What To Know Before Buying A House In New York

Are you dreaming of calling New York home? While the Big Apple comes with a much higher cost of living than most of the U.S., the state’s smaller cities are a more affordable option.

Before you make an offer, here’s what you need to know about buying a house in New York state.

How To Buy A House In New York

The home buying process in New York is similar to most other states. However, each state has its own nuances when it comes to purchasing real estate. Here’s what you need to know about buying a house in New York.

1. Review Your Finances

Before buying a home in New York, go over your finances and make sure you qualify for a mortgage and can afford to live comfortably there. New York is among the most expensive states in the U.S., particularly in New York City’s five boroughs and the surrounding suburbs and Long Island. Because so many people need somewhere to live near the city, housing prices are quite high.

Credit Score

http://Your credit score plays a big role in your ability to qualify for a mortgage. A high credit score tells the mortgage lender that you are a lower-risk borrower. Generally, a higher credit score gives borrowers access to better loan options and a more favorable interest rate. A lender may accept a lower credit score but be prepared to pay a much higher interest rate on your mortgage.

The minimum credit score for a conventional loan is typically 620. For a government-backed loan, you’ll need a credit score of at least 580, but this can vary depending on the loan type and lender. 

Because of New York’s higher cost of living, it’s a good idea to boost your credit score before you apply for a loan. By raising your credit score, you could potentially receive a lower interest rate and lower your monthly mortgage payment.

DTI Ratio

Your lender will also look at your debt-to-income ratio (DTI) to determine your eligibility for a mortgage. Your DTI tells lenders how much money you spend each month on debt payments versus your monthly income. DTI is calculated by adding your monthly minimum debt payments, such as credit card and auto loan payments, and dividing the total by your monthly income, before taxes.

The lower your DTI, the more likely you are to qualify for a mortgage. For a conventional mortgage, some lenders will accept a DTI of 50% or less, but it’s recommended to aim for a DTI of 43% or less.

How Much House Can You Afford?

Before you begin your search for a new home, it’s essential that you figure out exactly how much house you can afford. You want to be able to make your monthly mortgage payments while still being able to meet other financial obligations.

Lenders will examine your gross monthly income, annual income, down payment, monthly expenses, credit score and DTI to determine what size mortgage you qualify for. Also, just because you qualify for a certain amount, doesn’t mean you can comfortably afford those payments. You’ll need to consider your personal situation and your future financial goals. Typically, lenders will want your housing expenses, including principal, interest, taxes and insurance, to be less than or equal to 25% ­– 28% of your monthly gross income.

Statewide, the median sales price was $380,000 in March 2024. If you’re concerned about affording a typical home in New York, consider sticking to a budget and setting aside extra money to prepare for the home buying process.

2. Save Up For A Down Payment

Down payment requirements will depend on the type of loan you choose and the lender. For conventional loans, the minimum down payment is 3% or 5%. Keep in mind that the lower your down payment amount, the more you’ll borrow and the higher your monthly mortgage payment will be with a conventional loan. If you put 20% down, you don’t need private mortgage insurance (PMI) on a conventional loan.

Down Payment Assistance Programs

There are several down payment assistance programs that can help borrowers trying to buy a home in New York. These programs help buyers put money toward their down payment and/or closing costs when purchasing a home. In most cases, these programs are geared toward first-time home buyers, but this isn’t always true.

Down payment assistance can remove obstacles and make homeownership more affordable. This can allow you to buy a home sooner, save money on upfront home buying costs or potentially avoid paying PMI.

There are several types of programs available, including housing grants that you don’t have to pay back, deferred-payment loans, forgivable loans and low-interest loans.

3. Get Mortgage Preapproval

Getting preapproved for a mortgage is an important step in the New York home buying process. It shows that you are likely to secure financing for the loan to purchase the home and that you are a serious buyer.

In New York, first-time home buyers can apply for grants and programs to help pay for their down payment and closing costs. For example, the Federal Home Loan Bank of New York’s 2024 Homebuyer Dream Program offers grants of up to $20,000 to eligible first-time buyers purchasing a home through an approved community-based member lender.

Conventional Loans

Conventional loans are offered through private lenders. Because conventional loans don’t have the direct backing of a government agency, they may have stricter eligibility requirements. When you apply, you will need to meet the lender’s minimum requirements, such as a 3% or 5% down payment, a 620 credit score and a DTI of less than 50%.

FHA Loans

Federal Housing Administration loans (FHA loans) are a government-backed mortgage financing option in the New York home buying process. They are also known as FHA 203(b) loans and are typically more lenient with borrowing requirements. FHA loans are most popular among first-time buyers and those with low to moderate incomes.

FHA loans require a minimum credit score of 500 or 580, a down payment of 3.5% or 10% depending on the borrower’s down payment amount and a DTI of up to 57%.

VA Loans

Department of Veterans Affairs loans (VA loans) are available to veterans, active service members and eligible spouses by the U.S. Department of Veterans Affairs (VA) and offered through private lenders. Because VA loans are backed by the VA, lenders can offer better interest rates and more lenient borrowing requirements than conventional loans. The minimum credit score requirements are usually 580, and there’s no down payment requirement.

USDA Loans

U.S. Department of Agriculture loans (USDA loans) are an option for buyers in New York looking to purchase a home in a rural area. Through the USDA Rural Development program, eligible moderate- and low-income buyers can get a USDA mortgage with a low interest rate and no down payment requirement through approved lenders.

