Nationwide first-time homebuyer programs

It’s not always easy to find a lender in the private market and secure a “conventional” mortgage. You often need a credit score of at least 620 to impress, plus at least 5% of the purchase price in cash for a down payment.

That’s why many first-time homebuyers will find it easier to go through the federal government for one of these nonconventional mortgages.

FHA loans

Federal Housing Administration (FHA) loans were created following the Great Depression to encourage homeownership. In the mid-1930s, only about 40% of Americans actually owned their homes.

With a typical credit score requirement of just 580 and a minimum down payment of 3.5%, these loans are much more accessible than the typical mortgage. However, if you put down less than 10% upfront, you will face the added expense of a mortgage insurance premium (MIP).

The FHA's Loan Requirements Explained.

A walkthrough of how to meet the FHA's requirements.

See Guide

VA loans

At the tail end of the Second World War, Congress passed an act to increase benefits for veterans. From that, VA loans were created, making it possible for today’s U.S. Department of Veterans Affairs (VA) to guarantee or insure home, farm and business loans made to veterans by lending institutions.

Active service members, veterans and some surviving military spouses can all qualify for a VA loan. You won’t be asked for a down payment or have to pay mortgage insurance, but you do pay a funding fee when you take out a VA loan.

USDA loans

Another loan that doesn’t require a down payment or private mortgage insurance is the USDA loan. These loans are targeted to lower-income rural and suburban Americans and are guaranteed by the U.S. Department of Agriculture.

There are a few fees associated with these loans. You’ll pay both an upfront 1% guarantee fee and an annual 0.35% fee. But in most cases, the mortgage insurance associated with other types of loans adds up to more than the USDA’s fees.

To gauge whether you qualify for a USDA loan, lenders will look closely at your annual income. Borrowers have to fall within strict income limits, since the program is reserved for lower-income households.

The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living. You can find the limits for your region on the USDA’s website.

How to qualify for first-time homebuyer programs in New York

SONYMA offers low-interest mortgage loan programs to help residents of New York find affordable housing. The income and purchase price limits to qualify for the agency’s programs vary by program, but they are generally designed to prioritize low- to moderate-income households.

More: Get a free credit score and credit monitoring from Credit Sesame.

Programs for first-time homebuyers in New York

Infographic explaining programs for first-time home-buyers in NY

SONYMA has a wide variety of home loan and down payment assistance programs that are designed to meet a whole range of homebuyer needs. Working with one of SONYMA’s participating lenders, you’ll be able to determine which of its programs fit your needs best.

The agency provides a list of its current interest rates on its website.

Achieving the Dream

This is SONYMA’s lowest interest rate program. With a 30-year fixed rate mortgage, you’ll only have to contribute 3% of your total loan amount for your down payment. You can use this program for a whole range of home types, ranging from single-family to four-family homes, cooperatives and condominiums.

There are no prepayment penalties with Achieving the Dream, so if you want to make additional payments to save yourself interest in the long run, it won’t cost you anything. You can combine this program with SONYMA’s other special features, including down payment assistance of up to 3% of your home’s purchase price.

To qualify for this program, you’ll have to be a first-time homebuyer or military veteran, or be purchasing a home in a target area. You’ll also need to have good credit, prove you can afford the monthly mortgage payments, plan to live in the home as your primary residence, and attend a homebuyer education course.

The household income and purchase price limits for Achieving the Dream vary by county.

Low Interest Rate Program

This New York program offers first-time homebuyers, military members and individuals buying in target areas lower down payment requirements and competitive interest rates on 30-year fixed-rate mortgages.

You’ll need to make a down payment of only 3%, with 1% coming from your own funds.You can use this program for a whole range of home types, ranging from single-family to four-family homes, cooperatives and condominiums.

Like with the Achieving the Dream program, there are no prepayment penalties and you can pair this program with SONYMA’s other assistance programs, including several — DAPL, RemodelNY and the Neighborhood Revitalization Program — that we’ll explain shortly.

To qualify for the Low Interest Rate Program, you’ll need to have good credit, demonstrate that you can afford the monthly mortgage payments, and agree to occupy the home as your primary residence.

The program’s income and purchase price limits vary by county.

Types of Home Loans

A walkthrough on how to qualify for every major mortgage program.

