First-Time Home Buyer Guide for New York

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By Sam M. Huisache Updated March 6, 2023


Requirements | Assistance programs | Low-income options | Buying a home in New York City | The home buying process | FAQs

New York has several programs to help first-time home buyers fund their purchase. The State of New York Mortgage Agency (SONYMA), which is the main agency in the state for home purchases, offers several programs for a wide variety of buyers, including first-time home buyers. Nonprofit and local programs are also available in addition to SONYMA's offerings.

First-time home buyers in New York state can get assistance with:

  • Mortgage loan approvals
  • Down payments
  • Closing costs
  • Remodeling costs
  • Tax credits
  • General buyer education

🏠 Housing market in New YorkThe New York market is neutral. There aren't a ton of homes on the market, so buyers have time to weigh their options.

Property values are increasing. During 2022, home values in New York will grow by 7.6%.

Mortgage rates are rising. In New York, mortgage rates average 6.46000% for a 15-year mortgage and 6.94000% for a 30-year mortgage.

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What are first-time home buyer requirements in New York?

To qualify for most first-time home buyer assistance programs in New York, you must:

  • Not have owned a property in the past three years
  • Be purchasing your future primary residence within the state of New York

Local programs are typically limited to city or county limits. Most programs will also have financial requirements.

Credit score | Debt-to-income ratio | Residency

What shape do my finances need to be in?

To purchase a home, you'll need enough money to cover your down payment, closing costs, and monthly mortgage. First-time home buyer programs are designed to help you get into a quality home affordably.

For your down payment, you'll need anywhere from 1% to 20% of your home's cost. Lenders traditionally want 20%, but SONYMA loans require just 1%.

Your down payment ultimately impacts your monthly mortgage payment. The larger your down payment, the lower your monthly payment. Additionally, down payments below 20% are subject to private mortgage insurance (PMI ), which also increases the amount of your monthly payment.

At the median listing price in New York, $639,444, a 20% down payment will be $127,188.

Expect to pay 2–5% toward closing costs, which can be rolled into your mortgage. New York has closing cost assistance programs available if you need further funding.

» LEARN: Tools lenders use to evaluate home buyers

What credit score does a first-time home buyer need?

Most assistance programs require a credit score of 620. SONYMA requires a good credit score, typically defined as 670–739.

Federal programs typically accept a credit score as low as 580. Veteran Affairs loans don't have a minimum credit score requirement, but individual lenders offering VA loans may reject someone for having too low of a credit score.

Your credit score lets lenders know how likely you are to repay on time. The lower your credit score, the less likely. If your credit score is relatively low right now, you can improve your credit score in just a few months before entering the housing market.

What debt-to-income ratio do you need?

First-time buyers generally need to have a max debt-to-income (DTI) ratio between 33% and 46% or lower.

Programs have max DTI ratios to prevent buyers from purchasing a house they can't afford. Maximum DTI ratios are usually determined by buyers' credit scores as well.

New York home buyer program Max DTI ratio
State of New York Mortgage Agency (SONYMA) 33%
Federal Housing Administration (FHA) 43%
U.S. Department of Agricultural Affairs (USDA) 46%
U.S. Department of Veteran Affairs (VA) 41%
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What are the residency requirements?

For SONYMA, your house needs to be your future primary residence and within New York state.

City-level or county-level programs may have more restrictions. Typically, the house must be within the city or county limits. Similar to SONYMA, most of these programs require that the home you're purchasing be your future primary residence.

What are first-time home buyer programs in New York state?

New York's main government-sponsored program, SONYMA, offers a variety of assistance programs to buyers:

In many cases, you can combine one SONYMA program for mortgage and down payment assistance with another for closing costs or tax credits. This allows you to maximize the amount of assistance you receive toward your home.

Tools lenders use to evaluate home buyers

Credit score

Lenders use a credit score to determine a borrower's trustworthiness.

» READ: What Credit Score Is Needed to Buy a House?

