First Time Home Buyer Programs in New York 2023

• 30-year Fixed Mortgage
• Type of Homes: 1-4 unit homes, condominiums and cooperatives
• Interest Rate Locks:
  • Existing homes will have a locked interest rate for a period of 120 days.
  • Properties under rehabilitation or construction, condominiums and distressed sales will have a locked interest rate for a period of 240 days.
• Cannot be used for refinancing an existing mortgage
• SONMYA Add-on Features: Add on features such as Down Payment Assistance Loans (DPAL) and RemodelNY can be added to this program
• Subsidies and Grants: There are no limits on the grants and subsidies that can be used in this program
• Home Buyer Education Course: An educational course on homeownership must be completed by all applicants.

There are certain individual and property eligibility requirements that need to be met in order to qualify for the program:

Individual Requirements:

No	Criteria	Individual Criteria Requirement
1	Homeownership	First-Time Home Buyer
2	Residence	Prime Residence
3	Cash Contribution	1-3% of Home Price
4	Income Limits	Must be within Regional Limits
5	Good Financial Standing	Occupation and Credit

• First-Time Home Buyer: The program requires all home buyers to be first-time home buyers unless they are veterans (similar to VA Loans) or are buying a property in a certain target area. Target areas are identified by SONYMA as areas under severe economic distress determined by the quality of housing, income, poverty levels, and investment requirements. The target area can be checked using the SONMYA Tool.
• Primary Residence: The home must be used as the primary residence for the home buyer and cannot be used for investment purposes.
• Cash Contribution: The program also requires an upfront contribution in cash of at least 1% of home value, for example you are buying a home worth $300,000, a 1% contribution amounts to $3,000 ($300,000 * 1%) in cash. The cash contribution is higher for co-ops at 3% of home value.
• Income Limits: The home buyer’s income has to be within the regional limits. The average income limit for a home with 1 or 2 person in a non-target area is $68,080 whereas in a target area it is $81,690. The income limit can go as high as $109,150 for higher priced counties.
• Financial Standing: The home buyers must also have a steady job of at least 2 years and must be able to make mortgage payments along with any previous debt that is owed. The borrower must be creditworthy by having at least 3 lines of credit for at least 18 of the last 24 months.

Property Requirements:

No	Criteria	Property Criteria Requirement
1	Location	New York State
2	Property Use	Only Residential
3	Property Type	1-4 Family Homes
4	Property Limits	Must be within Regional Limits
5	Condos and Co-ops have special requirements	Units, Occupants, and Ownership requirements

• Location: The property that is being purchased must be in New York State
• Property Use: The home must be the primary residence and cannot be used for agricultural or commercial purposes
• Property Type:
  • Single-family homes can be existing or newly constructed
  • 2-4 family homes must be at least 5 years old since the program application date and must have been used for residential purposes only.
  • If a two-family home is located in a target area, then a newly constructed home can also be bought, and the 5-year rule does not apply.
  • The size of the property must not be greater than 5 acres and must have at least 500 square feet of living area.
• Property Limits: The property must be within the SONYMA limits for the specific region the property is being purchased. This limit is both for appraised value and final home price. The average property limit for single-family homes in non-target areas is $294,600 and in target areas, it is $360,060. The property limit can go as high as $679,840 for the more expensive regions such as New York City.
• Co-ops and Condominiums: There are additional requirements that must be satisfied for this property type. These requirements are linked to the number of units in the building, ownership, and occupants, other requirements can be found on the SONYMA page.

The program has certain advantages and disadvantages which can help you decide if this the right program for your needs.

Advantages of this program include low mortgage rates, which help in ensuring lower monthly mortgage payments . A minimum down payment requirement of only 3%, with the option to use down payment assistance programs . For example, if you want to buy a home selling for $300,000, only $9,000 ($300,000 * 3%) is required for a down payment. The minimum down payment of 3% for Achieving the Dream program is even lower than the down payment required by FHA Loans which is 3.5%. There are no prepayment penalties, hence, if you decide to pay down your mortgage which will help pay off the loan sooner, you will not be penalized for the payment.

