First-Time Homebuyer Programs in NYC To Make Your Dream Home A Reality
Saving up for a down payment, facing hefty fees at closing, and having poor credit are among the biggest barriers to homeownership in the U.S., according to the Federal Home Loan Mortgage Corporation, otherwise known as Freddie Mac. Add to that a competitive real estate market like New York City and it’s easy to see why many first-time homebuyers can quickly become discouraged at the thought of owning a property.
But with the right resources and information, homebuyers who are on a budget can still make their dream homes in NYC a reality. From down payment assistance to super-low interest rates, the five programs below can set you on a path to homeownership and help you get there at a pace that works best for you and your family.
5 First-Time Homebuyer Programs in NYC To Make Your Dream Home A Reality
1) Conventional 97 loan
A Conventional 97 program allows first-time homebuyers to qualify for a loan at competitive interest rates with only 3% down, hence the 97% loan-to-value ratio. The Federal National Mortgage Association, or Fannie Mae for short, offers this type of loan free of income restrictions, but you’ll need to be a first-time homebuyer and complete a Homeownership Education Course to qualify. Additional benefits include zero upfront mortgage insurance fees and the option to cancel private mortgage insurance (PMI) payments once the loan-to-value ratio on the property reaches 78%. To put it another way, once you’ve built 22% equity in your home, you can kiss those PMI payments goodbye.
2) HomeFirst Down Payment Assistance Program
The HomeFirst Down Payment Assistance Program offers qualified homebuyers up to $100,000 in down payment or closing cost assistance on a 1–4 family house, condo, or coop in any one of NYC’s five boroughs. To qualify, you’ll need to complete a homebuyer education course approved by NYC’s Housing Preservation & Development (HPD) department and earn up to 80% of the area median income (AMI) set for the location where you want to buy. If you’re chosen for a HomeFirst loan, be prepared to hunker down: you’ll need to live in the home for at least 10 years if the loan is less than or equal to $40,000, and a minimum of 15 years if the loan is greater than $40,000.
3) State of New York Mortgage Agency (SONYMA) programs
With as little as 1% of the purchase price to make your dream home in NYC a reality, SONYMA’s “Achieving the Dream” and “Low-Interest Rate” are first-time homebuyer programs to end all first-time homebuyer programs. You’ll need good credit and gainful employment to qualify, and if you’re approved for either, you’ll have to occupy the home as your primary residence. There are some income parameters to consider, too, plus size restrictions on the property. For example, the home can’t sit on more than five acres and the interior living areas must exceed a total of 500 square feet.
4) Federal Housing Administration (FHA) loan
FHA loans are designed for low- to moderate-income borrowers who may have little savings for a down payment or low credit scores. In addition to a 3.5% down payment, you’ll need a steady employment history, a credit score of 580 or above, and a debt-to-income (DTI) ratio not exceeding 43%, though some DTIs between 44–50% may be approved on a case-by-case basis. When it comes to mortgage gifts (hint: those big-money transfers you may have received from a friend or family member toward your down payment), FHA loans consider 100% of the gifted amount, whereas conventional loans only consider a portion of it. Also, FHA loans may charge mortgage insurance premiums over the lifetime of the loan, so keep this in mind when choosing a mortgage assistance program that best fits your needs.
5) Fannie Mae’s HomePath Ready Buyer program
Rounding out the best homebuyer programs to snag your first home in NYC is Fannie Mae’s HomePath Ready Buyer program. Like a Conventional 97, this option lets first-time homebuyers purchase a single-family property with just 3% down. The catch? You’ll need to purchase a foreclosed, short-sale, or real-estate owned (REO) property that’s Fannie Mae-approved. While this may limit your housing options, the upside is that the homes listed on the HomePath database tend to offer an exceptional value and return on your investment compared to standard resales, making this program a solid option for first-time homebuyers who want more bang for their buck.
Final Thoughts on First-Time Homebuyer Programs in NYC
The five mortgage assistance programs highlighted above cover a wide array of first-time homebuyer needs. Whether you’re looking for help with your down payment, closing costs, or a low-interest rate that will give you a foothold on your first home, one of the programs outlined above might be the ideal option for you.
If you’re not sure which one to choose, contact us today and let one of Elegran’s dedicated real estate advisors help make your dream home a reality!