Debt-to-income ratio (DTI)

Lenders evaluate a borrower's debt-to-income ratio to prevent the borrower from taking on too much debt and defaulting on their loans. Typically, lenders want your DTI to be 36–43% of your gross income.

To calculate your DTI, add all of your recurring monthly debt payments, plus your estimated mortgage payment, and divide it by your gross monthly income (before taxes).

» READ: How to Find High DTI Mortgage Lenders

Loan-to-value ratio (LTV)

Lenders use a loan-to-value ratio to ensure they provide ONLY the absolutely necessary amount of money to a borrower.

To determine your LTV, lenders divide your home loan amount by your property's value.

An LTV of more than 80% is considered risky, since it means the lender will lend more money to their customers. However, that doesn’t mean a lender won't offer a loan to a borrower with a high LTV.

Private mortgage insurance (PMI)

Lenders use private mortgage insurance to protect their investment in case a borrower defaults on their loan. PMI usually equals 0.3–1.15% of the loan amount.

Lenders typically require PMI on conventional mortgages where the borrower's down payment is smaller than 20%.

Lenders will cancel PMI automatically once a mortgage's loan-to-value ratio reaches 78%.

» READ: How Much Will My Mortgage Payment Be?

Price-to-income ratio (PTI)

Lenders use a price-to-income ratio to calculate housing affordability.

To calculate PTI, lenders divide median home prices by median household income.

If the PTI of a location is over 2.6, it usually means home prices exceed what people can afford based on the local median household income.

What are first-time mortgage assistance programs in New York state?

SONYMA runs two main mortgage assistance programs in the state of New York. By getting a loan through SONYMA, you can take advantage of add-on programs for a down payment, closing costs, and repair assistance.

While national loan programs (FHA, USDA, VA) are more commonly used, they don't offer the additional assistance that comes with SONYMA mortgages.

Loan type Down payment amount Credit score Best for home buyers with...
Conventional fixed-rate loans 20%

<20% + PMI

620+ An average credit history, who can have the same interest rate for the entire duration of the loan
SONYMA Achieving the Dream 1% or 3% 620–680 Low income — yet who don't require down payment assistance
SONYMA Low Interest Rate 1% (3% for co-ops) 620–680 Low income who require down payment assistance
FHA loans 3.5%+




Poor credit history, particularly first-time buyers and seniors; lenders may require PMI
USDA loans $0 620+ Low or moderate income in less populated or rural regions, so long as their income doesn’t exceed 115% of the median household income for their area
VA loans $0 N/A (620+ recommended) Veterans and active duty service members, who tend to be offered more competitive interest rates
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Government programs

SONYMA's mortgage programs, Achieving the Dream and Low Interest Rate, provide 30-year, fixed-rate mortgages to several groups:

  • First-time home buyers throughout New York
  • Eligible military veterans
  • Buyers purchasing a home a SONYMA target area

✍ Editor's note
Achieving the Dream actually offers a lower interest rate than the Low Interest Rate program. However, the Low Interest Rate program has a higher income limit by area, making it available to more buyers.
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For Achieving the Dream, you'll need to contribute either 1% or 3% of the purchase price (depending on which type of property you’re purchasing) in cash or other assets.

You can combine Achieving the Dream assistance with one of SONYMA's other programs for down payment assistance, closing costs, and remodeling.

Co-ops and condos have special eligibility requirements.

For Low Interest Rate mortgages, you'll need to contribute a minimum of 1% of the home's purchase price (3% for co-ops). The mortgage will then allow for a lower down payment and a lower interest rate for the mortgage.

You can combine a Low Interest Rate mortgage with other grants or subsidies to fund your purchase, including other SONYMA programs.

What are first-time down payment assistance programs in New York state?

For down payment assistance, you can go through SONYMA or receive a grant from the New York State Association of Realtors (NYSAR). You can combine assistance from both programs toward your home purchase.