See Guide

Conventional Plus Program

SONYMA’s Conventional Plus Program combines its 30-year fixed-rate mortgage loan with its down payment assistance for both first-time and repeat homebuyers.

Conventional Plus can be used for the purchase of a house or for refinancing an existing mortgage. You can use the down payment loan to either cover your closing costs or pay off your mortgage insurance premium (MIP), eliminating your monthly MIP payment.

To qualify, you’ll have to earn less than 80% of your area’s median income. You’ll also have to check the property address in the FNMA HomeReady Eligibility Tool to determine your corresponding income limit. For more on the features and requirements of this program, SONYMA has a helpful fact sheet.

FHA Plus Program

The FHA Plus Program combines SONYMA’s 30-year fixed-rate mortgage loan with its down payment assistance for both first-time and repeat homebuyers. You can use this program to buy a home or refinance your existing mortgage and use the down payment assistance to pay your closing costs.

You can find out more about the program’s features and requirements through this fact sheet.

Conventional Loan vs. FHA.

A walkthrough on the requirements of two common mortgage programs

See Guide

Down Payment Assistance Loans (DPAL)

Acknowledging that one of the biggest financial hurdles first-time homebuyers face is covering their down payment and closing costs, SONYMA’s Down Payment Assistance Loan (DPAL) addresses that. When you qualify for a SONYMA mortgage program, you can apply for a DPAL to help you cover your upfront costs or a mortgage insurance premium.

The loan features a 0% interest rate with no monthly payments, and if you’re still in the home after 10 years, the loan will be forgiven. You’re entitled to borrow 3% of your home’s purchase price (up to $15,000) or a straight $3,000, whichever sum is higher as long as it doesn’t exceed your actual down payment and closing costs.

For SONYMA’s first mortgage programs (except for Graduate to Homeownership, Homes for Veterans or Energy Star), when you add a DPAL your interest rate will be 0.375% higher.

Regardless of which program you use, you’ll have to contribute at least 1% of the value of the property out of your own funds. And for three- and four-family properties, the requirement goes up to 3%.

Homes for Veterans Program

Homes for Veterans aims to help both veterans and active service members achieve the dream of homeownership through low-interest mortgage loans. This program is limited to active service members, veterans and their spouses.

Unless they have received a dishonorable discharge, qualified applicants do not need to be first-time homebuyers. The program also is open to National Guard members and reservists, with both active and honorably discharged records. You will be asked to include documented proof of your service with your application.

With this program, you are eligible to use a down payment assistance loan, and you won’t face the 0.375% interest rate bump that’s common with other SONYMA first loan programs when a DPAL is utilized. However, you’ll still have to contribute at least 1% of your own funds for this program.

The Mortgage Underwriting Process Explained

A walkthrough of proven steps to getting a mortgage approval.

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Remodel NY

When you buy a home that needs a little (or a lot of) TLC, the Remodel NY program can help you secure mortgage financing and the funds to help pay for the necessary work.

This program is available under SONYMA’s Low Interest Rate and Achieving the Dream programs at the same interest rate. It may also be possible to combine it with the Homes for Veterans enhancement program.

Eligible home improvement projects include finishing a basement, repairing chimneys, remodeling kitchens and bathrooms, painting or installing new siding, putting in new free-standing appliances or new roofing and flooring, updating plumbing, increasing energy efficiency, or simply fixing health and safety issues.

Financing is available for all home types, ranging from single-family to four-family homes, as well as condominiums and planned developments that include housing.

For more details or eligibility requirements, download this PDF.

Energy Star Labeled Homes Program

To help New York residents find more energy-efficient homes, SONYMA has partnered with the New York State Builders Association (NYSBA), the New York State Energy Research and Development Authority (NYSERDA) and the Long Island Power Authority (LIPA) to offer incentives for buying an Energy Star certified home.

With this program, you can also use a DPAL, and you won’t face the 0.375% interest rate increase that’s common with other SONYMA first mortgages when a buyer signs up for a down payment assistance loan.

Single-family homes and newly constructed two-family homes in designated target areas are eligible for this program.

You can find out more about the Energy Star program’s features and requirements on SONYMA’s website.

How Much Can I Borrow?

Our guide will help you find out how much you can get — and afford.

See Guide

Graduate to Homeownership Program

This program is designed to help recent college graduates buy their first homes in certain upstate New York communities by offering low-interest mortgages, down payment assistance and homebuyer education resources.

