First-Time Home Buyer Long Island [2023] Guide | 🏠💲Long Island Home Buyer Grants & Loans
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Buying a home is a major life milestone; however, it can also get expensive. Even if you’re financing the purchase, you’ll still need to come up with a downpayment and save enough for the closing costs. Depending on the price of the home, this can often get quite expensive. The high price tag often makes it difficult for first time homeowners to save enough to afford to close on a conventional loan without expensive fees and private mortgage insurance. But luckily, a first-time homeowners program can help alleviate some of that burden and help you begin building equity without as much upfront.
There are many different first time homeowner programs in New York State that can help residents afford to buy their first home. Some are national programs, and others are only for in-state residents. There are even a few programs that offer tax credits and downpayment assistance in Long Island, available at the county level. So, to help you fight for the right program, here is a look at the best first-time home buyer programs in Long Island and New York State.
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First Time Home Buyer Tax Credits & Down Payment Assistance in New York
First-time home buyer assistance can come in many forms, including tax credits, grants, and downpayment assistance. These are New York first-time homebuyer programs that make the economic burdens of homeownership more affordable for those who are just starting out in life.
New York State recently implemented the New York State Mortgage Credit Certificate, which gives first-time homeowners a break on their federal income tax by deducting some of the interest paid on their mortgage loan. The New York first time home buyer tax credit allows eligible homeowners to claim a tax credit equal to 20% of their annual mortgage interest for the entirety of the loan, as long as the home remains their primary residence.
To be eligible for the tax credit, residents must be first-time homebuyers, intend to occupy the residence within 60 days, and satisfy income requirements set by the State of New York Mortgage Agency (SONYMA). The MCC is available alongside the first-time homebuyer tax credit created by the American Recovery and Reinvestment Act of 2009.
The SONYMA itself offers several other programs, including down payment assistance programs in New York. They provide a down payment assistance loan with attractive benefits to New York first-time homebuyers. The SONYMA Down Payment assistance loan (SONY DPL) can help borrowers required to pay private mortgage insurance cover some or all of their premium.
Benefits of the SONYMA DPL include:
- 0% interest
- No monthly payments
- Forgiven after ten years
Not that the loan must be at least $1,000 and up to $3,000 or 3% of the purchase price (whichever is highest). This can significantly reduce your monthly mortgage payment and make the process more affordable for first-time homebuyers. But it’s only available to borrowers using a SONYMA loan.
As long as the borrower does not sell or transfer the home within 10 years, it will be forgiven and repayment is not required (however, borrowers are subject to recapture if the property is sold before then). So technically, the SONYMA DLP program offers New York first-time home buyer grants as long as you plan on living in the home for at least ten years.
Any first-time home buyer in New York should also look into the SONYMA DLP Plus Program, which is even more generous. With this program, eligible homeowners can receive up to $30,000 toward down payment and closing costs, capped at 20% of the purchase price. The loan comes at a 0% interest rate and will be forgiven in equal installments over the first ten years of the loan. But to qualify, the homeowner’s income cannot exceed more than 60% of the median income in the area. Read this pdf of the SONYMA website to learn more about the exact requirements.
First-Time Home Buyer Loans in New York
Beyond tax credits, down payment assistance, and grants, several loans available at the state and federal level offer attractive terms for first-time home buyers. Here are some of the most common first-time home buyer programs in New York.
State of New York Mortgage Agency
The SONYMA offers low-cost first time homebuyer loans in New York. They have several options available, including the Achieving the Dream Loan, Low-Interest Loan, Conventional Plus, FHA Plus, and more. You can learn more about the different features and options on their website. The requirements are fairly standard and include the following:
- Must be a first-time home buyer
- Must be your primary residence
- Must have verifiable income going back two years
- Must have a credit score of at least 580 to 620 (depending on the loan)
- Must get a loan through a SONYMA-approved lender
State of New York Mortgage Agency, 641 Lexington Ave # 4, New York, NY 10022 (212) 688-4069
Conventional 97
A Conventional 97 is a loan that’s backed by the government-sponsored entities, Fannie Mae and Freddie Mac that offers laxer requirements than a standard bank loan. Borrowers must be first-time homeowners and purchasing a primary residence. As the name implies, the conventional loan can finance up to 97% of the purchase price, meaning borrowers can be approved with as little as 3% down. Beyond that, they must meet the income requirements, have a credit score higher than 620, and one borrower must complete a homeownership education course.