Government programs

If you're taking advantage of SONYMA's mortgage program, you can combine it with one of five down payment programs:

  • Down Payment Assistance Loans (DPAL)
  • Down Payment Assistance Loans Plus (DPAL Plus)
  • Homes for Veterans
  • Give Us Credit
  • Energy Star

» JUMP: Closing cost assistance programs in New York

DPAL offers a 0% interest rate loan with no monthly payments for buyers also securing a mortgage through SONYMA to use toward a down payment. The loans will be forgiven after 10 years unless you sell or refinance before that time.

You must contribute 1% of the property value — or 3% for co-ops and multifamily properties — toward the down payment. DPAL will loan an additional $3,000 or 3% of the home purchase price, up to $15,000, whichever is higher.

If you pair DPAL with a first-time mortgage from SONYMA, the interest rate on your mortgage will be .375% higher.

DPAL Plus offers up to $30,000 for down payment and closing costs until mortgage amount is 80% LTV (loan to value). It can also be used to pay single premium mortgage insurance for transactions over 80% LTV.

With DPAL Plus, you can also use other forms of financial assistance to fund your purchase.

The maximum household income for this program is 60% of the area median income (AMI) where your future home is located.

Homes for Veterans is exclusively for active service members, honorably discharged veterans, and their spouses or co-borrowers. Down payment assistance loans are available with this program for up to $3,000 or 3% of the purchase price (not to exceed $15,000).

Mortgage interest rates with Homes for Veterans are .375% lower than with other SONYMA programs. This works out to approximately 5% savings each month on your monthly mortgage payment with a 30-year loan — 2.5% savings on a 15-year loan.

You can contribute as little as 1% through Homes for Veterans, and the remaining 2% can come from gifts, retirement accounts, stocks, bonds, and similar sources.

Give Us Credit is designed for home buyers who are self-employed or rely on family members for financial assistance.

Under Give Us Credit, you can have a more flexible credit review and still demonstrate responsible financial management. Give Us Credit has several looser restrictions:

  • No open credit accounts or rental history
  • Some late payments, under certain circumstances
  • Shorter post-foreclosure and post-bankruptcy waiting periods
  • Fluctuating income sources

You can receive assistance from other programs on top of Give Us Credit to help fund your down payment.

The Energy Star program offers down payment assistance in the form of $3,000 or 3% of the home purchase price, up to $15,000, whichever is higher. To qualify, you must be purchasing a newly constructed single- or two-family home in an Energy Star–certified target area.

When you buy an Energy Star–certified home using a SONYMA mortgage, you also get a .375% lower interest rate on your loan.

Nongovernment programs

The Housing Opportunities Foundation (HOF) from the New York State Association of Realtors offers a grant of up to $2,000 to use toward a down payment and closing costs. The grant is a good option if you don't want to take out a loan for a down payment or you just need help with closing costs,

To qualify for HOF assistance, you must meet some requirements:

  • Be a first-time home buyer
  • Work with a NYSAR realtor
  • Fall within 110% of SONYMA's purchase limits (SONYMA mortgage not required)

» JUMP: Assistance programs for buyers in New York City

With so many options available, it may be difficult to decide which program is best for you. A real estate agent is not only useful for finding a home, but they can also help you find the best assistance program for your needs.

👋 Need a great agent on your side?

Connect with top local agents who can help you get a great deal on a new home. Eligible buyers also earn cash back after closing.

What are first-time home buyer tax credit programs in New York state?

A Mortgage Credit Certificate (MCC) allows home buyers to claim a dollar-for-dollar tax credit for up to $2,000 of mortgage interest paid per year. In New York, you can request your MCC when applying for your loan, regardless of lender or provider.

There's a one-time MCC fee due at application, typically $250 for loans up to $100,000 and $500 for loans over $100,000. Rates may vary by lender.

To qualify, you must be a first-time home buyer of an eligible property that you'll occupy within 60 days of closing.

You must also satisfy SONYMA's income and purchase price limitations, but you don't have to take a mortgage out through SONYMA. Your mortgage must also not be considered a high-cost home loan as defined under New York state law. This voids buyers with mortgage loans with interest rates higher than 9%.

