For many, home ownership brings psychological satisfaction, a sense of achievement, and an opportunity to enjoy a consistent community and surroundings. However, the cost of ownership, especially for first-time buyers, can be challenging, especially in cities like New York. For example, the average cost ranged from $93,250 in Allegany County to $770,000 in Westchester in 2022 and an average of $560,000 in 2023. To ease the burden, the government offers various grants for first-time homeowners. First-time homebuyers can qualify for the grants by filling out forms in the county, depending on eligibility.
First-time homebuyer refers to someone who has never owned a house in their lifetime or the past three years at the time of application. The Department of Housing and Urban Development (HUD) sets further criteria to define first-time home buyers. This includes someone with non-compliant housing as per the law, principal residence with no permanent foundation, and displaced homemakers who owned property with a spouse.
The government offers five programs to aid in home ownership through low-interest mortgages and closing costs aid for the eligible. The loans strictly service permanent residents and should not be used for vacation houses, prospecting, or investments.
The HomeFirst Down Down Payment Assistance Program offers the prospective home buyer a maximum of $100,000 for a downpayment or closing costs. The property should be located in one of the five boroughs of New York City and should be a one-to-four-family home, condo, or cooperative housing.
The qualifying criteria include meeting the first-time homebuyer definition in New York and completing a homebuyer education program. The education program includes classes on the homeownership process and covers finding, financing, and owning a home. Other requirements for the assistance include a downpayment of three percent of the purchase price, of which one percent should be from their funds.
The prospective homebuyer must also pledge to live in the home for at least ten years if the assistance is $40,000 or less and 15 years for loans above $40,000. Also, the housing unit should be 80 percent of AMI. This means that the household can afford to live in the house without spending 30 percent of its income on housing costs.
The State of New York Mortgage Agency (SONYMA) Achieving the Dream targets people with good credit and a stable source of income for a 30-year fixed-rate mortgage. As with the previous program, the applicants must complete the homebuyer education program and meet set income requirements like the ability to make mortgage payments and other debts and sufficient cash to pay the downpayment and closing costs. In addition, the prospective buyer can combine the Achieving the Dream program with other housing subsidies.
Thirdly, a SONYMA Conventional Plus aids low-income earners through a mortgage program with affordable monthly payments. The program combines a 30-year mortgage program with a down payment and assistance with closing, depending on the prospective buyer’s financial status. Conventional Plus differs from other programs in that it includes non-first-time buyers seeking to refinance their current mortgages due to financial constraints.
The SONYMA Low-Interest Rate has similar eligibility requirements and terms to others except for the Conventional Plus. Lastly, the SONYMA FHA Plus program is funded by the Federal Housing Administration (FHA). It targets prospects with a minimum credit score of 580, a stable source of income, and a downpayment of 3.5%. The prospect pays mortgage premiums till they decide to refinance, shift permanently, or clear the loan.
Though less pursued by the public, other grants include the VA Loan, available only to veterans and service members. The VA loan applicants do not require a downpayment or mortgage insurance after closing.
Marc Rovner (East Rockaway Attorney) 