New York first time home buyers are eligible to apply for at least four different programs offered at the state level. Surprisingly, New York is one of the more generous states when it comes to offering assistance to low and moderate income first time home buyers. The state offers several different options including low-interest mortgages, down payment and closing costs assistance, rehab loans, and even construction loans. Specific details about each individual program can be obtained from your bank, a real estate agent, or the State of New York Mortgage Agency (SONYMA) website.
SONYMA is the New York agency established to help assist in home buying and construction in New York State. They are part of a larger state agency known as Homes and Community Renewal. Where SONYMA deals mainly with the finance aspect of New York's housing, other agencies within the Homes and Community Renewal group deal with other aspects of state community development. All SONYMA loans are financed through banks and mortgage lenders and backed by New York State.
Low Interest Rate Program
The SONYMA Low Interest Rate Program is the standard assistance program for first time home buyers. It offers a lower down payment, low interest rates, and can be used on units consisting of up to four dwellings. Borrowers are also eligible to receive a limited amount of funds for minor repairs to the property. Other features of this first time home buyer program include the ability to finance up to 97% of the purchase price, a 100-day interest rate lock, payment options of 30 or 40 years, no points, and low borrower contributions that can be as little as 1%.
Requirements for this mortgage include a steady job, verifiable income levels that meet debt obligations, decent credit history, and enough cash on hand to meet down payment and closing costs contributions. Certain eligible applicants may be able to receive cash assistance for their down payment and closing costs.
Remodel New York Program
This program is somewhat unique in that it offers financing assistance to first time home buyers looking to purchase a property in need of improvements or renovations. Qualified applicants will receive not only a low interest mortgage, but also financial assistance to complete all of their work. The features of the low-interest loan are nearly identical to that of the standard program, including 30 and 40 year options, the 100-day interest rate lock, and financing of up to 97% of the home's value.
However, in order to qualify the house must meet certain restrictions and guidelines in terms of approved renovations. SONYMA provides a complete list of those renovations on its website. This program cannot be used by investors and those commonly known as "house flippers."
Construction Incentive Program
The Construction Incentive program from SONYMA is one of only a few such programs in the entire country. It was designed to encourage new home construction throughout the state, but primarily in certain targeted areas. This loan program offers the ability to convert construction loans to a SONYMA low-interest mortgage at up to 97% of the property's value. It can be used on both one and two family dwellings regardless of whether or not one of the dwellings will be used as income property.
In addition, the loan program requires only a 1% home buyer contribution, offers an interest rate lock of 240 days, provides options for both 30 and 40 year payment schedules, and is eligible for up to $3,000 of assistance for down payment and closing costs. To be eligible, applicants must meet the state's guidelines for being first time home buyers as well as prove a steady job, sufficient income, and decent credit score.
Achieving the Dream Program
The state's Achieving the Dream program is aimed at first time home buyers who qualify as low income earners. This program offers many of the same features as the previously mentioned programs along with some extra ones exclusive only to it. The program requires a low down payment and can be used on single and two family dwellings, condominiums, and even manufactured housing - provided it is permanently affixed to real property.
Like the other programs, borrowers can finance up to 97% of the total value, choose between 30 and 40 year programs, and contribute as little as 1% of their own funds. The program is also eligible for closing costs and down payment assistance of up to 3% of the home's value.
One of the special features exclusive to this program is payment protection built right into the loan. The payment protection plan will continue making mortgage payments for the borrower in the event of a job loss or a debilitating accident.
Other Assistance Options in New York State
Although the HUD website does not list any local or county programs currently available in New York, it's not unusual for such programs to be offered on a regular basis. The fact that none are listed at the current time could simply be a reflection of the state's troubled financial situation. Interested New York home buyers should check regularly with their real estate agents, mortgage lenders, and local and county agencies to see if and when programs will be available. Keep in mind that some of these programs have very tight restrictions that might play a significant role in whether or not you want to participate.