SONYMA - Construction Incentive Program:: SONYMA :: Construction Incentive Program

SONYMA - Construction Incentive Program

SONYMA's Construction Incentive Program was created in an effort to stimulate the construction of one and two family homes. The program features 100% financing, a special two step interest rate, and a longer rate lock period.

Program Features:

• Two step interest rate. The initial rate is fixed for the first 48 payments, then increases 2% and is fixed for the remainder of the loan term;
• 1 point or origination fee;
• Financing of up to 100% of the value of the property for qualified borrowers and homes (for cooperative apartments, the maximum financing is 90%);
• A low minimum borrower cash contribution requirement of 3% of the value of the property (5% for properties with maximum financing of 90%). For borrowers requesting 100% financing, the 3% must be applied to closing costs;
• 240 day interest rate lock from loan application;
• Applicants will be qualified at the lower initial rate;
• Term of 30 years only;
• No prepayment penalties;
• Closing Cost Assistance is available from SONYMA only after the borrower has contributed 3% of his or her funds to the loan transaction.

Eligible Borrowers must:

• Be a first time homebuyer as defined by SONYMA (This requirement is waived if the borrower seeks to purchase a home located in a Federally designated Target Area . See Exceptions for Borrowers for more details);
• Meet SONYMA's credit underwriting standards. Applicants must have:
  • a steady job;
  • a good credit history;
  • sufficient income to make the mortgage payment and meet other debt payments; and
  • sufficient cash, savings, or other assets for downpayment and closing costs;
• Meet SONYMA's Household Income Limit requirements;
• Occupy the SONYMA-financed home as their permanent residence.
• Note: If you currently own a residential investment or vacation home and you intend to retain ownership of the home, you will not qualify for SONYMA financing even if you are attempting to purchase a home located in a Target Area.

Eligible Properties must:

• Be located in New York State;
• Have a sales price that does not exceed SONYMA's Purchase Price Limits (click here to see Purchase Price Limits for your area);
• Not be used for any business or commercial purpose;
• Be one of the following property types:
  • Newly constructed one family home (includes condominiums and cooperatives);
  • Newly constructed two family home located in a Target Area;
  • Be a maximum of 5 acres (exceptions can be made on a case by case basis);
• Have at least 500 square feet of living space (exceptions can be made on a case by case basis).

Additional Considerations:

• SONYMA mortgage may not be used to refinance an existing mortgage and SONYMA mortgages are non assumable;
• Applicants must complete a homebuyer education course if:
  • the borrower's cash contribution in the transaction is less than 5% of the value of the property, or
  • the financing being requested is more than 95% of the value of the property, or
  • certain other conditions exist in connection with the loan application.
• SONYMA will require a 1% lock in deposit to be paid by the applicant at loan application. The deposit will be refunded to the borrower or credited towards closing costs except if the applicant cancels or withdraws their loan application, or makes a material misrepresentation on their loan application;
• All loans with less than a 20% downpayment will require private mortgage insurance (PMI);
• All loans must be approved for pool insurance by SONYMA's mortgage pool insurer;
• All borrowers are subject to a potential "recapture tax" under Federal law.
• An applicant whose spouse, domestic partner, fiance, or fiancee (who is not an applicant) does not meet SONYMA's definition of first time homebuyer and therefore, is not eligible for financing.
• SONYMA reserves the right to refuse any loan application which will not close within 240 days of loan application.
• An applicant who has used more than 10% of their current residence (or a prior residence) for a business or commercial use in the past year, is not eligible for financing.

Regarding Co-ops and Condos:

• Borrowers purchasing a condominium or cooperative unit must satisfy certain special requirements.

Exceptions for Borrowers Purchasing Homes in a Target Area:

Federal law provides certain special incentives for applicants purchasing homes in Federally-designated Target Areas. SONYMA is committed to helping revitalize these neighborhoods. The incentives are as follows:

• The first time homebuyer requirement is eliminated;
• Household Income and home Purchase Price Limits are higher;
• Two family homes that are newly constructed or are less than 5 years old are eligible.
  

Note: If you currently own a residential investment or vacation home and you intend to retain ownership of the home, you will not qualify for SONYMA financing even if you are attempting to purchase a home located in a Target Area.