The luxury homes in New York's Hampton neighborhoods and beautiful Pennsylvania markets can be an excellent investment for first-time homebuyers looking for a community to start their lives as homeowners. However, many homes can feel out-of-reach due to high prices, hefty down payments, or closing costs requirements. Debbie Quigley is familiar with the markets and first-time homebuyer assistance programs in Pennsylvania and New York, and she helps first-time buyers of all income levels understand the available assistance options. Learn more about the area's most popular and beneficial homebuyer programs so you can search for your dream home with financial confidence.
Types of first-time homebuyer programs you can consider
First-time homebuyer programs can take multiple forms depending on the goal of the program and its specific eligibility requirements. For example, some programs focus on helping first-time homebuyers with lower incomes afford property, while others incentivize long-term residence in the community. Some of the most common forms of first-time homebuyer assistance you might see include:
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Mortgage loans with lower terms, such as a lower down payment requirement
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Grants that cover a portion of the down payment or closing costs
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Deferred second mortgages that don't accrue interest and won't need to be repaid until the home is sold; these mortgages often have strict loan amount caps and can only be used for down payments or closing costs
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Forgivable second mortgages, which are similar to deferred mortgages but will be forgiven if the homebuyer stays in the home for a certain number of years
While these are common types of programs, every program is different and will have unique terms, conditions, and eligibility requirements. Take a closer look at programs in the Hamptons and Pennsylvania markets.
Down Payment Assistance Programs (DPA)
DPAs help first-time buyers afford the down payment requirement for purchasing a home. Buyers can secure a mortgage with as little as 3% down. Some loans require a higher down payment, and almost all loans will require private mortgage insurance (PMI) if the down payment is below 20%. DPA programs help homebuyers fund the down payment so the loan terms don't become too burdensome or out of reach.
What are DPA loans?
DPA loans are forgivable loans that homebuyers can put toward the down payment. Most DPA loans can be as large as 5% of the home value, purchase price, or mortgage loan amount. These loans are typically forgiven if the homeowner continues to use the home as their primary residence for the required time, such as three, five, or ten years.
What are DPA grants?
DPA grants are similar to loans, except they often have fewer obligations. The grant money is offered to eligible homebuyers as a lump sum without any requirements to pay back the money.
Helpful tax deductions
Federal, state, and local programs can also incentivize homebuying by offering tax discounts. New York's Mortgage Tax Credit Certificate (MCC) gives first-time homebuyers a deduction equal to 20% of the cost of their mortgage interest, and they remain eligible for this discount the entire time the home is their primary residence.
Closing assistance options
Many DPA loans and grants also include provisions or options for the funds to go toward lower closing costs. This reduction helps first-time homebuyers retain enough savings in their accounts to afford moving and unexpected maintenance costs in their first months or years as homeowners.
Home buyer education programs
For many state homebuyer assistance programs, buyers are required to take an education course. These courses are designed to give eligible parties a better understanding of financing terms, counseling services, home purchase programs they may be eligible for, and other information. For example, taking the Pennsylvania Housing Finance Agency's course is required in many of the state's assistance programs.
State and local first-time home buyer programs
First-time home buyers in New York and Pennsylvania can access numerous assistance programs to help with down payments, closing costs, loan terms, and other homebuying costs. When you're looking at homes in the Hamptons of New York, consider New York's programs:
Suffolk County's down payment assistance program
In 2023, Suffolk County changed the terms of its down payment assistance options to offer larger sums to residents planning on owning their homes and staying in the community long-term. Previously, first-time homebuyers were eligible for a $14,000 grant if they agreed to remain in the home for at least five years. Now, qualified applicants can receive $30,000 if they agree to live in the home for ten years.
Your lender and realtor can help you navigate the terms and conditions of the program.
Your lender and realtor can help you navigate the terms and conditions of the program.
Pennsylvania's first-time homebuyer assistance programs through the Pennsylvania Housing Finance Agency (PHFA)
First-time homebuyers in Pennsylvania can choose from a wide range of options that can save them thousands of dollars:
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Keystone Home Loan Program: First-time homebuyers and veterans are eligible for 30-year fixed-rate loans with as little as 0% down.
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Additional Keystone programs:
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Keystone Advantage Assistance: Borrowers can take out a second mortgage at a 0% interest rate for closing costs and down payment. The maximum value of this loan is $6,000 or 4% of the home price, whichever is less.
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Keystone Forgivable in Ten Years (K-FIT) program: Eligible buyers can receive a forgivable loan for up to 5% of the home's value. The funds can go toward the down payment or closing costs, and it's forgiven in ten years if the buyer stays in the home.
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HFA Preferred Program: This conventional loan program offers low down payment requirements and can be used with other grants and assistance programs. It's open to both first-time homebuyers and non-first-time homebuyers.
First-time home buyer program FAQs
Before you start applying for programs, it's important to determine your eligibility.
Who counts as a first-time home buyer?
First-time homebuyer programs are designed for prospective residents who haven't purchased a home before. To be considered a first-time home buyer, you must not have owned a home for at least three years.
Who qualifies for programs and assistance?
Depending on the specific program, being a first-time homebuyer may be enough. However, some programs are focused on buyers in low- and medium-income ranges and other programs require applicants to agree to stay in their future homes for several years.
Many first-time homebuyer assistance programs are also open to veterans, regardless of their status as first-time buyers.
Help is available for first-time home buyers in the Pennsylvania and Hamptons area
When buying a home for the first time, navigating the real estate market and the financial ecosystem surrounding mortgage loans can be overwhelming. But your realtor can help you manage both aspects. Choose a realtor who has knowledge of first-time homebuyer assistance programs in your preferred area so they can give you insight into financial requirements and strategies. They may also be able to recommend knowledgeable lenders they've worked with in the past who can help you understand all of your options. Reach out to Debbie Quigley for help finding a lender and to start exploring local homes on the market.
*Header photo courtesy of Debbie Quigley
