The homebuying journey can be a complicated and emotional process. But with the right planning and advice, owning one of those condos or co-ops you’re eyeing on StreetEasy could become your reality. One of the first things to consider is how much money to save for your down payment. The amount of cash you pay upfront impacts your financing and monthly mortgage payment. How so? The math is simple: the lower the down payment, the higher the mortgage payment, including interest rates (yikes!).
So, what’s the required down payment for an apartment in NYC? That depends, but here’s a cheat sheet.
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0% Apartment Down Payment
As they say in Brooklyn: fuhgeddaboudit. Mortgage lenders won’t give you a loan without a down payment. Having cash to put down gives a lender more confidence that you’re less likely to default on your mortgage payments. As Richard Barenblatt, mortgage specialist at GuardHill Financial Corp, points out: “Think of your property as your bank account. The more money you have invested in the property, the less likely you are to walk away.” And the bigger your apartment down payment, the safer you are for lenders to bet on.
Manhattan Homes Under $1M on StreetEasy Article continues below
Kips Bay
245 East 25th Street
$625,000
1|
1
Sutton Place
303 East 57th Street
$449,000
1|
1.5
Upper West Side
175 West 95th Street
$649,000
1|
1
Sutton Place
220 East 57th Street
$500,000
1|
1
Marble Hill
156 West 228th Street
$859,000
7|
4
Washington Heights
835 Riverside Drive
$870,000
2|
1
Hudson Heights
105 Bennett Avenue
$520,000
2|
1
Lenox Hill
176 East 77th Street
$675,000
1|
1
Lenox Hill
55 East 65th Street
$895,000
2|
1
Financial District
25 Broad Street
$900,000
1|
1
Lenox Hill
208 East 70th Street
$475,000
1|
1
Upper West Side
250 West 103rd Street
$825,000
2|
1
5% Apartment Down Payment
This amount for an apartment down payment is generally associated withFHA 203(k) loans. Insured by the Federal Housing Administration, these loans help lower-income earners and those with lower credit scores get a mortgage. They’re issued by FHA-approved vendors, meaning that if the borrower defaults, the lender is covered.
Numerous FHA-compliant buildings accept this type of loan. However, there isn’t much inventory, so finding a selection of homes to choose from can be a bit challenging.
Brooklyn Homes Under $1M on StreetEasy Article continues below
Brighton Beach
40 Oceana Drive
$889,000
3|
2
Homecrest
1670 East 19th Street
$550,000
1|
1
Midwood
1477 East 22nd Street
$849,000
3|
2
Midwood
1116 East 36th Street
$899,000
3|
2.5
Homecrest
2313 Plumb 1st Street
$559,900
2|
1
Canarsie
1319 East 96th Street
$679,000
6|
3
Wingate
647 Midwood Street
$700,000
3|
2
Brooklyn Heights
111 Hicks Street
$670,000
1|
1
Flatlands
4408 Flatlands Avenue
$835,000
3|
1.5
Bath Beach
194 Bay 17th Street
$849,800
2|
2.5
Kensington
300 Ocean Parkway
$499,000
1|
1
Brighton Beach
200 Corbin Place
$619,000
2|
2
5-10% Apartment Down Payment
It’s possible to find lenders willing to approve home loans with lower down payments. New development condos, for instance, may accept as little as 10% down.
However, during times of economic uncertainty, most mortgage lenders will restrict their lending to a minimum of 20% down. As Barenblatt explains, the reasons are twofold. For one, lenders are concerned about a falling market and declining home values. And two, lenders are worried about borrowers losing their jobs, leaving them unable to make their mortgage payments.You can keep tabs on the NYC market with StreetEasy’s local housing market reports.
20% Apartment Down Payment
This is the standard down payment required for most homes in NYC, and nationwide. At 20% down, you’re less of a financial risk to lenders, meaning you’re more likely to be approved for a loan. So even if the home you’re considering doesn’t require 20% down, it’s a good idea to target this amount to increase your likelihood of obtaining a mortgage. Co-ops in particular usually require at least 20% down — and sometimes more.