There are certain disadvantages, if you do decide to make a down payment which is less than 20% of the home value, then you will have to get Private Mortgage Insurance (PMI) . PMI is in the range of 0.4% - 2.25% of the original loan amount. Although this is a disadvantage, all loans require some sort of mortgage default insurance if the down payment is less than 20%, therefore, this is a factor that affects all loans. Another disadvantage is that 1% of home value is required as an upfront cash contribution as part of the down payment. This can be difficult for individuals that do not have savings, especially cash liquidity.

This program has the same features and eligibility requirements as Achieving the Dream Program.

There is one major difference between the Low Interest Rate and Achieving the Dream Program, Income Limits. The income limits for the Low Interest Rate Program are higher than the income limits for the Achieving the Dream Program. The average for a home with 1 or 2 people in a non-target area is $85,100 and in a target area, the average is $102,120. The income limit in Achieving the Dream program for similar conditions is $68,080 for non-target and $81,690 for target areas. Therefore, the income limit is on average $17,020 higher for non-target areas and $20,430 for target areas.

Individual and Property Eligibility requirements need to be met to qualify for this program.

Individual Requirements:

No	Criteria	Individual Criteria Requirement
1	Status	US Citizens or lawful permanent residents
2	Minimum Down Payment	3% covered by DPAL program
3	Minimum Credit Score	620
4	Income Limit	Income < 80% Area Median Income
5	Debt-to-Income Ratio(DTI)	Maximum of 50%

• Status: Only US citizens and permanent residents are eligible. Foreign nationals and non-occupant co-borrowers are not allowed.
• Minimum Down Payment: A minimum down payment of at least 3% is required for a 1-unit property which can be covered using the DPAL program and hence the borrower does not need to use their own funds for the down payment. For example, if the purchase price is $400,000, then a down payment of $12,000 ($400,000 * 3%) is required. This results in a loan-to-value (LTV) ratio of 97%, the LTV ratio is calculated by taking the home price $400,000 and removing the down payment $388,000 ($400,000 - $12,000) and dividing it by the home price to give 97% ($388,000/$400,000). For 2 to 4-unit homes, a minimum down payment of 5% is required which results in an LTV ratio of 95%.
• Minimum Credit Score: A minimum credit score of 620 is required, similar to conventional loans. Credit score requirements can be waived if approved by the mortgage insurance company.
• Income Limit: The borrower’s income must be less than 80% of the median income in the area. For example, if the annual income in your county is $100,000, your income must be less than $80,000 to be eligible. If your income is less than 50% of median area income you may be eligible for additional assistance. Use the FNMA HomeReady Tool to determine if your income is below 50% of the annual income in the area.
• Loan-to-Value (LTV) Ratio: A maximum DTI ratio of 50% is allowed, however, if the DTI ratio is greater than 45% then the minimum credit score must be at least 700. The DTI ratio is your monthly debt obligations as a fraction of your monthly income. The DTI requirement can be waived if approved by the mortgage company.

Property Requirements:

No	Criteria	Property Requirement
1	Location	New York State
2	Property Use	Primary Residence
3	Property Type	1-4 Family Homes, condominiums & Cooperatives
4	Property Limits	Must be within Regional Limits
5	Appraisal	Required

• Location: The property must be located in New York State
• Property Use: The property has to be the primary residence for the borrower and cannot be used for commercial & agricultural purposes, investments, and as a second home.
• Property Type: Eligible properties include 1-4 unit homes and condominiums & co-operatives that meet Fannie Mae’s guidelines.
• Property Limit: These limits determine the highest purchase price of the home that can be bought under this program.
  • Single Family - $510,400
  • Two Family - $653,550
  • Three Family - $789,950
  • Four Family - $981,700
• Appraisal: An appraisal no older than 120 days is required.

Advantages:

• The down payment assistance can also be used to be paid for closing costs which can help reduce the burden on first-time buyers who do not have large savings.
• DPAL also has the option to be used as a method of payment for Private Mortgage Insurance (PMI) . PMI has to be bought if the minimum down payment of 20% is not met by the home buyer, PMI can be included in the monthly payment or paid as a lump sum at the start of the loan. Therefore, the down payment assistance program can help you pay for PMI by covering the upfront portion, which will help reduce your monthly mortgage payments.
• Closing costs can be covered by a gift from a family member or a grant from a non-profit/employer/municipality.
• Refinance transactions can be done without taking the home buyer education course, which can assist existing home buyers.
• Underwriting guidelines that are flexible and no prepayment penalties for paying off the mortgage earlier.

