Your Guide to Buying a Home in New York

The Buying Process: A Summary

• In New York, all real estate purchases must be closed by an attorney.
• There is usually an attorney review at the beginning of the process. (See Phase 1, #4.) 
• Although an agreement has been reached on price, there are still negotiations to be settled. 
• There may be special rules for New York City and certain boroughs. 
• In the state, there are some unique environmental features to be worked out. 
• The closing usually takes place with both the buyer and seller at the same table. 
• Most of New York is under the base limit conforming loans, which is currently $647,200. However, counties in the New York City metro area have larger limits. 

Phase 1: Reviews, Negotiations, and Repairs for New York Homes

Congratulations! You have had an offer accepted by a New York home seller! Although this is a big step, there is still lots of work, including final details for the purchase contract. 

1. When you have an offer accepted, a contract will be signed by you and the seller. 
2. You now have the option to complete inspections on the New York property. This could be done before the attorney review. The type of inspection you complete will depend on the property type, but you can expect an engineer’s inspection, a home inspection, termite inspections, and a radon inspection. 
3. If the inspections find significant issues, you have an opportunity to request changes to the purchase contract, such as a lower purchase price.
4. When the contract is signed (before or after inspections), a process called the attorney review will be launched. 
5. You will have to make a deposit known as “earnest money,” which will be paid to the attorney or broker, but never to the seller. 
6. Depending on the property, you may need to have an inspection and certification of a buried oil tank. In New York, as well as other northeastern states, oil tanks, which stored home-heating fuel, were buried on the property. These tanks are now an environmental hazard that needs to be decommissioned. Inspection and certification may be required before the purchase is final. 
7. If the property uses well water, inspections and water testing will likely be required. 
8. A survey of the property for flood risk may also be needed. The results of this test could impact the cost of insurance. 
9. In New York, you may also need a certificate of occupancy, which simply states that the property is safe to live in.  

Phase 2: The Mortgage Process in New York

Before searching for your New York property, you probably went through the mortgage pre-qualification process. Your lender likely has most of your information, but the loan will need to be finalized. This process will include financial documents, as well as a successful appraisal on the property.

1. You will launch the mortgage process by filling out an application. This can be done on your own, or you can get the help of a qualified professional. 
2. You will receive a good faith estimate from the lender. This is simply an estimate of the final closing costs that will be needed. 
3. To finalize the loan, you’ll need to send a variety of financial and debt information, which can include: 

• Pay stubs for the past two weeks.
• Tax returns for the past two years.
• Bank statements from all accounts you own. 
• Loan documents that show your debt totals, including student loans and auto loans. 
• Financial disclosures, such as alimony and child-support payments. 
• Explanation on any credit inquiries, as these can impact your probability of default. 
• Information on any large deposits, including money that is outside of your regular income
• Gift letters that describe any gifts you will use towards the loan, such as gifts for downpayments
• Repeat or updated information that can verify or support any of the above documents. 

4. Eventually, the lender will issue an approval decision and deliver a loan commitment letter. (Assuming you are approved, of course.) You should send a copy of this letter to the seller or seller’s agent.

5. An appraisal will need to be completed. This is requested for almost all loans, as the banks and lending groups need to know that the property they are lending against has significant value. If the appraisal is low, changes to the purchase contract will be needed. If the appraisal is fine, the process can move forward. 

6. You will need to order homeowners’ insurance and send proof of this insurance to the lender.

This process can take a long time, so it’s best to start as early as possible. Also, avoid changes to your income and debt situation, as this could reset the entire process.

Phase 3: Closing the Deal for Your New York Home

Once the negotiations are complete and your mortgage is finalized, it’s time to complete the closing. In New York, the process will be completed with all parties meeting together at the same table. 

