Yes, you can still buy your first home on Long Island with rates over 7%. The key is to stop using the average rate as your plan. Programs for first-time buyers can lower your rate, cover part of your down payment, or both.
Where the market stands
The average 30-year fixed rate was 7.40% on October 15, according to Freddie Mac. A year ago it was 6.27%. Meanwhile, the median price of a single-family home in Suffolk County was $740,000 in September, according to OneKey MLS. That’s up 2.8% from a year ago. Therefore, waiting for prices to drop may not save you money. Getting a better loan might.
1. SONYMA can beat the average rate
The State of New York Mortgage Agency, known as SONYMA, offers loans for first-time buyers. Its Achieving the Dream program is at 6.600% with no points, according to NY Homes and Community Renewal. Its Low Interest Rate program is at 7.000%. Both allow financing of up to 97%. Rates can change at any time.
What does that mean for you? Here’s example math for principal and interest only. On a $500,000 loan, SONYMA lists a payment of $6.39 per $1,000 at 6.600%. That works out to about $3,195 a month. At 7.40%, the same loan costs about $3,460 a month. That’s about $265 less every month. Your real numbers will depend on your loan, taxes, and insurance.
2. Check the income limits first
In Suffolk County, Achieving the Dream is open to households earning up to $157,720 for one or two people, or up to $184,010 for three or more, according to SONYMA’s current limits. Purchase price limits also apply. Moreover, kids count toward your household size. A couple with one child uses the three-person limit.
3. Ask your lender about grants of up to $30,000
The Federal Home Loan Bank of New York runs the Homebuyer Dream Program. It gives first-time buyers grants of up to $30,000 for the down payment and closing costs, according to FHLBNY. You apply through a participating bank or credit union. The base program is for buyers earning up to 80% of the area median income. A second version, HDP Plus, covers New York buyers earning up to 120%. Funds are limited each year, so ask early.
4. Watch for Suffolk County’s next round
Suffolk County’s Down Payment Assistance Program is closed for applications right now, according to the county’s program page. It says to watch the page for the next funding round. If you plan to buy in the next year, check back often. You can also call the county’s Office of Community Development at 631-853-5705.
What to do this week
- Get pre-approved with a lender that offers SONYMA loans.
- Ask whether that lender takes part in the Homebuyer Dream Program.
- Add up your household income, and compare it with the limits above.
- Take a homebuyer education course, since many of these programs require one.
From our broker “Rates are high, but they aren’t the whole story. The buyers I see winning this fall stack a SONYMA loan with grant money before they ever make an offer.” — Brad Wilson, Broker, Jones Hollow Realty Group
Thinking about buying your first home in Babylon, Bay Shore, Islip, Sayville, or anywhere on the South Shore? Call Jones Hollow Realty Group at 1.833.GO.JONES. We’ll help you find a home and connect you with lenders who know these programs.
