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Many states and large cities offer down payment assistance to first-time homebuyers. New York City is no exception. Once such program is the HomeFirst Down Payment Assistance Program offered by the city’s Housing Preservation & Development (HPD) agency.
Since we have an aversion to people wasting a money-saving opportunity, we provide a detailed explanation in order to see if this is program is a fit for you.
The program requirements
In order to be eligible for the program, there are certain criteria that must be met. First, there are income requirements, which depend on your family size. A four-person household’s income is limited to low-$60,000 range. Unfortunately, this knocks many people out. However, there are circumstances where this might fit, such as if you are starting out and feel your income is set to rise, or you have taken a pay cut that you believe is temporary.
If you meet the income eligibility, the rest of the requirements are not onerous. Remember, the program is only for first-time homebuyers. You also must complete a homebuyers education course that is taught by an HPD approved counseling agency and the home you are planning to purchase must pass a Housing Quality Standards inspection. Beyond that, you must be able to make a financial contribution to the down payment or closing costs.
You can purchase a broad range of properties. It encompasses a one-to-four family home as well as a condo and co-op unit in any of the five boroughs. The city is not interested in subsidizing a rental business, so you must occupy the residence. In fact, you must live there for a period of at least 10 years, and up to 15 years, depending on your income, which is based on the Area Median Income (AMI). If your income is up to 80% of the AMI, you must reside at the property for at least 10 years, and 15 years for amounts greater than this threshold. For a family of four, 80% of the AMI was $72,500.
If you meet the requirements and go through the process, you are eligible for up to $25,000 to apply towards your closing costs or down payment.
Not home free
You still must qualify for a mortgage. The educational course should help you determine your options, and what you can do to repair your credit score if needed. There are also supplementary online courses offered by HPD. While these are not required, you may find these informational.
You should feel comfortable that the program will remain in place. It was started in 2004 when the federal government launched its American Dream Downpayment Initiative (ADDI). However, although ADDI was eliminated, the HomeFirst Down Payment Assistance Program has been funded by alternative sources, including city capital funds.
This is merely one program, so do not get discouraged if you are not eligible. Diligent homebuyers can search for federal, state, and other city programs that can provide assistance in an array of areas, such as down payments and closing costs. A buyer’s agent can help you sort through the various options.