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New York first-time home buyer programsThe Empire State and the federal government manage several New York first-time homebuyer programs. Some cater to specific groups like veterans, teachers or people with less-than-favorable credit history. But no matter your situation, you can find one that will help you achieve the American dream anywhere from the Big Apple to the scenic beauty of rural New York. But if you need some professional guidance, you can use our SmartAsset matching tool. Based on your answers to simple questions, it recommends up to three local financial advisors who can guide you through the entire house-hunting terrain so you can secure a mortgage. One of these professionals can help you find the one of the New York first-time homebuyer programs that works best for you.

Federal First-Time Homebuyer Programs

FHA Loans

Pros – You can secure an FHA loan with a credit score of at least 500
– Interest rates usually much lower than those of conventional loans
– Down payment as low as 3.5%
Cons – Insurance premiums
– Long appraisal process
Eligibility – Have a credit score of at least 500
Best For – Individuals with low-to-moderate income and low credit scores

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.

USDA Loans

Pros – USDA loans can finance up to 100% of property’s value
– Low-interest rates and little-to-no down payment requirement
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. And if you want to lay your roots among these vibrant sights, there’s one New York first-time homebuyer program you can’t miss: The USDA loan program.

The United States 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.

In addition, the USDA also issues home improvement loans and direct loans for qualifying New Yorkers with very low income.

VA Loans

Pros – Low-interest VA loans with zero down payments available
– No insurance component required
Cons – VA funding fee can be high in some cases
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.

You also have a few options when it comes to VA loans. You can apply for one to buy a single-family home, refinance a previous mortgage or make home improvements.

Good Neighbor Next Door Program

Pros – 50% discount off listing price of a home in a revitalization area
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

Pros – Lax income and credit score requirements
– Several options to cover down payments
– Cancellable PMI
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 1-4 units, 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.

NADL

Pros – Loose credit score and income requirements
– No down payment or insurance component required
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 a zero down payment and a an interest rate currently fixed at 4.75%. The VA usually keeps closing costs lower than those of conventional mortgages. And the loan maximum currently sits at around $424,100 for 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

State of New York Mortgage Agency (SONYMA)

New York first-time home buyer programs

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. Down payments dip as low as 3%. Interest rates can sink to as low as 4.375%. 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

Pros – Low interest rates and down payments
– DAPL
– No prepayment penalty
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 dip to 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 drops 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+ lenders scattered throughout the state.

Homes for Veterans Program

Pros – Eligible U.S. military veterans and active duty personnel don’t have to be first-time homebuyers to qualify
– Low interest rates and down payments
– Down payment assistance
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.

The current interest rate for a Homes for Veterans mortgage currently stands at 4.250%. 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

Pros – Properties built with energy-efficient features
– Low interest rates
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.

The interest rates for these loans currently stand at 4.250% without a DPAL and 4.625% with a DPAL.

You can use these mortgages to buy newly-constructed, one-family homes or a newly constructed two-family home within a SONYMA targeted area.

RemodelNY

Pros – Low interest rates and down payments
– DPAL available
– Can combine with other programs’ benefits
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 Purchase Program

Pros – Can qualify for very low interest rates
– Qualification exemptions available for those hit by the foreclosure crisis
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 Purchase 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

Pros – Low interest loans
– DAPL with no interest rate increase
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 first-time homebuyer
  • Meet income limits that vary by county
  • Have graduated with an associate’s, bachelor’s, master’s or doctorate’s degree within the past 48 months from a U.S. Department of Education-recognized institution

SONYMA Conventional Plus Program

Pros – Mortgage refinance options available
– Low interest rates
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. Current interest rates measure around 5.750% depending on your down payment.

To secure a 3% down payment on a 1-2 unit home, you’d need a credit score of at least 620 or 680 for 2-4 unit homes. The maximum loan amount depends on family size. You must also meet income limits set by SONYMA depending on location.

FHA Plus Program

Pros – Mortgages backed by the FHA
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 currently stand at about 5.750% locked for 60 days. However, it can vary by loan amount and home size. And because the FHA backs it, lenders typically allow flexible eligibility requirements.

Tips for Finding the Best New York First-Time Homebuyer Programs

New York first-time home buyer programs

  • Keep looking. This report covers federal and state-wide programs. But your local county may also sponsor its own first-time homebuyer programs.
  • Know the real price. A mortgage can be a complex product. There are down payments, closing costs, insurance, property taxes and more. So, we developed our mortgage calculator to help you visualize the real cost of buying a home. You can also use our How Much House Can I Afford? calculator to determine what type of mortgage you can comfortably pay back.
  • Ask for help. House hunting can be a complicated journey filled with paperwork and number crunching. If you’d like some professional guidance, we’ve got you covered. Our SmartAsset matching tool links you to up to three local financial advisors based on your answers to simple questions about your goals. These professionals can walk you through the entire process and help you find a first-time homebuyer program that best works for you.

Photo credit: ©iStock.com/DenisTangneyJr, ©iStock.com/monkeybusinessimages, ©iStock.com/LaylaBird

Javier Simon, CEPF® Javier Simon is a banking, investing and retirement expert for SmartAsset. The personal finance writer's work has been featured in Investopedia, PLANADVISER and iGrad. Javier is a member of the Society for Advancing Business Editing and Writing. He has a degree in journalism from SUNY Plattsburgh. Javier is passionate about helping others beyond their personal finances. He has volunteered and raised funds for charities including Fight Cancer Together, Children's Miracle Network Hospitals and the National Center for Missing and Exploited Children.
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