Disadvantages:

• The loan can only be a 30-year fixed mortgage, there is no flexibility in terms of duration or making it a variable rate mortgage which follows a pricing benchmark like the Prime Rate, which is linked to the FED Funds Rate.
• Credit Requirements – the loan requires a minimum credit score of 620, and non-traditional credit cannot be used.
• Private Mortgage Insurance (PMI) – If the down payment is less than 20% PMI is required for the loan. The amount of coverage required changes depending on the amount of down payment and the loan-to-value (LTV) ratio:
  • LTV between 95.01-97%: 18% Required Coverage
  • LTV between 90.01-95%: 16% Required Coverage
  • LTV between 85.01-90%: 12% Required Coverage
  • LTV between 80.01-85%: 6% Required Coverage

Lastly, a home buyer education course must be completed by at least one borrower (unless it is a refinance) from a HUD-approved agency and if it’s a 2-4 family home, then landlord counseling is required. More information regarding Conventional Plus Loan Program can be found on the SONYMA Product Term Sheet.

1. Cash contribution made by the borrower must be at least 1% of the purchase price (3% for co-ops and 3-4 family homes.
2. The minimum loan amount is $1,000
3. The maximum loan amount is 3% of the purchase price (up to $15,000) or $3,000 whichever is highest. For example, if the home price is $300,000 and the minimum down payment required is 3% which is $9,000 ($300,000 * 3%) and closing costs are $1,000, a cash contribution of 1% has to be made by the borrower which is $3,000 ($300,000 * 1%), the rest of the down payment $6,000 and closing costs of $1,000 can be covered by the DPAL.
4. The DPAL cannot exceed the down payment and closing costs total. For example, if the down payment and closing costs total is $10,000, the DPAL cannot be taken for any amount greater than $10,000.
5. If the home is sold or refinanced in less than 10 years of purchase, all or some of the DPAL will have to be paid back. For every month that you stay in the property, the possible repayment reduces by 1/120 (0.83%) per month. There is a condition where you will not have to pay back the DPAL, if the proceeds from the sale of the home are not enough to pay the repayable amount, the remaining DPAL will be forgiven.
6. Cashback rebates at closing are not allowed unless it is a special circumstance.
7. The DPAL cannot be subordinate to another mortgage

1. 0% Interest Rate: The borrower is not required to pay interest on the DPAL loan.
2. No monthly Payments: The borrower does not need to increase their monthly mortgage payments as a result of the DPAL as it is structured as a second mortgage.
3. Removed after 10 Years: The loan is forgiven after a period of 10 years if the borrower carries on the primary SONYMA financing and is still living in the home.

1. This program is used with other programs such as Achieving the Dream Program and Low Interest Program. There is no additional interest rate charged for using the Remodel NY program with the other two programs. Therefore, the mortgage rates are the same as the rate you receive for the other two programs.
2. The loan is financed based on the lower of two values, the first value is the ‘after improved’ appraised value and the second value is purchase price inclusive of financeable repairs and ‘soft’ costs (e.g. lender fee).
3. RemodelNY can also be combined with the Homes for Veterans Program.
4. Down Payment Assistance Loan (DPAL) can also be used to help cover down payment and closing costs. The total DPAL that can be received is higher of $3,000 or 3% of the home price up to $15,000).
5. There is a minimum required loan amount of $1,000 for eligible repairs
6. There is no maximum set amount and hence almost all repair costs can be included
7. SONYMA also oversees all the draws for renovation taken from an escrow account throughout the post-closing repair and completion period.

There are no specific eligibility requirements for this program, borrowers must meet basic SONMYA program requirements such as:

1. First-time home buyers must take an educational course
2. Debt to Income ratio of less than 45%
3. Minimum employment of 2 years
4. Prove stable credit by showing at least 3 lines of credit that have been open for at least 18 out of the last 24 months with the timely payment of bills.

Only 30-year fixed-rate mortgages are available as that is the only mortgage available under the Achieving the Dream and Low Interest Rate Program. There are also loan limits and maximum loan-to-value (LTV) ratio allowed.

All RemodelNY loans require a contingency reserve of 10% of repair costs, and vacant properties require 15%. The contingency reserves can go as high as 20% if recommended by an appraiser based on the condition of the home. The borrower has two choices to pay this reserve, first, you can either choose to finance the contingency reserve into the loan (as long as you are still within the above loan limits), or second, you can choose to deposit your own funds into an escrow account which is managed by SONYMA.

