It’s no secret that New York City is expensive, so much so that the thought of homeownership can be discouraging for those who are having trouble saving for a down payment and other closing costs. However, there are several programs out there that can help first-time homebuyers with their down payment for their very first home.
Specifically, first-time homebuyers who need down payment assistance can contact both private and public entities to obtain down payment assistance.
What is a first-time Home Buyer grant?
First-time buyers’ grants make buying a home in New York possible and affordable for those buyers who qualify. Specifically, these programs can help first-time homebuyers with down payment and closing costs. Various types of first-time home buyer grants are available through multiple entities, city agencies, and nonprofits.
Typically, if you comply with the terms of the grant, the money doesn’t have to be repaid.
Every grant will have its own terms and eligibility requirements. However, in general, most homeowner programs require that the applicant be:
- Be a first-time homebuyer.
- Meet the income requirements
- Take a first-time homebuyer education course.
- Live In the property as their primary residence.
First Time Home Buyer Programs in NYC & Grants available to New York City Residents
Housing Opportunities Foundation Grant
The Housing Opportunities Foundation grant is available through the New York State Association of Realtors and the Community Foundation. This grant program offers $2,000 to help first-time homebuyers cover their down payment and closing costs. The grant is a gift, and there’s no obligation to repay it if you are awarded the grant. Only those who are working with a real estate agent is eligible for the Housing Opportunities Foundation Grant. These grants are awarded through a monthly lottery for those applicants who qualify.
HomeFirst Down Payment Assistance: Only available in New York City
The HomeFirst program provides up to $40,000 in assistance for down payment or closing costs. The program offers assistance in the form of a forgivable loan. The loan is forgiven if the buyer occupies the home for ten consecutive years. The property must be located within New York City and can be a one-to-four-unit family home, condominium, or a cooperative apartment. Buyers must be able to contribute some money toward the purchase to qualify for assistance.
NeighborhoodLIFT program: Available in Brooklyn, Bronx, and Queens
The NeighborhoodLIFT program provides up to $20,000 in support for down payments to all buyers (not just first-time homebuyers). To qualify for assistance, the property must be located in Brooklyn, the Bronx, or Queens. The program offers assistance in the form of a five-year forgivable loan. A percentage of the loan is forgiven each year that the buyer occupies the home. If the buyer moves before the five-year mark, any remaining balance of the loan is due immediately. All applicants must take an approved homebuyer education course.
“HOME” grant: Available in Brooklyn
Only homes located in Brooklyn qualify for this grant program, which offers up to $20,000 in assistance. The assistance is provided by the New York State Homes and Community Renewal (HCR) agency. This grant is only available to first-time homebuyers who must also be able to contribute some of their savings towards the downpayment and closing cost.
National Mortgage Programs
On a national level, buyers should first check with the Federal Housing Association (FHA) to figure out what programs they qualify for. Specifically, the FHA has various programs to help buyers with a down payment! Additionally, the Department of Housing and Development is another organization that has many programs in place to allow first-time buyers to be able to buy their very own home and get over the hurdles of down payment costs.
Most first-time homebuyers have heard of an FHA loan, as this is one of the best lending options for first-time homebuyers who may have lower credit scores. If approved for an FHA loan, the buyer makes a down payment as low as 3.5%. The FHA will insure loans for buyers who have credit scores as low as 500, but they require a 10% down payment. The only downside to an FHA is that the loan requires mortgage insurance, which must be maintained throughout the life of the loan and cannot be canceled.
American Dream Down Payment Initiative.
Passed in 2003, geared towards minorities and low-income families, the American Dream Down Payment Initiative grants eligible first-time homebuyers as much as $10,000 in down payment and closing cost assistance.
Current service members, veterans, and surviving spouses are eligible for VA Loans. There is no official minimum credit score required, but most lenders require at least a 640. These loans are attractive because they offer competitive rates, no down payment, and no mortgage insurance.
A U.S. Department of Agriculture “USDA” home loan is offered to eligible suburban homebuyers. It is a zero-down payment issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, but the USDA offers a streamlined process for applicants who have credit scores of 640 or higher.
First Time Home Buyer Programs in NY State & SONYMA Loans
If New York residents are unsuccessful with grants or federal programs, they can explore additional programs provided by New York State’s Mortgage Agency “SONYMA.”
The following programs are offered for New York state first-time home buyers. Typically, the first-time buyer requirement is waived if you are a military veteran purchasing a home in a federally designated “target area” (i.e., economically disadvantaged neighborhoods). In general, the programs require the following:
- An overall debt-to-income ratio of 45% or less.
- The borrower must contribute at least 1% on LTV >95%.
- Borrowers must have at least three lines of credit that have been paid timely. The credit lines must have been active for 18 of the last 24 months.
- Must meet county limits regarding household income and purchase price set by SONYMA,
- Maximum LTV of 97% for single-family homes.
- Two-years of employment history.
- The borrower must successfully complete a home buyer education course.
Achieving the Dream
The Achieving the Dream Program is geared towards first-time homebuyers who have low incomes. Buyers will receive reduced interest rates and a lower down payment on a 30-year loan. The mortgage can be used to purchase and renovate a one or two-family home.
Conventional Plus Program
The Convention Plus Program packs a lot of benefits into one mortgage program. This loan offers a lot of attractive features into one program. It’s a 30-year loan program that offers down payment assistance available to a first-time buyer or existing homeowners. There is down payment assistance available to use on closing costs so that the buyer can avoid costly mortgage insurance.
Low-Interest Rate Program
Lower-to-moderate-income home buyers are offered low rates through SONYMA’s Low-Interest Rate Program.
Homes for Veterans Program
This program if veterans and active-duty U.S. military personnel to buy a home in New York, even if it’s not their first home. The loans provide favorable financing terms, interest rates, and down payment assistance.
RemodelNY combines a purchase and renovation mortgage into one program. This is especially helpful for first-time buyers and existing owners who want to purchase a fixer-upper.
Neighborhood Revitalization Program
The Neighborhood Revitalization Program is designed to revitalize distressed communities. The program provides cash and mortgage finance assistance to help homebuyers purchase and renovate homes (one to four-family dwellings) in eligible communities. (e.g., the Bronx, Queens, Staten Island, Queens).
FHA Plus Program
The FHA Plus Program combines the SONYMA’s down payment assistance program with an FHA mortgage. Notably, the FHA Plus Program is available to both new home buyers and existing homeowners.
Graduate to Homeownership Program
The Graduate to Homeownership Program is marketed towards new college graduates. The programs offer down payment assistance and favorable interest rates. Buyers must be looking to purchase their first home in New York communities scheduled for downtown revitalization. These cities include Elmira, Glens Falls, Jamestown, Oneonta, Oswego, Plattsburgh, and others.
Down Payment Assistance Loans
SONYMA offers down payment assistance loans, which can be combined with any of their mortgage programs. Essentially the down payment is set up as a second mortgage. No monthly payment and no interest is charged on the loan, and it is forgivable after ten years if the borrower maintains their SONYMA financing and continuing living in the property during that time. The maximum down payment assistance is $3,000 or 3% of the loan value (up to $15,000).
The lender you choose to work with may have additional requirements beyond the requirement stated by the SONYMA program. So, if you’re interested in any of SONYMA’s programs, it’s best to get on the phone and start talking to your lender about your options. You can also get the full details on the various SONYMA’s programs on SONYMA’s website here.