAR Labeled Homes Program
|Cons||– Homes must be thoroughly inspected|
|Eligibility||– Property must meet extensive ENERGY STAR requirements|
|Best For||– People interested in newly-constructed, energy-efficient homes|
SONYMA also offers mortgages designed to buy new homes built with energy-efficient applications. You can secure one through its ENERGY STAR program. According to SONYMA, ENERGY STAR labeled homes can save home owners hundreds of dollars a year.
You can use these mortgages to buy newly-constructed, one-family homes or a newly constructed two-family home within a SONYMA targeted area.
|Cons||– Various fees and “soft” costs|
|Eligibility||– Meet standard SONYMA requirements|
|Best For||– Low-to-moderate income New Yorkers who want to buy fixer uppers|
SONYMA also supports special types of home improvement loans through the Remodel NY mortgage program. These loans help New Yorkers buy and renovate homes in need of repair. With these mortgages, you can finance up to 97% of the “after-improved” appraised value of the property or its purchase price in addition to financeable repairs.
You can still take out DPALs for this program. Plus, SONYMA lets you combine this loan with an Achieving the Dream mortgage. These loans exist under the the Achieving the Dream program. So, they carry the same interest rates.
The RemodelNY program covers repair costs at a minimum of $1,000 with no maximum. These loans apply to most non-luxury repairs. SONYMA and your lender should have detailed information.
The acquisition price or the total of the home’s purchase price and cost of repairs as well as “soft”costs (inspection fees, consultant fees, etc.) can’t exceed purchase price limits set by SONYMA. In addition, SONYMA requires a minimum 10% contingency reserve on all loans. SONYMA also oversees draws for renovations, which are taken from an escrow account.
Neighborhood Revitalization Program
|Cons||– Property must be in a designated revitalization area|
|Eligibility||– Meet basic SONYMA requirements
– Seek home in a designated revitalization area
|Best For||– Low-to-moderate income New Yorkers who don’t mind certain geographic restrictions|
The mortgage crisis crippled communities throughout New York. And it left many empty homes in its wake. Today, SONYMA manages the Neighborhood Revitalization Program to help you buy homes after foreclosure.
These loans come in 30-year terms. If you meet certain income requirements, you’d get the lowest interest rate that’s allowed by any SONYMA program. Down payments can drop to 3%. In addition, you can get up to $20,000 in cash assistance to repair the home you purchase. You can also finance additional improvement costs into your mortgage. SONYMA also allows you to fund repairs with grants and other benefits including RemodelNY loans. However, fees include a charge worth 2.5% of the revitalization mortgage amount.
To qualify, you must meet basic SONYMA standards. But the organization grants special exceptions for borrowers hit by the foreclosure crisis. In addition, you must undergo counseling from a HomemartNY member. Homes must also be in eligible counties which include New York, Kings and Suffolk. Moreover, you can’t make more than the adjusted median income for the area you want to live in. Loan limits depend on home size.
SONYMA Graduate to Homeownership Program
|Cons||– Property must be in designated area|
|Eligibility||– Be a first-time homebuyer
– Meet income limits varying by county
– Must have graduated within the past four years
|Best For||– Recent graduates with low-to-moderate income|
SONYMA designed the Graduate to Homeownership program to help recent grads become home owners in upstate New York.
You can secure a low-interest subsidized loan through the State of New York Mortgage Agency. Your down payment depends on house size and loan amount. It may range from 3% to 10%. However, you can take out a DPAL and see no increase in your mortgage interest rate. SONYMA also allows you to combine this option with grants and other benefits.
However, you must use your mortgage to purchase one to four family properties in eligible communities throughout Upstate New York. You must also meet the following requirements:
- Be a first-time homebuyer
- Meet county-specific income limits
- Have graduated with an associate’s, bachelor’s, master’s or doctorate’s degree within the past 48 months from a U.S. DoE-recognized college or university
SONYMA Conventional Plus Program
|Cons||– Credit score requirements|
|Eligibility||– Meet standard SONYMA requirements|
|Best For||– New Yorkers who want to refinance a mortgage or those looking for a new, low interest one|
SONYMA’s latest homebuyer program is the Conventional Plus Program. It allows individuals to take out loans to purchase primary homes or refinance mortgages. The program offers 30-year fixed-rate loans.
To secure a 3% down payment on a one- to two-unit home, you’d need a credit score of at least 620. For larger homes, a credit score of 680 may be required. The maximum loan amount depends on family size. You must also meet income limits set by SONYMA depending on location.
FHA Plus Program
|Cons||– Slightly higher interest rates than other SONYMA programs|
|Eligibility||– Meet basic SONYMA requirements
– Use mortgage for 1-4 unit homes and be primary resident
|Best For||– New Yorkers with moderate income who want to secure a mortgage with a low down payment|
The SONYMA FHA Plus program is very similar to the Conventional Plus program. However, the FHA backs this mortgage. And borrowers must take on a minimum 3.5% down payment. You must cover at least 1% with cash, and a DPAL can cover the rest.
Interest rates can be high, though they do vary by loan amount and home size. And because the FHA backs it, lenders typically allow flexible eligibility requirements.
Tips for Buying a Home for the First Time
- The purchase of a home will naturally have a major affect on your finances. So before you drop a ton of money on the home of your dreams, consider working with a financial advisor to create a plan for you and your family’s financial future. SmartAsset’s free tool can simplify the search process for you by matching you with suitable advisors in your area. Get started now.
- When planning for the purchase of a home, your principal concern is likely to be whether or not you can afford the price that the home is listed for. However, there are a number of additional costs you’ll need to account for, including property taxes, homeowners insurance, closing costs and more. Stop by SmartAsset’s home affordability calculator to see what you can really afford.
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