‘Soft costs’ such as permit fees, escrow administration fee, title update fee, inspection fee, and consultant fees can also be financed as long as the borrower is within the loan limits.

The full list of eligible and ineligible items can be found on the Fannie Mae Page.

• It is the borrower’s responsibility to find a reputable contractor that is insured
• A consultant will need to be hired for the following reasons:
  • If the repair costs are in excess of $35,000
  • At the time of inspection, the home is vacant, or utilities are off
  • The contractor that is hired is related to the borrower
  • If structural renovations are involved
• Following the completion of the renovations SONMYA will send a completion of work certificate within 30 days. This is sent to the lender, the PMI company, and the servicer.

More information regarding the RemodelNY can be found on the SONYMA page.

• Status: US military veteran (discharged for reasons other than dishonorable) or active duty serviceperson. Proof in the form of DD214 certificate is required for veterans, and military ID by active servicepersons.
• If you are not a first-time home buyer, then a Military Veterans Eligibility Affidavit (SONYMA Form 243) is required.

• Restricted for military personnel, their spouses, and co-borrowers.
• Home buyers are not restricted to be first-time purchasers.
• This program is also available to the National Guard and Reserves.
• Loans with down payment assistance have a 0.375% reduced interest rate as compared to standard SONYMA mortgage rates.
• A minimum down payment of 3% only and availability of down payment assistance loan (DPAL).
• A cash contribution of 1% is required, however, the other 2% can come from gifts.

More information regarding the Homes for Veterans loan can be found on the SONYMA page which also has the list of participating lenders for this program

1. Must be a first-time home buyer
2. The home must be used as the primary residence
3. The individual must have received one of the following degrees in the past 48 months – Bachelor’s, Associate’s, Master’s, or Doctoral degree. The degree also must be from an institution that is recognized by the US Department of Education. You can check if your program is recognized on the Database of Accredited Postsecondary Institutions and Programs website.
4. Good Financial Standing: the home buyer must have good credit and a stable job
5. Income Limits: Regional income limits must be met, the average annual income for a home with 1 or 2 people in a non-target area is $85,100 and in a target area it is $102,120. Income limits for all counties in NY can be found on the SONYMA Page.

1. Competitive interest rates on a 30-year fixed mortgage
2. Can be combined with other SONYMA programs:
   1. Down Payment Assistance Loan (DPAL)
   2. RemodelNY

Although the program is open to all new graduates the home can only be purchased in certain communities

• Home buyer counseling from HomemartNY is required by all buyers.
• The loan is a fixed 30-year mortgage.
• The interest rate offered is the same as the SONYMA Low Interest Rate Program.
• There is a mortgage rate lock for 120 days.
• Property Types: 1-4 family homes, condominiums, and co-ops are allowed.
• Loan Terms: There are limits on the size of the loan, which affects down payment, LTV, and contribution

1. Location: The home must be located in one of the chosen communities, as found on the SONMYA Approved Community page.
2. Good financial standing: Stable job and good credit
3. Income limits: Annual Income must be within the limit which is 150% of the annual median income of the area. To qualify for this program, the average annual income limit for a 1-2 family home is $127,650. The income limits can be found on the SONYMA Income Limits page.

1. Competitive mortgage rates with low down payment requirements.
2. It is not restricted to only first-time home buyers and can be used by anyone who wishes to purchase a home.
3. This program can also be combined with other SONYMA programs:
1. Down Payment Assistance Loan (DPAL)
2. RemodelNY – where up to $20,000 can be used for remodeling

Therefore, this program provides individuals to buy a home for a very competitive rate as long as they are willing to locate in the chosen areas. More information regarding this program can be found on the SONYMA Program page.

1. Interest rate is 0.375% lower as compared to other programs with down payment assistance
2. There is a 240-day interest rate lock
3. This program can be used in conjunction with Achieving the Dream and Low Interest Rate program.
4. Prior to closing the home must undergo inspection to ensure that the home meets the necessary New York Energy Star® Labelled Homes requirements.
5. Down Payment Assistance Loan (DPAL) is available

1. Single family homes that are newly constructed
2. Two Family homes are only allowed if located in a target area
3. The home must be built following the requirements of the New York Energy Star® Labelled Homes.