Everything You Need to Know About Getting an FHA Loan in New York State

If you’re looking to buy a home in New York but don’t have a huge down payment saved up, an FHA loan can be a great option. FHA loans only require a 3.5% down payment and have flexible credit requirements, making them more accessible for first-time and low-income homebuyers.

In this comprehensive guide, I’ll explain everything you need to know about getting an FHA mortgage in New York, including:

• FHA loan limits for each county in NY
• Requirements and qualifications
• Down payment and mortgage insurance
• The process of applying and getting approved
• Using FHA loans for multifamily properties
• Finding the best FHA lenders in New York

Let’s dive in!

FHA Loan Limits for New York Counties

The maximum FHA loan amount you can borrow depends on what county in New York you want to buy in. FHA loan limits vary by county based on the median home prices in that area.

For 2024, FHA loan limits in New York range from a low of $498,257 in 48 counties to a high of $1,149,825 in the New York City boroughs and surrounding suburban counties.

Here’s a quick table summarizing the 2024 FHA loan limits for all New York counties

To look up the specific FHA loan limits in your county, I recommend checking FHA.com’s loan limit lookup tool. This will also give you the FHA limits for 2, 3, and 4-unit properties.

FHA Loan Requirements and Qualifications

While FHA loans are more flexible than conventional mortgages you still need to meet certain eligibility criteria

Credit Score: At least 500, with 580+ recommended for the lowest down payment. Under 500 may still qualify with 10% down.

Down Payment: Only 3.5% required for credit scores 580+, otherwise 10% down. Gifts and grants can be used.

Debt-to-Income Ratio: Your total monthly debt payments must be below 43% of gross monthly income.

Employment and Income: Steady income that can be verified through pay stubs, tax returns, etc. Self-employed may qualify.

Homebuyer Education: Required for first-time homebuyers. Easily completed online.

Occupancy: Must move in within 60 days and occupy as primary residence for at least 1 year.

Mortgage Insurance: Upfront and annual mortgage insurance premiums required.

As long as you meet these requirements, you should be able to qualify for an FHA loan in New York. Be sure to go through preapproval to confirm you meet the guidelines before making an offer.

Down Payment and Mortgage Insurance Costs

One of the biggest advantages of an FHA loan is the low 3.5% down payment requirement. On a $300,000 home purchase, that’s only $10,500 needed upfront compared to 20% or $60,000 on a conventional loan.

However, the trade-off is that you have to pay mortgage insurance premiums, including:

• Upfront MIP – 1.75% of the loan amount, rolled into your mortgage
• Annual MIP – 0.45% to 1.05% of the loan amount per year

So on that $300,000 loan, you’d pay $5,250 upfront and $1,350 to $3,150 annually for mortgage insurance.

While mortgage insurance increases your costs, for buyers with limited savings FHA loans allow you to get into a home much sooner. And you can always refinance to a conventional loan later to get rid of the MIP once you have 20% equity.

The Process of Applying and Getting Approved

Now that you understand the requirements, here are the steps to go through when applying for an FHA loan:

1. Get pre-approved – Talk to a lender to get a preapproval letter verifying you qualify based on your income, credit, and down payment.

2. Find a home – With your preapproval done, you can confidently make offers on homes knowing your financing is secured.

3. Make an offer – Submit your offer along with the preapproval letter to strengthen your bid on the home.

4. Inspection – If your offer is accepted, complete both a home inspection and FHA appraisal.

5. Loan processing – Provide all required documentation so the lender can verify your information and underwrite the mortgage.

6. Closing – Review the finalized loan terms, sign documents, and officially obtain the keys to your new home!

I recommend getting pre-approved with multiple lenders so you can compare rates and fees. The entire process usually takes 30-45 days from start to close.

Using FHA Loans to Buy Multifamily Properties

In addition to single family homes, you can use an FHA loan to purchase a 2, 3, or 4 unit multifamily property with just a 3.5% down payment. This can be a good investment strategy.

The process is largely the same, with a few key differences:

• Live in one unit as your primary residence
• Use projected rent from other units to qualify for higher loan limits
• May need higher credit score and down payment as a first-time investor
• Single closing saves time versus individual mortgages

Talk to your lender to see if you’re a candidate for an FHA multifamily loan. This lets you get started in real estate investing for less cash out of pocket.

Finding the Best FHA Lenders in New York

As you consider lenders for your FHA loan, here are some of the top-rated options in New York based on customer reviews:

• SoFi – Excellent online lender with fast processing and great rates.

• Guaranteed Rate – Popular mortgage broker with statewide licensed loan officers.

• Amerisave – Leading online lender with easy rate comparisons.

• Navy Federal Credit Union – Great for military families and those who qualify for membership.

• TD Bank – Major brick and mortar lender in the Northeast.

I recommend getting rate quotes from multiple lenders to make sure you find the best deal. Pay attention to origination fees, closing costs, and lender credits offered in addition to the interest rate.

The Bottom Line

Hopefully this guide gave you a full overview of everything involved with getting an FHA home loan in the state of New York. The low down payment requirement makes FHA mortgages accessible for so many more buyers.

Just be sure to consider the mortgage insurance costs as part of your monthly payment and long-term finances. Shop around with different lenders to optimize both rate and fees.

Buying a home is an exciting milestone! An FHA loan can help make that dream a reality, even if you don’t have a 20% down payment saved up yet. Follow the steps and tips outlined here for a smooth path to homeownership in the Empire State.