NY home loan forgiveness program: how to apply and what are the requirements?
With sky-high inflation and the housing market incredibly slim, many first-time buyers in New York State will need financial support to cover the costs.
During the first two years of the pandemic mortgage interest rates were falling consistently, a result of the covid-19 induced lockdown measures. However as the United States’ economic recovery has gathered pace in 2022 inflationary pressures have caused interest rates to soar well above pre-pandemic levels.
Fortune reports that the typical home price has increased 20.3% year-over-year and housing stock is very limited, suggesting that the price could go higher.
Fortunately there are some programs in place to support first time buyers, such as New York State’s Down Payment Assistance Loan (DPAL) program, provided by the State of New York Mortgage Agency (SONYMA).
What is the DPAL program?
For many looking to buy a home for the first time, the down payment and closing costs can be prohibitively expensive. To support applicants with the considerable up-front costs of home ownership, SONYMA is offering essentially a secondary mortgage to cover those expenses.
But fear not, the DPAL comes with much more favourable terms than a normal mortgage and many recipients will never have to pay it back.
Interest is not levied on DPALs, and there are no monthly payments to make. Most inviting of all, however, is that the entire loan will be forgiven after ten years, provided that the borrower keeps the SONYMA financing in place and continues to occupy the home.
What are the requirements for New York’s DPAL?
The program may seem too good to be true, but it is a reality for prospective first time homeowners who satisfy a few eligibility requirements.
The loan can be used to pay all or a proportion of any one-time mortgage insurance premium. This will allow successful applicants to pay more up-front, lowering their monthly mortgage payments going forward.
The minimum size of the loan is $1,000. The maximum loan on offer is $3,000 or 3% of the home purchase price (up to a maximum of $15,000), whichever figure is higher.
Under no circumstances can the DPAL exceed the actual down payment and closing costs of the transaction, and applicants will be required to provide all necessary paperwork to prove the financial commitments associated with their mortgage agreement.
For more information and to apply for the DPAL, or other homeownership support programs from SONYMA, head over to their How To Apply help page.