First-time home buyer programs in New York #CashNews.co

When it comes to first-time home buyer programs, New York has a lot to offer. That is welcome news for first-time home buyers as housing prices continue to stretch affordability in the state. Follow along to learn more about the New York first-time home buyer programs that can help you achieve your dream of home ownership.

Read more: First-time home buyer grants

Who offers New York first-time home buyer programs?

The State of New York Mortgage Agency (SONYMA) is a state-sponsored mortgage agency that provides home buying assistance programs directly to low-income and first-time home buyers. While they don’t provide the home loans themselves, they partner with approved lenders to provide low-interest first mortgage loans, as well as loans for assistance with down payments, closing costs, or home repairs.

New York City and other municipalities also offer first-time home buyer programs, but we will focus on SONYMA’s statewide programs below. Check out HUD’s website for more information on local home buying programs in New York.

Types of New York first-time home buyer programs

SONYMA offers two unique first mortgage programs as well as conventional and FHA mortgage programs. If you qualify for one of these programs, you can also access an array of assistance to cover the down payment, closing costs, and other expenses that may arise when buying a home.

Dig deeper: What’s the latest on first-time home buyer tax credit?

Achieving the Dream program

The Achieving the Dream program provides the lowest interest rates that SONYMA has to offer. This 30-year fixed-rate mortgage program is exclusive to first-time home buyers and offers low interest rates set by SONYMA to guarantee maximum savings. Once you receive your interest rate, you can lock it in for 120 days for an existing home and 240 days for properties under construction, a much longer lock-in time than the typical 30 to 60 days.

Achieving the Dream requires a 3% down payment, but first-time home buyers also have access to down payment assistance programs that they can use in conjunction with the program. However, no matter the assistance program, the first-time home buyer must provide at least a 1% cash contribution (3% for co-ops) for the loan.

Low Interest Rate program

The Low Interest Rate program has much of the same features as the Achieving the Dream program but comes with higher interest rates (despite its name), higher income limits, and higher home sales price limits. For example, as of Feb. 15, 2024, Achieving the Dream loans could receive a 5.875% interest rate without down payment assistance, while a Low Interest Rate loan could receive a 6.625% interest rate. These rates are subject to change any time, so it is essential to check SONYMA’s current interest rates before you apply.

Read more: 5 ways to get the lowest mortgage rates

SONYMA Conventional Plus

The Conventional Plus loan program combines a 30-year fixed rate loan with additional down payment assistance. It is available to both first-time home buyers and non-first-time home buyers but must be used to purchase your primary residence. The conventional mortgage loan follows guidelines set by Fannie Mae’s HomeReady Mortgage program to offer flexible credit and eligibility requirements. The down payment assistance is provided by SONYMA’s Down Payment Assistance Loan (DPAL) program, which we cover more below.

SONYMA FHA Plus

The FHA Plus program combines a 30-year fixed-rate FHA loan with additional down payment assistance. The first mortgage loan is based on FHA’s underwriting and eligibility standards, while the down payment assistance is based on SONYMA’s DPAL program.

Down payment, closing cost, and renovation assistance

SONYMA has several additional programs that can help you fund your down payment, closing costs, renovation expenses, and more.

Dig deeper: Closing on a house — What to expect and how to prepare

DPAL

The Down Payment Assistance Loan program provides a 0% interest loan worth up to $15,000 that you can use for the down payment or closing costs. The loan is 100% forgiven after 10 years, but that doesn’t mean you have to pay the entire loan back if you move before then. The repayment amount decreases by 1/120 per month so your liability decreases consistently throughout your time in the home.

When you use DPAL with most SONYMA loan programs, the interest rate on your first mortgage will increase by 0.375%. However, there are some programs below that are excluded from this hike.

DPAL PLUS Achieving the Dream (ATD) program

The DPAL PLUS ATD program is an enhanced assistance program reserved for first-time buyers with incomes under 60% of the area median income (AMI). This beefed-up program also issues 0% interest loans that are forgivable after 10 years, and the loan amount limit is increased to $30,000. The program is designed to help low-income borrowers get enough funds to put down a full 20% down payment so they can avoid private mortgage insurance. If $30,000 is not enough to get you to 20% down, you can also use the funds to pay for single premium mortgage insurance so you don’t have to make monthly mortgage insurance payments. The funds can also be used on closing costs.

