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For a lot of New York home buyers, the down payment can be the biggest hurdle to buying a home. But it might only be a perceived hurdle. The truth is there are several mortgage programs available in New York that offer low down-payment requirements.

Additionally, borrowers might be able to obtain gift money from a family member or borrower from a 401k. Those are just some of the ways you could buy a home in New York with little to no money down.

Buying a Home With Little Money Down, Using FHA

House prices across New York have risen steadily over the last few years. 

As a result, many home buyers in New York are seeking ways to reduce their upfront, out-of-pocket expenses when buying a house. Some prefer to buy a house in New York with little to no money down. Here’s how you might accomplish that goal.

Despite common misconceptions, you don’t necessarily need a down payment of 20% or more when buying a house in New York. There are mortgage loans available that offer a much lower upfront investment.

The FHA loan program is one of those financing strategies that offers a low down payment. The Department of Housing and Urban Development (HUD), which manages this particular mortgage program, allows borrowers to make a down payment as low as 3.5% of the purchase price or appraised value.

Even better, HUD allows FHA home buyers to obtain gift money from a third-party donor, such as a family member, a close friend, or even an employer. These funds can be used to cover some, or all, of the minimum required investment.

This is one way you could buy a home in New York with little to no money down. You could combine a mortgage program with a low upfront investment requirement with gift money from an approved third-party source.

Conventional Mortgage Loan Options in New York

But you don’t necessarily have to limit yourself to the FHA loan program. These days, many conventional (non-government-backed) mortgage loans allow for gift money as well. And many have down payment requirements as low as 3%.

That’s because Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase loans from lenders via the secondary market, both support mortgage programs with loan-to-value ratios up to 97%.

Here are the key points to remember from all of this:

  • The down payment when buying a home might be less of an obstacle than you think.
  • There’s a lot of flexibility within today’s mortgage industry.
  • Different loan programs have different requirements, and some are more flexible than others.
  • A lot of the mortgage loans available today allow for gift money to be provided by a third party.
  • As a result, it’s possible to buy a home in New York with little to no money down (out of your own pocket).

This underscores the importance of speaking with a knowledgeable loan officer about your financing options. And that’s where we come in!