What are first-time home buyer grant programs in New York state?

New York has two statewide grant programs for home buyers who are still hesitant to take out forgivable loans for assistance:

VA home loans also have a Special Adapted Housing (SAH) and Special Home Adaptation (SHA) grant option for veterans with service-connected disabilities. SAH and SHA grants provide home buyers with disabilities with grant money to buy, build, or change their permanent home.

As of 2022, you can receive up to $101,574 for a SAH grant and $20,376 for a SHA grant. The specific disability housing grant amount depends on the type of injuries sustained while in service.

What are first-time home closing costs assistance programs in New York state?

Any of SONYMA's mortgage programs can be combined with a 0% interest loan for up to $15,000 for down payment and closing costs. SONYMA mortgages WITH down payment or closing cost assistance add-ons may have higher interest rates than those without.

» JUMP: Down payment assistance programs in New York

What assistance is available for first-time home buyers with low income?

All of SONYMA's assistance programs are designed for low-income and first-time home buyers. Overall, the agency has the most comprehensive of services available to low-income buyers.

Through SONYMA, a low-income buyer could get assistance with a mortgage, down payment and closing costs, and future repairs — all through one agency.

» FIND: Local homeownership buyer programs in New York

What assistance is available for New York City buyers?

The NHSNYC mortgage program provides affordable loans for both purchasing and refinancing homes within the New York City metropolitan area. It requires a minimum credit score of 620 and can't be combined with other mortgage programs. Buyers through this program can receive a "gap loan" to assist with closing on a purchase for up to $65,000.

The HomeFirst Down Payment Assistance Program is for first-time home buyers looking to be within NYC limits. It's provided in the form of a forgivable loan and requires buyers make a minimum down payment of 3%, of which 1% must be sourced from buyer's own funds. Buyers must live in the home for at least 10 years if the loan received is less than or equal to $40,000, 15 years if the loan is greater than $40,000.

Maximum household income for this program cannot be more than 80% of the area median income (AMI) within New York City. Through this program, buyers can receive up to $100,000 toward their down payment in conjunction with a SONYMA mortgage.

Housing in New York City

Buying a house in New York City can be intimidating to many first-time buyers given its expensive reputation. However, New York City has higher income and purchase price limits for first-time home buyers compared with other regions in the state to accommodate for its more expensive home prices.

The median first-time home buyer income in NYC is $95,136.

You can combine mortgages from SONYMA with its grant and subsidy programs to maximize your funding for purchasing a home in expensive areas.

Buying vs. renting in New York City

Despite the higher upfront costs, buying a home is more affordable than renting in the long term. The average monthly mortgage payment in NYC is $2,709, compared with the average monthly rent of $3,050.

Certain boroughs may be more affordable than others. For example, median home prices in the Bronx and Staten Island are lower than those in Manhattan and Brooklyn.

Buying in NYC is a good investment if you decide to stay in the city. However, many NYC residents like the flexibility of renting and the opportunity to live in more in-demand parts of the city like Manhattan, which has expensive purchase prices.

Pros for buying in NYC Cons for buying in NYC
Builds equity Less flexible moving terms
Potential tax deductions Higher maintenance costs
Stability Long-term financial commitment
Price appreciation Very expensive
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What's the process of buying a house for the first time in New York?

Step 1: Evaluate your financial situation

A credit score of 620 is best even if a program doesn't require it. Your credit score will impact your mortgage's interest rate potentially. For a conventional loan, you'll need a down payment of at least 20% to avoid paying a higher monthly payment.

You'll want to spend less than 36% of your income on debt (including your future mortgage payment) each month, so factor this in when determining your budget for a home.

Be prepared to pay 2–5% of the home's price in closing costs in New York. The median listing price in New York is $639,444, so closing costs for that would be around $12,788–31,972.