RemodelNY

SONYMA’s programs don’t only help you purchase a home, they can help you fix one up as well. The RemodelNY program offers a 30-year loan with the same interest rates as the Achieving the Dream or Low Interest Rate programs. The loan amount is based on either the “after-improved” appraised value of the home or the purchase price of the home plus the repairs and certain allowable fees, whichever option is lower. With no limit on the renovation costs, you could use this program to make a fixer-upper look good as new.

Homes for Veterans

The Homes for Veterans program offers low-interest loans to U.S. military veterans, active duty service members, their spouses, National guardsmen, and reservists. If you’re a veteran, you don’t even have to be a first-time home buyer to access this program. The program is one of the few offered by SONYMA that does not require increased mortgage rates for using down payment assistance. Veterans only have to put 1% of their own money down and can fund the remaining 2% from down payment assistance programs.

Graduate to Homeownership

Instead of moving back in with your parents, how about moving into your own home after graduating college? The Graduate to Homeownership program can help you achieve this goal by providing a competitive 30-year fixed-rate mortgage loan if you have graduated from an associates, bachelor’s, master’s, or doctoral program within the past 48 months. A key consideration is that this program is only available in “certain upstate New York communities,” according to SONYMA’s website.

Neighborhood Revitalization

The Neighborhood Revitalization program offers a 30-year fixed-rate loan worth up to $20,000 to spend on eligible improvements to your new home. The key to this program is that the improvements must be deemed “necessary” by SONYMA. Renovations to improve the structure, safety, or accessibility of the home are generally deemed necessary, but SONYMA reserves the right to determine what renovations are approved.

Credit is Due

The Credit is Due program is designed to address racial disparities in housing by providing competitive 30-year fixed-rate loans with broad eligibility standards, including flexibility for credit, cash reserves, and non-traditional income sources. The program also comes with exclusive loan enhancements like the Enhanced Down Payment Assistance Loan and up to a 2% interest rate reduction.

Energy Star® Labeled Homes program

The Energy Star® Labeled Homes program allows first-time home buyers using the Achieving the Dream or Low Interest Rate first mortgage programs to receive additional down payment assistance on energy efficient homes. The program is reserved for new construction homes that meet New York Energy Star® efficiency standards that typically make homes 20% to 30% more efficient. With this program, you can receive up to $15,000 in down payment assistance without the 0.375% increase in your first mortgage interest rate.

Manufactured Home Mortgage program

This program allows first-time home buyers using the Achieving the Dream or Low Interest Rate first mortgage programs to purchase manufactured homes that are affixed to a foundation.

Learn more: Should you buy a house? How to know when you’re ready.

Eligibility requirements

Specific eligibility requirements will depend on the program and the lender providing the loan. However, SONYMA does have some general eligibility guidelines:

• First-time home buyer definition: SONYMA defines “first-time home buyer” as someone who has not owned a principal residence in three or more years.

• Occupancy: All four SONYMA first mortgage programs are reserved for home buyers that will use the home as their primary residence.

• Income: All SONYMA loan programs, except the FHA Plus program, have income limits based on the program, type of home you’re buying and the location of the property.

• Sales price: All SONYMA first mortgage programs have varying sales price limits depending on the program and location of the property.

• Educational courses: You may be required to take a homeownership education course depending on the type of program you apply for.

• Credit score: SONYMA generally requires “good credit” to qualify for their loan programs, but the specific score required can differ depending on the loan program.

How to apply to New York first-time home buyer programs

SONYMA has a four-step process to apply for their first-time home buyer programs:

1. Get prequalified: Getting prequalified for a loan from one of SONYMA’s approved lenders can show sellers that you’re a serious buyer and gives you a good idea of the homes you can afford. You’ll need to provide the necessary financial information that the lenders require. More information can be found on SONYMA’s website, but the exact requirements will depend on the lender.

2. Find and sign a contract on a home: When you’ve found the home you’d like to buy, sign the contract and provide SONYMA with the official offer letter.

3. Update your application and lock in your rates: You will need to update your application with property information such as the address, sale price, and total loan amount. Once this information is finalized, SONYMA can lock in your interest rate and review the final loan package.

4. Stay in touch with your lender: It is essential to stay in touch with your lender until the entire loan process is complete, you’ve signed the closing documents and have the keys to your new home.