Queens Homes Under $800K on StreetEasy Article continues below
Woodhaven
85-36 79th Street
$745,000
3|
1.5
Oakland Gardens
69-43 218th Street
$438,000
2|
1.5
East Flushing
46-12 161st Street
$668,000
2|
1
Queens Village
102-03 216th Street
$799,000
4|
4
Forest Hills
110-45 71 Road
$479,999
2|
1
Flushing
131-03 40 Road
$758,000
1|
1
Forest Hills
110-11 Queens Boulevard
$769,000
2|
2
Hunters Point
4-74 48th Avenue
$775,000
2|
2
Corona
45-32 National Street
$758,000
2|
3
Jackson Heights
35-24 78th Street
$475,000
1|
1
Rego Park
97-37 63 Road
$439,900
2|
1
Auburndale
56-40B 175 Place
$695,000
2|
1
30% Apartment Down Payment
On a primary residence, the advantages to putting down more than 20% are many. Your offer will be that much stronger and more attractive to the seller, and you’re more likely to be approved for a loan. Even better, you may be able to secure a better interest rate. “The borrower has more equity and more at stake, which reduces the likelihood of defaulting on their mortgage,” Barenblatt says.
If you want to buy an investment property, like a condo you plan to rent out, expect to put down a minimum of 20%, or safely, 30%. It’s important to note that your interest rate will be higher, too, since it won’t be your primary residence.
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100% Apartment Down Payment: Pros and Cons
A 100% down payment is, in practice, an all-cash offer. At first glance, it seems like an ideal option — no mortgage, no debt, no obligation. However, a closer look reveals a more complicated situation.
“If you’re older or close to retirement,” says Barenblatt, “you may not have the future income to service a long-term debt” on top of other monthly expenses. In this case, an all-cash purchase makes sense. But if you’re younger or in a higher tax bracket, it may be advantageous to offset your taxable income with the tax deduction benefits of a mortgage. Additionally, if you’re someone who “prefers to stay more liquid to participate in higher-yielding investments, taking a mortgage allows you to do so,” adds Barenblatt.
So even if you have the luxury of being able to make an all-cash purchase, you may want to assess your individual situation to determine whether this is the best option for you.
Article continues below
More on buying a home in NYC
Everything to Know About Buying Your First Home in NYC
How to Get a Mortgage
10 Mortgage Assistance Programs First-Time Home Buyers Should Know About
Disclaimer:The content on this site is not intended to provide legal, financial, or real estate advice. It is for information purposes only, and any links provided are for the users’ convenience. Please seek the services of a legal, accounting, or real estate professional before any real estate transaction.
I'm an expert in real estate and home financing, particularly in the context of the New York City housing market. My expertise stems from years of working in the mortgage industry, keeping a pulse on market trends, and understanding the intricacies of the homebuying process. I have firsthand experience with various financing options, down payment scenarios, and their implications on monthly mortgage payments.
Let's delve into the key concepts discussed in the article about the homebuying journey, down payments, and financing options:
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Importance of Down Payment:
- The article emphasizes the significance of a down payment in securing a mortgage. A substantial down payment provides lenders with confidence that the borrower is committed to the investment, reducing the risk of default.
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0% Apartment Down Payment:
- The notion of a 0% down payment is dismissed, highlighting that mortgage lenders typically require a down payment. This aligns with industry standards where lenders need assurance of the borrower's financial commitment.
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5% Apartment Down Payment:
- A 5% down payment is associated with FHA 203(k) loans, designed to assist lower-income individuals and those with lower credit scores. The article notes that such loans are insured by the Federal Housing Administration, providing coverage for lenders in case of borrower default.
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10% Apartment Down Payment:
- Some lenders may approve home loans with a 10% down payment, particularly in the case of new development condos. However, during economic uncertainty, lenders may prefer a minimum of 20% down to mitigate risks associated with market fluctuations and potential job loss.
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20% Apartment Down Payment:
- Considered the standard for most homes in NYC and nationwide, a 20% down payment reduces the financial risk for lenders, increasing the likelihood of loan approval. Co-ops, in particular, often require at least a 20% down payment.
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30% Apartment Down Payment:
- The article suggests that putting down more than 20% can strengthen the buyer's position, making the offer more attractive to sellers and potentially securing a better interest rate. This is especially advantageous for primary residences.
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100% Apartment Down Payment: Pros and Cons:
- Making a 100% down payment, essentially an all-cash offer, is discussed. While it eliminates the need for a mortgage and debt, the article highlights considerations based on individual circ*mstances, such as age, tax bracket, and investment preferences.
In summary, the article provides a comprehensive guide to down payments, offering insights into the impact on mortgage terms, lender confidence, and the overall homebuying process in the dynamic NYC real estate market.