The Federal National Mortgage Association, 780 Third Avenue 9th Floor, New York, NY 10017 (917) 322-8960
FHA Loan
FHA loans are another popular first-time homebuyer program in Long Island and across the country. FHA loans are insured by the Federal Housing Administration and feature laxer requirements than conventional loans. You can get a loan for as little as 3.5% down and a credit score of 580 or better, making them ideal for borrowers with low income. Although popular among first time homebuyers in New York, anyone who meets the qualifications can get an FHA loan. Due to its lax requirements, it’s also popular among first time home buyers in New York with bad credit.
The Federal Housing Administration, 451 7th St SW Washington DC 20410, 1-800-225-5342
VA Loan
VA loans are insured by the Veterans Administration and are only available to those who have served in the military. They require 0% down and a minimum credit score of 580 (although exact requirements depend on the lender). You don’t have to be a first-time homebuyer in NY, either. However, you will be required to obtain a certificate of eligibility from the VA to give to the lender. But if you qualify, the VA offers one of the best first time home buyer programs in New York with bad credit.
The Veterans Administration, 810 Vermont Ave NW, Washington DC 20420, 1-800-827-1000
USDA Loan
The Department of Agriculture insures USDA loans, which are designed for low to moderate-income borrowers in rural areas. There is no requirement to be a first-time homebuyer, but it must be your primary residence, and it needs to be in a rural area (typically a place with less than 20,000 people). Borrowers also must have verifiable income and decent credit (typically 640 or above). But you can qualify for no money down, which makes them an attractive option for many New York first-time homebuyers.
The United States Department of Agriculture, 1400 Independence Ave., S.W. Washington, DC 20250, (202) 720-2791.
First-Time Home Buyer Programs in Long Island
Beyond the federal and state programs offered, there are also several first-time homebuyer programs in Long Island. Here are some of the most popular.
The Nassau County HOME Down Payment Assistance Program
This first-time home buyer program in Nassau County, New York offers eligible borrowers up to $25,000 for down payment assistance in New York and closing costs and up to $10,000 to pay for repairs to a newly purchased home. Applicants must be first-time home buyers and meet certain minimum and maximum income requirements, which you can find on their website. Funds are a deferred payment, non-interest loan and only need to be repaid if the home is sold or transferred within ten years.
Long Island Housing Partnership, 180 Oser Ave #800, Hauppauge, NY 11788 (631) 435-4710
Suffolk County Community Development Department
The Suffolk County Community Development Department also offers a first time home buyer program Suffolk County, New York. Residents purchasing a home in Towns of East Hampton, Huntington, Riverhead, Shelter Island, Smithtown, Southampton, and Southold can receive grants up to $14,000 to put toward the down payment (does not cover closing costs), which will be forgiven after five years. To qualify, applicants must be first-time home buyers and make less than 80% of the area’s median income determined by HUD but more than $40,000 per year. This PDF offers more information about the exact requirements, eligible homes, and application process.
Long Island Housing Partnership, 180 Oser Ave #800, Hauppauge, NY 11788 (631) 435-4710
You can find a longer list of first time homebuyer programs in Long Island sorted by county on HUD’s website.
Long Island First Time Home Buyer Programs FAQ
What is a first-time homebuyer’s program in NY?
A first-time homebuyer program in NY is any loan, grant, or financial initiative that helps those purchasing their first home offset some of the expenses related to closing on the sale.
What is considered a first-time home buyer in New York?
The government defines a first-time homebuyer eligibility as anyone who has not owned a home in the past three years.
Who qualifies for down payment assistance in New York?
The exact qualifications vary, but typically, they are reserved for first-time homeowners looking for a primary residence who intend to stay in the home for 10+ years and meet the necessary income and credit requirements.