Another important aspect to consider are maintenance costs. In New York, homeowners typically spend $3,705 in maintenance costs annually, but this can vary widely based on the house. In general, you should save 1% of the house's value each year for repairs.

Step 2: Choose the right neighborhood

Think about where you'd like to live. What are your favorite areas of the city? How do those neighborhoods impact your daily commute, where you'd like to go out to eat or for entertainment, and the potential schools your children will attend if you're a parent?

Next, consider home values in the neighborhood you're considering. Historical trends in property appreciation will also show you if buying in the area will pay off in the future.

Step 3: Find a great real estate agent in New York

Working with a real estate agent can diminish much of the stress that comes with buying a home for the first time. Be sure to consider these important attributes for agents:

  • Years of experience (the more the better)
  • Number of transactions in the last year (the more the better)
  • Experience in your price range and chosen neighborhood
  • Overall review score
  • Individual reviews and complaints

» FIND: Top Real Estate Agents in New York (February 2022 Rankings)

Step 4: Get pre-approved for a mortgage

Assistance programs can assist buyers with getting approved for a mortgage. Whether you're going with a conventional loan or mortgage through an assistance program, consider these factors:

  • Interest rates. The state of the economy, your financial health, the length of your mortgage, and many other factors can impact your interest rate. Over the years, having a lower rate can save you thousands of dollars.
  • Lenders. Your mortgage lender will play a huge part in closing on your home. Make sure you choose one with a proven record of happy customers.
  • Your finances. Any changes to your finances or credit score after you've been pre-approved can void your approval. If you need to make a big purchase or have your credit checked, make sure to do it before you're pre-approved.

We recommend having at least 1% of your down payment already saved. The State of New York Mortgage Agency (SONYMA) requires a minimum 1% buyer contribution.

Step 5: Start house hunting in New York

Before you really enter the market, identify your "must haves" vs. "nice to haves." Decide which of your priorities are non-negotiable by making a list of what you need.

Also find out how current housing inventory fits in with the type of home you desire. Depending on the time of year you're looking for a home, you might have fewer options from which to choose. If there are fewer houses on the market, you might have to adjust your expectations.

Step 6: Make offers

Move fast when making offers. Know how quickly homes are going off the market so you don't wait too long to make an offer.

In New York, homes spend an average of 101 days on market. If your dream house has been listed for that long, you shouldn't wait to submit an offer.

When making an offer, sometimes a higher price isn't your best option for getting a seller to accept your offer, so don't be too tempted to go over your budget just to seal a deal. Additionally, you can write in different benefits — like no contingencies — to create a deal that works for you and the seller.

Step 7: Inspections and appraisals

Real estate agents can help you find a reputable inspector. With inspections, a licensed professional checks the house for any unseen, unexpected, or potential issues. With appraisals, an appraiser hired by your lender will examine the house and determine how much it is worth. You can hire your own appraiser on your dime to compare values, but it's not required.

Step 8: Final walkthrough and closing

During the walkthrough, be very thorough, as missed items will end up needing to be fixed on your dime. Bring a checklist with you so you don’t miss giving anything a once over. Be thorough and invite a real estate agent along to cover your bases.

FAQs for first-time home buyers in New York

How do I qualify for a first-time home-buyer grant in NY?

To qualify for most grants in New York, you'll need to have a credit score of at least 620. You'll also want to identify the area where you'd like to live, as many assistance programs have specific location stipulations. We recommend having at least 1% of your down payment already saved. The State of New York Mortgage Agency (SONYMA) requires a minimum 1% buyer contribution.

How much are closing costs in NY?

Average closing costs in NY for the buyer are 2–5% of the purchase price. For a $639,444 home, closing costs will be around $12,788–31,972. Learn more about first-time home buyer finances.

How can I buy a house in NY with no money down?

Buyers can use down payment assistance programs to fund their down payment if they don't have anything saved. Some down payment assistance programs may still require at least 1% of mortgage to be provided. However, Veterans Affairs (VA) loans don't require down payment at all.

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