Do you have to put 20% down in NYC? Or can you buy a property with a lower down payment? This is a question most first-time home buyers have in NYC. In most cases, you do need 20% down in NYC, but there are exceptions.
Understanding the 20% Down Payment Requirement
It’s important to understand that the 20% requirement comes from the bank and other private mortgage lenders. For the most part, it has nothing to do with the seller and the type of property you are buying. Because once you manage to secure a mortgage, their end of the transaction is secured. They will get paid in full by the bank. The down payment amount is not regulated or enforced by the city government.
The banks want you to put 20% down because it lowers their risk. With this much stake in the property, you are unlikely to default on your payments.
Exceptions
You do not have to put down any amount if you are buying in cash because the bank is not even in the equation for this transaction. There are also loan and mortgage assistance programs that allow you to put down much less than 20%, in some cases, as low as 3%.
The property type may have some influence here as well. Some condo buildings may accept your bid to buy an apartment with a 10% to 15% down payment. But you will also need to find a mortgage lender willing to offer you a loan at this down payment.
In contrast, some co-ops may require you to pay a higher down payment, even if your mortgage lender only wants 20%.
Even if you have options to pay less than 20%, it may not always be a good idea. It may limit your options and inflate your monthly payments. Your New York City broker can help you make the right call in this regard.
Also Read: What You Need To Know About NYC Real Estate Contract Contingencies
