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Buying a house in New York can be both exciting and confusing, especially for first-time home buyers. But with the median home price in New York trending more than 2% lower than in 2022, your next home may be more within reach than you think.
Our guide breaks down the home buying process in eight steps, with practical tips to help you navigate the Empire State’s competitive market.
Key steps to buying a house in New York
Step 1: Save for a down payment. » A down payment less than 20% of the purchase price requires purchasing mortgage insurance, which adds interest to the life of your loan.
Step 2: Find an agent. » A knowledgeable agent can help you understand state requirements for down payments, determine your borrowing capacity, and identify where you want to buy. Interview and vet realtors to find someone experienced and communicative.
Step 3: Get preapproved. » Then, protect your credit score and financial situation to ensure your financing goes through on your home purchase.
Step 4: Find the right location. » Consider your lifestyle, budget, and which areas are likely to increase in value as you choose where to buy a home.
Step 5: Go house hunting. » New York’s list prices are high, so be realistic about what you can afford. Be clear with your agent about your must-haves and be flexible about the rest.
Step 6: Make an offer. » Work with your agent to determine contingencies and concessions ahead of time so you can put forward a reasonable, strong, yet competitive offer.
Step 7: Get an inspection and appraisal. » These professional assessments will confirm the home’s value and help you better understand its condition — including any potential issues — before you finalize your purchase.
Step 8: Close on your home. » Do a final walk-through of the property with your agent to ensure the home is in reasonable condition before closing the sale.
👋 If you're weighing your options to buy a house, Clever's fully licensed Concierge Team is standing by to answer questions and provide free, objective advice on how to get the best outcome. Get free advice from a licensed expert today — no obligations!
Step 1: Save for a down payment
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender pays the remaining balance.
A down payment can be up to 20% of the home's final purchase price. In New York, that could mean paying up to $90,093 for a $450,466 home.
If you put less money down, your lender will typically require you to get private mortgage insurance (PMI) on the loan. That can save you money up front but increase your monthly payment and total interest costs over the life of the loan.
However, if you can't afford to put that much down at closing, or want to hold onto more of your cash to cover other home-buying expenses, some government-backed loans have lower down payment mortgage options.
Minimum down payment on a house in New York
| Mortgage type | Minimum down payment (%) | Down payment ($) |
|---|---|---|
| Conventional | 20%, or <20% + PMI | $13,514 |
| Federal Housing Administration loan | 3.5% | $15,766 |
| Veterans Affairs loan | 0% | $0 |
New York down payment assistance programs
New York State makes numerous down payment assistance (DPA) programs available for interested homebuyers. These programs can help low-income and first-time buyers afford a home through grants or second mortgages with deferred or forgiven payments.
Check out these DPA programs in New York to see if you qualify:
SONYMA DPAL/DPAL Plus
The State of New York Mortgage Agency (SONYMA) offers two DPA programs: the Down Payment Assistance Loan (DPAL) program and the DPAL PLUS program.
The DPAL program offers a loan of 3% of the purchase price (up to $15,000), and is forgivable after 10 years. The DPAL PLUS option offers up to $30,000 for homebuyers earning less than 60% of the area median income.
To qualify for either program, the borrower must contribute at least 1% of the purchase price from their own funds.
SONYMA Achieving the Dream Program
The SONYMA Achieving the Dream Program offers first-time home buyers a loan of up to 97% of the purchase price with a 30 year fixed-rate mortgage, at a very low rate. The program also includes down payment assistance of 3% of the purchase price (up to $15,000).
To qualify, buyers must have good credit and proof of steady income. They must also contribute at least 1% of the home’s purchase price themselves and reside in the home as their primary residence.
HomeFirst DPA Program (New York City)
The Neighborhood Housing Services of New York City offers its HomeFirst DPA Program to first-time home buyers earning less than 80% of the area median income. The financial aid can provide up to $100,000 to pay for a single-family home, multi-family home, condo, or a cooperative in any of New York City's five boroughs.
Eligible participants must make a minimum down payment of 3% of the purchase price, complete a homebuyer education course, and live in the home for at least 10 years.
U.S. Department of Housing and Urban Development
HUD’s list of alternative programs in New York can be found here.
More about low down payment home loans
Government-backed loans, like FHA loans, allow a minimum down payment of 3.5% toward your home's purchase. Even conventional loans allow for down payments as low as 3–5%, though the minimum varies by lender.
But making a down payment of less than 20% comes with some risks:
- Because you're borrowing more money, you'll have higher monthly payments and pay more in interest over the life of your loan.
- Putting less than 20% down means you'll pay additional PMI, which protects the lender from potential losses.