Graduate to Homeownership offers competitive 30-year fixed interest rates and can be combined with SONYMA’s other grant and assistance programs like DPAL and Remodel NY.

To qualify for assistance, you’ll have to be a first-time homebuyer who received an associate, bachelor’s, master’s or doctoral degree within the past four years (48 months) from an academic program recognized by the U.S. Department of Education.

You’ll have to prove you have good credit and the ability to make your monthly mortgage payments. The home will have to serve as your primary residence; the income limits to qualify vary by county.

You can find the list of participating communities on SONYMA’s website.

Neighborhood Revitalization Program

Following recent waves of foreclosures, a number of New York communities were left with an inventory of vacant homes. The Neighborhood Revitalization Program aims to offer qualified buyers incentives to buy and restore these houses — which ultimately improves property values across the community, restores community pride and drives long-term sustainable economic growth.

With this program, you could receive up to $20,000 to renovate a qualified home and still seek funds from other lenders to cover additional improvements. The Neighborhood Revitalization Program can be combined with SONYMA’s other programs.

To qualify, the home will have to be in one of the partnering communities. You’ll also need to have a good credit standing and be able to demonstrate that you’re able to make your monthly mortgage payments. Depending on your region, the income limits will vary.

The Best Lenders for a Mortgage

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Next steps

With all of these options available to you for buying your first home in New York state, you might be wondering where you even begin.

Before you try to qualify for a mortgage, you’ll want to be certain your credit score meets the requirements for either state or national programs.

The site Credit Sesame can offer you a free look at your current score. If your three-digit number is a little low, there are plenty of steps you can take. Self credit repair is one option to help you get the score you need.

You’ll also need to gather a series of documents to prove you have a steady income and, depending on the type of loan you want, money in the bank.

After that, you can think about getting pre-approved for a mortgage so you can start searching for your first home.

Support for new homebuyers in other states

Arizona Department of Housing (ADOH) Read More
Arkansas Development Finance Authority (ADFA) Read More
California Housing Finance Agency (CalHFA) Read More
Colorado Housing and Finance Agency (CHFA) Read More
Connecticut Housing Finance Authority (CHFA) Read More
Delaware State Housing Authority (DSHA) Read More
Florida Housing Finance Corp. (Florida Housing) Read More
Georgia Dream Read More
Hawaii Housing and Finance Development Corporation (HHFDC) Read More
Idaho Housing and Finance Association Read More
Illinois Housing Development Authority (IHDA) Read More
Indiana Housing and Community Development Authority (IHCDA) Read More
Iowa Finance Authority (IFA) Read More
Kansas Housing Resources Corporation Read More
Kentucky Housing Corporation (KHC) Read More
Louisiana Housing Corporation (LHC) Read More
MassHousing (Massachusetts) Read More
Michigan State Housing Development Authority (MSHDA) Read More
Minnesota Housing Read More
Missouri Housing Development Commission (MHDC) Read More
Montana Board of Housing (MBOH) Read More
Nebraska Investment Finance Authority (NIFA) Read More
Nevada Housing Division Read More
New Mexico Mortgage Finance Authority (MFA) Read More
State of New York Mortgage Agency (SONYMA) Read More
North Carolina Housing Finance Agency (NCHFA) Read More
Ohio Housing Finance Agency (OHFA) Read More
Oklahoma Housing Finance Agency (OHFA) Read More
Oregon Housing and Community Services (OHCS) Read More
Pennsylvania Housing Finance Agency (PHFA) Read More
South Dakota Housing Development Authority (SDHDA) Read More
Tennessee Housing Development Authority (THDA) Read More
Texas Department of Housing and Community Affairs (TDHCA) Read More
Utah Housing Corp Read More
Virginia Housing Read More
Washington State Housing Finance Commission (WSHFC) Read More
Wisconsin Housing and Economic Development Authority (WHEDA) Read More
Wyoming Community Development Authority (WCDA) Read More

About the Author

Sigrid Forberg

Sigrid Forberg

Staff Writer

Sigrid is a staff writer with MoneyWise. A graduate of Carleton University's journalism program, she spent the better part of the last six years writing about business and retail. In her spare time, she enjoys reading, baking and riding her bicycle.

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