First-Time Homebuyer's Guide for New Yorkers II: SONYMA, FHA, and Veteran Affairs Home Loans

Publish date: 2024-07-16
Uptown one-bed condo asking $525K: 463 West 142nd Street, #GC (Brown Harris Stevens Development Marketing LLC Uptown one-bed condo asking $525K: 463 West 142nd Street, #GC (Brown Harris Stevens Development Marketing LLC In addition to NYC’s HomeFirst Down Payment Assistance Program and other affordable housing programs provided by the city (covered in Part 1 of the feature), there are several state and federal programs explicitly designed to help first-time buyers make the leap from tenant to owner. These programs are overseen by two government agencies. At the state level, housing programs are overseen by the State of New York Mortgage Agency (SONYMA) and at the federal level, housing programs are administered by the Federal Housing Administration (FHA). The second part of this two-part article on first-time buyers programs outlines how and when New Yorkers can qualify for SONYMA and FHA programs.

SONYMA offers a wide range of buyer’s assistance programs to both first-time buyers and existing home owners. Notably, SONYMA’s regional income limits are considerably higher than the income limits set by the city’s HomeFirst Down Payment Assistance Program so middle-class buyers who don’t qualify for programs at the city level often do qualify for SONYMA programs.

The first SONYMA program for first-time buyers is known as the Achieving the Dream Program. The program offers a 30-year fixed-rate mortgage and low down payments (as low as 3%, though most NYC coops expect buyers to bring more to the deal) among other benefits. To apply, you must meet the following criteria:

1. Be a first-time buyer (unless you are an eligible military veteran or purchasing in a Target Area – find out if you are here);

2. Have good credit, stable employment, and sufficient income to make mortgage payment and other debt payments;

3. Plan to occupy the property as a primary residence (i.e., you can’t rent out the home or use it as a vacation home);

4. Sufficient cash, savings, or other assets for down payment, which is up to 3% of the price;

5. Meet regional income limits which vary by county.

In addition, you must intend to purchase a property that is:

1. Located in New York State;

2. At or under value limits set by SONYMA (e.g., in New York City, single-family homes can’t be valued over $1,110,400 in non-target areas or $1,357,160 in target areas);

3. Not intended for agricultural use;

4. Set on less than 5 acres and consist of at least 500 square feet of living space (some exceptions may apply);

5. Classified as a single family home, condo or co-op that (can be existing or newly constructed) or be a two, three, or four family home that is at least five years old and has been only used as a residence for the past five years;

6. If a two-family home located in a Target Area, it must be newly constructed or constructed within the five years prior to your loan application.

If the applicant and home are eligible, there are a few final steps that must be completed to qualify for the Achieving the Dream Program. Most notably, you must complete a homebuyer education course and, if you’re putting down less than 20%, you must obtain Private Mortgage Insurance. Anyone who is eligible and willing to adhere to SONYMA’s guidelines can apply here. Another popular program for first-time buyers is the SONYMA Low Interest Rate Program. The program also offers a 30-year fixed-rate mortgage and low down payments (as low as 3%) among other benefits. To apply, you must meet the following criteria:

1. Be a first-time buyer (unless you are an eligible military veteran or purchasing in a Target Area);

2. Have good credit, stable employment, and sufficient income to make mortgage payment and other debt payments;

3. Plan to occupy the property as a primary residence (i.e., you can’t rent out the home or use it as a vacation home);

4. Sufficient cash, savings, or other assets for down payment, which is up to 3% of the price;

5. Meet regional income limits which vary by county.

In addition, you must intend to purchase a property that is:

1. Located in New York State;

2. At or under value limits set by SONYMA;

3. Not intended for agricultural use;

4. Set on less than 5 acres and consist of at least 500 square feet of living space (some exceptions may apply);

5. Classified as a single family home, condo or co-op that (can be existing or newly constructed) or be a two, three, or four family home that is at least five years old and has been only used as a residence for the past five years;

6. If a two-family home located in a Target Area, it must be newly constructed or constructed within the five years prior to your loan application.

Once again, if one is eligible and their desired home qualifies, there are a few other steps to complete. First, you must complete a SONYMA-approved homebuyer education course, and you must obtain home owners insurance if you plan to bring less than 20% to the deal. For more information or to apply, visit the SONYMA homepage.

Other SONYMA Programs Designed to Help Renters Transition to Home Ownership

While not exclusively reserved for first-time buyers, the SONYMA Down Payment Assistant Loan is another program frequently used by first-time buyers. The program is available to anyone using a SONYMA mortgage program, including those programs already described in this article. These loans offer 0% interest, no monthly payments, are forgiven after 10 years, and range from $1,000 and up to 3% of the purchase price of a home (up to $15,000).

Notably, your loan can’t exceed your down payment or closing costs. Also, if you sell your home or opt to refinance within the first 10 years, all or a portion of your Down Payment Assistance Loan may be required to be repaid. As per SONYMA guidelines, “the amount subject to repayment will decrease by 1/120 per month each month you live in the property. In the event the proceeds from the sale of your home is not enough to pay any repayable amount, the shortage will be forgiven.” Search participating SONYMA lenders here.

This brings us to the final category of home assistance programs—those administered at the federal level. While these programs don’t necessarily only target first-time buyers, many first-time buyers do tap FHA assistance.

● FHA loans are offered by private lenders but regulated and insured by the Federal Housing Agency. In other words, the FHA doesn’t lend money directly to buyers but oversees the terms of private lending by banks nationwide. Among other benefits, FHA loans allow for low down payments (as low as 3.5%) and lower qualifying credit scores than most conventional loans. To find an FHA lender near you, visit the FHA website. Notably, most private lenders do offer FHA loans.

● Other Federally Administered Home Loan Programs While not solely designed for first-time buyers, other popular federal home loan programs include the Veteran Affairs Home Loans, which offers low down payment loans to qualified veterans, and the FreddieMac and FannieMae home loan programs, which are not federal programs per se but are both federally sponsored enterprises (GSEs) designed to support prospective buyers. However, like many other first-time buyer programs, with FreddieMac and FannieMae, borrowers can’t make more than 100% of the area median income. Given the high cost of living in New York City, especially Manhattan, many New Yorkers who need assistance to purchase a home may still not qualify.

Approachable listings under SONYMA price limits

The Riverdale Arms, #2C (COLDWELL BANKER RELIABLE REAL ESTATE NYC)

The Hamilton, #3V (Brown Harris Stevens Brooklyn LLC)

The Murray Hill Crescent, #15B (Serhant LLC)

Little Gramercy, #5C (Andrew J Markowitz Real Estate LLC)

One Carnegie Hill, #27B (Corcoran Group)

463 West 142nd Street, #GC (Brown Harris Stevens Development Marketing LLC)

Madera Condominium, #4B (Serhant LLC)

Madison Lofts, #2B (Brown Harris Stevens Brooklyn LLC)

The Clinton Hill Cooperative Apartments, #2E (Compass)

281 West 11th Street, #4B (HomeDax Real Estate LLC)

Brooklyn Flats, #3E (Douglas Elliman Real Estate)

Park, #54 (Compass)

Vernon 46, #2F (Modern Spaces)

Windsor Tower, #811 (Compass)

210 East 17th Street, #6A (Compass)

310 West 55th Street, #3JK (Keller Williams NYC)

Allura, #PHS611 (Compass)

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Contributing Writer Cait Etherington Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.

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