Mortgage insurance costs around 1% of your annual mortgage balance and is added to your mortgage payment each month. However, rates vary based on your down payment, credit score, and loan type:
- Conventional loans require PMI until you've built up 20% equity in the home (for example, until you owe $360,000 on a $450,000 home). Some lenders require proof that your home has increased in value enough to cancel the PMI.
- FHA loans require a mortgage insurance premium (MIP) for the life of your loans, regardless of your home equity.
- VA loans don't charge mortgage insurance. Instead, you'll pay a one-time VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price. VA loans are available only to veterans, active service members, and eligible surviving spouses.
» LEARN MORE: Everything You Need to Know About Low-Income Home Loans
Step 2: Find a great real estate agent in New York
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great New York realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
In addition to finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers (like title companies and inspectors) to help you buy your home in New York — just remember you can always shop around!
Best of all, hiring the right real estate agent comes at no extra cost to you — sellers typically pay all realtor fees from the home sale — and can get you the best price on a home.
When finding and choosing a New York realtor, consider their local knowledge and proximity to the specific neighborhoods you're interested in.
For example, a New York City agent could have intimate knowledge of Manhattan but not Brooklyn. Or if you don't know where you're moving to yet, you can reach out to agents who specialize in the broader New York area — potentially even in New Jersey or Connecticut if you're planning to commute into NYC.
You can start your search by looking up a brokerage or realty, but don't stop there. Take the time to research and interview multiple real estate agents, paying attention to their:
- Years of experience (the median is 8 years)
- Number of home buyers helped in the last year — the more the better!
- Expertise in your target neighborhood and price range
- Online reviews and complaints
- Licensing and certifications, such as an Accredited Buyer's Representative
- Membership in local real estate boards, such as the New York State Association of Realtors or the Real Estate Board of New York
Step 3: Get preapproved for a mortgage
Mortgage preapproval is a lender's conditional offer to lend you a maximum amount of money to buy a home.
Most sellers in New York will ask for a mortgage preapproval letter before showing you their home. It demonstrates that you're financially qualified to make an offer and can give you an advantage over buyers who don't have one.
Pre-approval can be as simple as a 40-minute phone call with your lender or mortgage broker, a credit check, and sending them your proof of funds. Once you make an offer on a house, you'll start the initial mortgage application.
Preapproval vs. prequalification
Preapproval is a more in-depth analysis of your finances than a prequalification and serves as a more formal commitment from a lender. It usually requires a hard credit check and supporting documentation, such as paycheck stubs and W-2s.
Prequalification gives you a basic idea of what you might be able to borrow based on a quick look at your finances.
Does pre-approval hurt my credit score?
✍️ Tip: If you get pre-approved with multiple lenders within a 45-day window, it will only count as one credit inquiry, minimizing the impact on your score.
The savings you'll gain from shopping around for a mortgage pre-approval will likely far outweigh any minor, short-term impacts to your credit.
What do lenders review?
Mortgage lenders will check your credit score, payment history, annual gross income (amount you earn before taxes and deductions), employment, and debts to determine approval and how much they are willing to lend to you. (Note: These are the same factors that determine the loan's interest rate.)
You're evaluating lenders, too
Consider each lender's quoted mortgage rate, estimated closing costs and fees, reputation and online reviews, customer service quality, and responsiveness to your questions.
Although you don't have to decide on a lender now, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best rate and terms when you buy your New York home.
A local lender:
- Might provide you with more market-specific information, such as typical home values in your desired area
- Likely has a better understanding of lending regulations in the state
- Can connect with you other real estate professionals (realtors, contractors, inspectors, etc.)
You don't necessarily need to use a New York-based lender when buying a home in the state. Many national and online lenders are licensed to provide mortgage loans in New York and may provide better rates and terms.
Step 4: Choose the right location
Start zooming in on the best neighborhoods where home prices fall within your budget, and consider what you want out of your home.
If home equity is most important to you, search where home values are rising the most. But don't forget about local culture and amenities that fit your lifestyle.
New York home prices
Currently, the typical home value in New York is $450,466, but prices vary dramatically from city to city and even from neighborhood to neighborhood!
Lifestyle
Working with a local realtor can be enormously helpful when buying a home, especially in New York's competitive market. They'll provide a unique perspective, with in-depth knowledge of neighborhoods and their potential for appreciation over time.
A good local agent can also provide tailored housing recommendations based on your lifestyle, such as information on the best schools, local amenities, and traffic patterns, giving you a clearer picture of what it’s like to reside there.
Where should you live in New York? Start here
Step 5: Start house hunting in New York
📊 Key local data:
- Median mortgage interest rate: 6.94%
- Median home value: $450,466
- Best month for house hunting (highest inventory): May
- Median lot size: 11,067 square feet
Searching for homes in New York is the fun part of the home buying process! You'll get to look at a variety of available listings and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them by must-haves (such as proximity to work or your children's school) versus your nice-to-haves (like a spacious garage or backyard).