4. Consider Working With A Real Estate Agent

Working with a local real estate agent can provide insight on specific neighborhoods, help you find homes that match your needs and streamline the entire buying process. You could also find yourself in a dual agency arrangement, where the agent works on behalf of both the buyer and the seller. However, there would be a potential conflict of interest. National Association of REALTORS® allows for dual agency but states that agents must disclose this information to all parties.

Do You Need An Attorney To Buy A House In New York?

Many state laws, including New York, require the involvement of a real estate attorney during the home buying process. As a buyer, you’ll need to contact an attorney as soon as a seller has accepted your offer. Real estate attorneys are legal advocates and represent clients, facilitate transitions and ensure legal compliance.

5. Search For Your New York Home

Next, you’ll need to search for a home within your price range in your desired location. It’s important that you consider the cost of living, property taxes and homeowners association fees (HOA fees) when doing your initial search. For example, the overall cost of living in New York City is much higher than almost any other city in the state.

Types Of New York Housing

In cities of New York, there are also different types of housing. In New York City, for example, apartments, co-ops, townhouses and condos are much more common than single-family homes.

A co-op is similar to a condo where you have full ownership and control of the unit, but a co-op is a form of homeownership that allows residents of the building to hold ownership of the property as shareholders. Townhouses are more similar to traditional homes, except they share at least one wall with a neighbor.

6. Put In An Offer On A House

When you find a home you like that fits within your budget, it’s time to put in an offer. No matter the type of market, you’ll want to consider what contingencies to include and whether you’re up against cash offer competition. Once the seller receives the offer, they can accept it, reject it, negotiate or request that changes be made.

7. Schedule A Home Appraisal And A Home Inspection

A home appraisal and inspection can give you a better idea of the condition of the home you’re purchasing. Mortgage lenders also require a home appraisal and homeowners insurance to approve the loan, and while home inspections aren’t required, they are always recommended. New York’s Seller's Disclosure laws require sellers to disclose known home defects to buyers, but an inspection can potentially save you money during negotiations.

8. Complete The Closing Process

There are several steps to the closing process, including:

• The final walk-through
• Signing purchase agreements
• Setting up escrow accounts
• Budgeting 3% – 6% of the total purchase price for closing costs
• Paying necessary taxes and fees

Best Places To Live In New York State

New York state offers its residents a variety of different lifestyles. The best place depends on your personal lifestyle preferences and personal importance regarding the home location’s immediate environment and convenient amenities. Here are some of the best places to live in the Empire State.

New York City

• Median home sold price: $845,489 

New York City is made up of five boroughs: Manhattan, The Bronx, Brooklyn, Queens and Staten Island. It’s not only the most expensive city in the state but also one of the most expensive cities in the country. Despite the higher cost of living, there are countless restaurants, museums, attractions, job opportunities and attractions, as well as a solid education system and public transportation.

Rochester

• Median home sold price: $200,000 

Located along Lake Ontario in upstate New York, Rochester is known for its affordability. The cost of living is much lower than in New York City, and even lower than the national average. The city is divided into four quadrants, each with its own neighborhoods, and Center City located at the heart of downtown Rochester. The city has beautiful parks, a lively cultural and arts scene and plenty of outdoor activities.

Buffalo

• Median home sold price: $227,140 

Buffalo, New York, located near Niagara Falls along Lake Erie, is described as having a neighborly feel with walkable neighborhoods. Residents are passionate about local sports teams, and the metro area offers a lot in the way of outdoor activities. Buffalo’s housing costs are lower than the national median, as well as other everyday expenses like groceries, utilities and health care costs.

Albany

• Median home sold price: $270,000

As the capital of New York state and known locally as the Tri-City Area, Albany is only 150 north of New York City. The downtown area is filled with small businesses, galleries, restaurants and more, and acts as the region’s cultural and entertainment center. Most residents in Albany rent, but homes are still affordable. Albany homes sell for less than the national median sale price and the average income is also higher than the national average salary.

Syracuse

• Median home sold price: $170,455

Located in the heart of New York state, Syracuse is a popular place to live for families, young professionals and retirees due to its low housing costs and overall lower cost of living. There are nearly 20 distinct neighborhoods in Syracuse, and it's a top destination to dine, explore and shop. There are also several kid-friendly events and activities and the Great New York State Fair in the summer. When the weather cools down, residents can ice skate at Clinton Square.

Buying A House In New York FAQs

Below are the most frequently asked questions about buying a house in New York.

How long does it take to buy a house in New York?

It can take anywhere from 6 months to a year to buy a house in New York depending on the current real estate market and the kind of home you’re looking for. Once you find a home and your offer is accepted, closing can take 30 – 45 days. 

Is it hard to buy property in New York?

Buying property in New York can be challenging due to high housing prices and large down payment requirements. Buyers may face a lack of affordable homes that match their needs and could face competition from other buyers.

How much money do I need to buy a house in New York?

How much money you need to buy a house in New York depends on the price of homes in your desired area. For example, you’ll need almost $170,000 to make a 20% down payment on the median-priced home in New York City. However, you’ll only need about $34,000 to make a 20% down payment on a median-priced home in Syracuse.

The Bottom Line: Is Owning A Home In New York Worth It?

The process of buying a house in New York state is similar to anywhere else, but there are little nuances that buyers need to be aware of before making an offer. New York offers a wide variety of cities, suburbs and towns, making it easy to find a place that suits your lifestyle and personality.

If you’re reading to take the next step in your home buying journey, explore your financing options and start the mortgage approval process with Rocket Mortgage^® today.