1. Before the meeting, the attorney overseeing the purchase will complete a title search to make sure the title is free of ownership complications. 
2. The buyer’s attorney will then begin the paperwork for changing the title and obtaining title insurance. 
3. The closing date is scheduled.
4. You’ll need to bring a certain amount to close the purchase. This total is now calculated. This usually needs to be brought as a cashier’s check.
5. A final walkthrough will be performed to make sure the property is still in excellent condition.
6. At the final closing, both the buyer and seller meet to sign all documents. As the buyer, you’ll need to sign all loan documents as well.
7. The transaction will now be recorded with the city or county where the New York property is located. 
8. You will receive the keys and can finally move into your new home!

New York Conforming Loan Limits

Most of the state, at least geographically, is under the base limits for conforming loans. As of writing this article, the base limits are $647,200 for a single family home. This is the limit in cities like Buffalo, Albany, Ithaca, Rochester, and Syracuse. 

Conforming loans can also be used for multiunit properties. In areas under the base limits, the limits for a two-unit property is $828,700, the limit for a three-unit is $1,001,650, and the limit for a four-unit is $1,244,850.

Counties in the New York City metro area have larger limits, a reflection of the higher property prices in this region. 

The limits in high-cost New York counties include:

New York, Bronx, Westchester, Putnam, Rockland, Kings, Queens, Nassau, and Suffolk: 

• Single-family:$ 970,800 
• Two-units: $1,243,050 
• Three-units: $1,502,475 
• Four-units: $1,867,275

Orange and Dutchess: 

• Single-family: $726,525 
• Two-units: $930,300 
• Three-units: $1,124,475 
• Four-units: $1,397,400

These are the limits for conforming loans, but larger loans are available in the form of jumbo mortgages. Contact our staff today to learn more about New York jumbo loans.

Note: Conforming loan limits are subject to change and these numbers may not reflect current limits. Contact our team for accurate and up-to-date information on New York conforming loans.

Downpayment Assistance Programs in New York

Housing can be expensive. With some of the most high-cost housing in the nation, saving for a 5% downpayment on a New York property can seem impossible. For a $600,000 home, which is far from outrageous in this state, a 10% downpayment would be $60,000.

Fortunately, many programs can provide downpayment assistance to help you overcome this large barrier…

Statewide Programs for New York Residents

Down Payment Assistance Loan
The State of New York Mortgage Association (SONYMA), a branch of the state government, offers the “Down Payment Assistance Loan,” commonly called “DPAL.” This program offers a 0% loan with no monthly payments, and borrowers can secure as much as 3% of the total mortgage; a maximum of $15,000 can be borrowed in many cases. Best of all, this loan can be forgiven after ten years!

DPAL Plus
With many of the same details as the original, DPAL Plus offers up to $30,000 in support. The main difference is a tighter income restriction; this program is only available to buyers who make less than 60% of the area’s median income.

Major Local Programs in New York

There are also many local programs available to buyers in specific areas. Here are a few examples…

HomeFirst Down Payment Assistance Program (New York City)
If you are purchasing a property in New York City, you may be eligible for downpayment assistance through the HomeFirst program. This option gives eligible buyers as much as $100,000 that can be used to purchase a house, condo, or cooperative unit. This is available in all five boroughs.

East Buffalo DPAL+
Buyers in the East Buffalo area can utilize support from the SONYMA program. $30,000 is available, and funds have been specifically targeted to improve this region of the state.

Ithaca Neighborhood Housing Services
Up to $20,000 is available to eligible buyers. This program provides downpayment assistance and closing costs, and it can be utilized by homebuyers in the counties of Cayuga, Chemung, Cortland, Schuyler, Seneca, Tioga, and Tompkins.

Common Requirements for New York Downpayment Support

There are numerous requirements, but the largest restriction is income. There are usually limits on the amount you can earn while still being eligible. The HomeFirst program, as an example, has different income limits for family size. A family of three, for example, is limited to $96,150 or less.

There can also be purchase limits (you can only spend so much in total and still be eligible) and there are requirements for credit scores, debt load, and other personal factors.

Many of these programs will require that you are a first-time homebuyer. So if you have never purchased a home, you are likely eligible.

New York downpayment assistance is constantly changing and certain details or entire programs may have expired. If you need help finding the right DPA program for your purchase, contact our team today!