First time home buyer looking for best type of loan

12 Replies

Hi all, 

So I am a first time home-buyer looking to purchase a real estate property in the NYC metro area to either live in and/or rent out. Was taking a look at all the different types of loans out there and was a bit confused and trying to figure out the best option for me. I took at look at the SONYMA loan vs. FHA vs. traditional 30yr fixed. Rates and everything is different and I know some of the programs allow for 3%down payment and offer assistance.

Background:

Credit score is above 700 so I don't perceive that to be an issue.

Have some money saved for down payment

First time home buyer.

Thanks alot in advance!

Steven

@Steven Zai  

Move into a duplex, triplex, fourplex and rent the remaining units out.

3.5 down, interests rates are pretty comparable, 3-6% depending on your credit score.

You may want to try to find an agent and mortgage agent that owns investment property as well so that they can help guide you in the process.

What I have found in talking with various lenders, that if you are comfortable with them and they are responsive to your needs all of the loans available to first time buyers are pretty standard.

I dont know what a SONYMA is?

I am not a lender, speaking in generalities.

Chris,

Thanks for the advice, the problem is I don't think I can qualify for a duplex or triplex in the NYC area.  Even just a 2 BR condo will run me around 400-500k and just putting around 3.5% down, I am not sure I can qualify for that type of mortgage.  I will take that idea of trying to locate an agent to aid me in the process.

SONYMA is a NY state sponsored mortgage/lending program to aid home buyers.

Hi Stephen,

Consider an FHA 203k loan on a fixer and you might extend your affordability (assuming you purchase at a discount). FHA 203k loans enable the buyer to do some repairs on the property prior to moving in. It's a great first-time home-buyer / newbie-investor financing option requiring little to no money down. However, you still need to find the deal. Good luck.

Josh

Hello Steven,

You're going to want to get pre-approved first with a lender so that you know what you qualify for. After you know what you qualify for you can have a realtor help you find a property that works for you.

Also remember that if you buy a unit property you can use the current rents towards your income. 75% of the current lease agreements will be added to your monthly income.

I hope this helps and have a great day.

Josh,

Thanks for the advice, I did see something about a 203k loan while browsing the web. My question is that do I have to apply for it when I apply for the mortgage or can I assess what I would need/want to repair after purchase and take the loan out then?

Also do I have to take out a FHA mortgage loan in order to take out this FHA 203k loan or can I take a traditional 30yr fixed and then take the 203k loan after?

Shaun,

That's what I was thinking as well, get pre-approved to see the maximum I can qualify for. Thing I am only worried about is damaging my credit the more times I get pre-approved since they pull a hard credit check each time.

Thanks all for your advice!

I didn't see that anyone had addressed the "either live in or rent out" part of your statement, so I thought I'd point out that those loans you are seeing for  3% down or w/assistance will always be for owner occupied properties. For a strictly investment mortgage you will probably need 20% downpayment. That's why folks are recommending a duplex or triplex- you are still an owner-occupant, but you'd also have rental income. It is a great way to start investing, but you're right, the prices in the NY market make it tougher to do.

Jean,

Good catch and good point, so as long as I live there I can still qualify for the 3% down payment as long as I can afford the mortgage and have a renter cover part of it as well?

Btw off topic, just saw you're from Aurora, CO. My cousin lives there also his name is Jeff Hui, wonder if you know him by the mere random chance.

Thanks again!

Originally posted by @Steven Zai :

Jean,

Good catch and good point, so as long as I live there I can still qualify for the 3% down payment as long as I can afford the mortgage and have a renter cover part of it as well?

Btw off topic, just saw you're from Aurora, CO. My cousin lives there also his name is Jeff Hui, wonder if you know him by the mere random chance.

Thanks again!

 There are 350k people in Aurora.  In a strange coincidence, my brother lived in Commack for about 9 years.  He hung out at Grafton Street Pub quite a bit.

Get prequalified and then talk to a realtor. That way you know what you can buy with the amount you can afford. I recommend getting a FHA loan, putting 3.5% down, and getting roommates. The way I look at it is, you can lock in a low cost of living for 30 years. Interest rates haven't been this low and won't stay this low forever. So jump before it's too late.

Buy a property with 3.5% down, finance the rest for 3.5%-4%, and have your roommates help pay down the mortgage. It's a much better strategy than renting, if you can afford homeownership.

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