Consider the full costs of owning a home, not just the mortgage payment. Other potential costs of owning the home include maintenance and repairs, property taxes, homeowner's insurance, and HOA fees.
Your realtor can help you understand which of your needs and wants fit your budget and favorite neighborhoods and adjust where possible.
You should also decide whether you'll only visit homes in person or if you trust your agent to visit the properties on your behalf. This can be useful if you work demanding hours and can't always be available to see a house.
Next, your agent will search for homes on your local MLS and bring you top picks, and you'll schedule viewings and tours.
Step 6: Make an offer
Once you find a New York house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Talk to your real estate agent to work out all your contingencies and concessions so you can act quickly and make a strong offer that gives you a good chance of winning the home.
Part of your offer could include an earnest money deposit, which may be 1–2% of the purchase price. It's an incentive for the sellers to take the home off the market until closing. If the sale goes through, the earnest money goes toward your down payment, so you won't be anything additional out of pocket.
Note: When housing inventory is high, so is demand. So if you're house-hunting in May, you may have less time to make an offer than in December.
Average time homes spend on market in New York
| Annual average | 78 |
| January | 103 |
| February | 101 |
| March | 80 |
| April | 70 |
| May | 66 |
| June | 65 |
| July | 64 |
| August | 68 |
| September | 76 |
| October | 78 |
| November | 83 |
| December | 94 |
Source: Realtor.com
Step 7: Inspections, appraisals, and financing
Once the seller accepts your initial offer, you have to do due diligence before officially purchasing the home. Inspections let you better evaluate the home's condition, and lenders use appraisals to determine value and decide how much your final loan amount will be.
If something unexpected pops up or if the home's appraisal comes in below the purchase price, you could have an opportunity to renegotiate the terms of your contract.
Underwriting
This is also the period that your lender will verify that you can afford your mortgage. They may ask for proof of income, pay stubs, and letters of explanation for income that doesn't come from wages, and other loan statements (like for student debt).
Delays could lead to postponed closing, so start collecting this information early so that you can be ready to submit documents when your lender asks.
Home inspections in New York
Having your New York home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it. A licensed professional checks the house for any unseen, unexpected, or potential issues.
Your inspector should check out the following parts of the property:
- Roof
- Foundation
- Electrical system
- HVAC system
- Plumbing
A home inspection costs around $300 to $600, depending on factors like the home's location, condition, and age.
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
New York-specific inspections
Here are a few important tests you might want to consider:
- Radon testing: If a seller hasn't conducted a radon test in the past year, it's best to have one done before closing. Radon is dangerous at elevated levels and can cause long-lasting lung damage. Find information about where to obtain a radon test kit on the New York State Department of Health website.
- Termite inspection: New York doesn't always require inspections before closing on a property, though some lenders may before approving your loan. It's smart to get one completed no matter what. If infestations aren't caught early, termites and other unwanted pests can cause structural damage and pose health risks.
Appraisals
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
» LEARN: 3 options for buyers after a low appraisal
Step 8: Close on your new home!
Final walk-through
Before you close on your new home, you and your agent will do a final walk-through of the property to ensure that it's still in the expected condition. You'll want to check to make sure:
- The appliances are in working order.
- Any agreed-upon repairs were handled by the seller.
- There was no damage to the home when the seller moved out.
Closing day
On the closing date, you’ll meet at the title company to review lots of important paperwork. You'll need to read and sign several documents, including:
- The final loan application
- The deed transfer
- Various disclosures
Before signing anything, ask your agent or closing attorney about any questions you have to make sure you fully understand each document.
After completing the paperwork, you'll have to pay for closing costs. The title company will collect the total amount you owe for various services and pay each party on your behalf.
Typically, a buyer's closing costs can be separated into four categories:
- Prepaid costs: Ongoing costs of homeownership, such as property taxes and homeowners insurance. Mortgage lenders often require buyers to pay these monthly fees up front.
- Title and escrow charges: Charges for the title company's services, such as title searches and title insurance.
- Lender fees: Fees for the mortgage company to originate and underwrite your loan. Lender fees might include other expenses associated with your loan, such as appraisal fees or mortgage points.
- Other closing costs: Miscellaneous costs unique to each buyer. Other closing costs can include pest inspection fees, natural disaster certification fees, and other variable expenses.
Buyers in New York typically pay 3%–5% of the purchase price in closing costs. For a $450,466 home — the typical home value in New York — that's between $22,525!
After signing all of the paperwork, you'll get the keys and can move into your new home. Congrats!
Start of mortgage payments
If you took out a mortgage to purchase the home, your first loan payment is likely due within a month after closing.
Ask your lender for more specific details about the payment schedule, how to make the first payment, and how to set-up automatic payments (if desired).
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