“The Journey of a thousand miles begins with the first step.” If ever a quote applied to the home buying process it’s this one made by the ancient Chinese philosopher, Lao Tsu in 500 BC. It doesn’t matter whether you’re moving up or downsizing, it’s a stressful journey, and if you’re a first time home buyer it can seem absolutely overwhelming. The thing to remember is to take one step at a time (and keep breathing). First there’s the eye-opening step where you take a long deep look at your finances and calculate exactly what you afford. This is a step that will help you avoid the heartbreak of falling in love with a prospective home you can not presently afford. Then’s there’s the fun step where you take a look at what’s available in the neighborhood and search for a home you can imagine yourself coming home to each night. And when you find the home that’s calling your name, there’s the third step, the one that accounts for the bulk of that thousand mile journey – getting the right mortgage.
If you live in New York, you’re lucky; the state, under the auspices of SONYMA, wants to help you move into your first home and, to that end, offers a number of incentives, programs, and grants.
What is SONYMA?
SONYMA, which stands for State of New York Mortgage Agency is a public authority created in 1970 for the purpose of providing affordable housing to residents making low and moderate incomes. The authority offers five mortgage programs to help first time New Yorkers finance their first homes. All five feature low down payments, flexible underwriting, down payment assistance, and no prepayment penalties. All are offered at competitive interest rates, and financed through the sale of tax exempt bonds.
How Do the Five Mortgage Programs Differ from Each Other?
- Low Interest Rate Program is SONYMA’s standard mortgage program and can be used for buying either a newly built or existing home.
- Remodel NY offers financing to qualifying first time buyers at competitive interest rates which must be used for purchasing an existing home updating it and completing necessary repairs.
- Construction Incentive Program must be used by first-time purchasers to buy a home which is either under new construction or is being rehabilitated.
- Achieving the Dream, featuring lower interest rates than the other SONYMA programs, is limited to low income buyers and may be used for both purchase, and if needed, renovations and repairs.
- Homes for Veterans Program is available only to military veterans or those actively serving in the armed forces. If they qualify for the program, it allows them to receive more favorable terms when applying to any of the four other programs.
Down Payment Assistance Programs
SONYMA also offers mortgage programs that assist income-qualified borrowers with their down payments.
Conventional Plus Program combines SONYMA down payment assistance with 30-year fixed interest mortgages. The program features flexible underwriting guidelines and lower monthly mortgage payments. Borrowers have the option of using the down payment assistance for closing costs, including paying an upfront lump-sum mortgage insurance premium, thereby allowing them to avoid monthly mortgage insurance payments.
FHA Plus Program is unique in that it combines down payment assistance with FHA-insured mortgages. Under special Department of Housing and Urban Development (HUD) exemption, borrowers can use 2.5% of the payment assistance and add 1% of their own funds to satisfy the FHA-required 3.5% minimum cash investment.
What Incentives Are Available to the First-Time Home Buyer?
SONYMA has partnered with the New York State Energy and Research Development Authority (NYSERDA), the Long Island Power Authority (LIPA), and the New York State Builders Association (NYSBA) to offer special incentives for buyers of energy-efficient new construction homes or rehabilitated homes. The incentive is available to all New Yorkers as long as the builder of the house is a registered Energy Star Label builder, and the contract of sale between the homebuyer and builder states that the home is being built in accordance with all the requirements of the New York Energy Star Label Program.
Features of the incentive program include
- lower mortgage interest rates
- down payment assistance amounting to either $3,000, or 3% of the purchase price, not to exceed $15,000
- 240-day locked rate
- no origination fees or points
Grants
AHC Grants
The New York State Affordable Housing Corporation creates ownership opportunities for qualified low and moderate income households by awarding grants to not-for-profit, charitable, and government organizations to help subsidize the building of new homes, or the renovation of existing stock. While not a direct grant to first time home buyers, qualified prospective buyers can take advantage of AHC grants by virtue of purchasing the homes at subsidized prices. They must however apply directly to the organizations that received the grant to build the house
NYSAR Grants
The NYSAR Housing Opportunities Foundation overseen by the New York State Association of Realtors in partnership with the Community Foundation for the Greater Capital Region awards a limited number of first time homebuyer grants for purchasers across the state to use toward closing costs or down payments. In order to qualify for the grant, the home buyer must be working with a realtor and meet the guidelines of the foundation.
Many people who live in other parts of the country tend to think only the rich can afford to purchase a home in New York, and while this may be true in some neighborhoods of New York City and its close-in suburbs, New York is way more than the city. and it’s full of readily affordable houses in urban, suburban, and rural areas. So if you’re a New Yorker and a first time home buyer, take heart, the state wants to help!
2 Point Highlight
Many people who live in other parts of the country tend to think only the rich can afford to purchase a home in New York, and while this may be true in some neighborhoods of New York City and its close-in suburbs, New York State is way more than the city, and it’s full of readily affordable houses in urban, suburban, and rural areas.
If you live in New York, you’re lucky; the state, under the auspices of SONYMA, wants to help you move into your first home and, to that end, offers a number of incentives, programs, and grants.
