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First-time buyer grants, loans, and programs available to New Yorkers

The stalled market favors buyers and there are numerous forms of assistance you can take advantage of when buying for the first time.

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There are plenty of reasons why you might be hesitating to buy in New York right now—chief among them the city's high prices. In addition, tighter bank restrictions make it more difficult to take advantage of lower mortgage rates. Lenders are being much more cautious about who they will lend to and some banks have even suspended jumbo loans—typically the type of loan needed to buy here.

For many buyers, the inability to see listings in person kept them on the sidelines. This has forced sales to a near halt, but it also means there are opportunities for buyers. And first-time buyers may be eligible for some financial assistance that may help you get over your hesitation.

If you’re looking for help to buy in NYC, here are some of the grants, loans, and programs aimed at first timers. 

HPD’s HomeFirst

If you have a household income of up to 80 percent of the area median income and plan to live in the apartment for at least 10 years, you may be eligible for help from the HomeFirst Down Payment Assistance Program. This provides eligible New Yorkers with up to $40,000 or 6 percent of the purchase price toward the down payment or closing costs on an apartment or house in the five boroughs. The program requires taking buyer education classes and you must have your own savings to contribute to the purchase. 

SONYMA options

For buyers at or below a certain income level, a state lending program, the State of New York Mortgage Agency (SONYMA), is available to help renters buy in the city, primarily units below the median sales price for the city. The program allows first-time homebuyers to get a loan if they have 3 percent of the purchase price.

Only certain banks do SONYMA loans and they require some additional paperwork. If you’re using a mortgage broker—who works with many lenders to arrange a loan for a client—you won’t hear about SONYMA loans because the agency only works directly with lenders. And many buildings in New York City, especially co-ops, still require buyers to come up with a 20 percent down payment, above and beyond what the bank allows.That said, if you’re finding it hard to get the funds for a down payment, a SONYMA loan could be the answer.

FHA loans

Loans from the Federal Housing Administration can also help you reach the financing requirements to buy your first place. FHA loans are mortgages that are insured by the Federal Housing Administration and they don’t have income or first-time buyer restrictions, but the mortgage insurance costs are higher. Depending on your credit score, you will need to put down between 3.5 and 10 percent as a down payment.

NeighborhoodLIFT program

A lending service offered by Wells Fargo in partnership with the local nonprofit, Neighborhood Housing Services NYC, offers $20,000 down payment assistance for owner-occupied houses, condos, or one- to four-bedroom buildings in Brooklyn, the Bronx, or Queens. You don't have to be a first-time buyer but you will need to complete a homebuyer education course to prepare your finances for the buying process. 

HDFC co-ops

Housing Development Fund Corporation buildings only allow buyers in the lower income bracket. Some require buyers to earn a percentage of the area median income, others have income requirements based on the apartment's utility and maintenance fees. HDFC co-ops were created when the city allowed tenants in derelict buildings to form co-ops and take over their buildings. Some credit unions have specific packages geared towards HDFC buyers. 

Fannie Mae option

HomeReady mortgages from Fannie Mae offer a 3 percent down payment option. This program allows for co-borrowers on the loan, so for example, a parent can help an adult child qualify for a mortgage and buy a place. You can also apply rental payments (for example from a second apartment in the building) as an income source to help qualify a buyer.

VA loans

There are several loan programs available for military service members, veterans and surviving spouses. The length of service or service commitment, as well as duty status will determine your eligibility for specific home loan benefits. There are also credit and income requirements. These types of loans are provided by private banks and mortgage companies but the VA guarantees a portion of the loan, so the lenders can offer you more favorable terms.

Co-investing

Co-investing is another option that is more of a financing model rather than a grant or loan option. Brick Underground spoke to a buyer who took advantage of this type of shared-equity model offered by a company called Unison. The program facilitates an ownership partnership, so you can meet NYC's steep down payment requirements. Co-investment doesn't require monthly payments, instead, you give up a percentage of the property. Co-investing works primarily with real property so it isn't available for those who want to become shareholders in a co-op.