Buying A House In NYC: A Complete Guide

Molly Grace

8 - Minute Read

UPDATED: Jun 2, 2023

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Like New York City itself, the city’s real estate market is unlike anything you’re likely to encounter elsewhere. It’s competitive, it’s crowded, and the cost of living can be quite expensive.

What does this mean for those looking to own a little slice of the so-called greatest city in the world? Here’s everything you need to know about buying a house in NYC.

How To Buy A House In NYC

Deciding where to live and buy a home in New York City? While the area has a lot to offer its residents, the home buying process can sometimes be a tad bit complicated, even for longtime New Yorkers.

Let’s walk through what this process typically looks like and check out some of the requirements for buying a home in NYC.

1. Determine If You Should Rent Or Buy

New York City is notorious for its pricey real estate. Because of this, renting is incredibly popular in the city.

While the U.S. as a whole has a homeownership rate around 64%, according to U.S. Census data, New York City has a homeownership rate of just 33%. However, this rate varies quite a bit among the city’s five boroughs. The Bronx has the lowest homeownership rate of 20%, while Staten Island’s 69% rate of homeownership is actually higher than the national average.

If you’re considering whether to rent or buy in NYC, you’ll first want to determine which option makes the most financial sense.

While it’s true that buying a house in New York City can be expensive, the cost to rent in the city is also fairly high. For those who can afford the upfront costs of homeownership, buying a home in NYC can be a good investment. Consider the benefits of slowly building equity in a home with each monthly housing payment rather than paying rent to a landlord, where you get no return on investment.

A rent versus buy calculator can help you better understand how much buying a home would cost you compared to renting. Plus, you’ll see how long you need to stay in the home for your investment to be worthwhile.

2. Save For A Down Payment

One of the biggest barriers to homeownership, regardless of where you live, is the down payment.

Although 20% down has always been the gold standard, most buyers put down less. Some loan programs even allow buyers to go as low as 0% down.

If you’re buying a house in New York City, however, you likely won’t get to take advantage of many low down payment programs. Many buildings require buyers to put down at least 20%. Condos may allow buyers to put down 10% or less, while many co-ops require more than 20%.

With the city’s high prices, you’ll need a hefty sum of money to get into a home. For example, a 20% down payment on a median-priced home in Brooklyn is a little over $150,000. You can tap into your savings, supplement your down payment with gift funds from relatives, or see if you qualify for any down payment assistance or grant programs.

In addition to a down payment, you’ll need some cash set aside for closing costs. These are fees you’ll incur throughout the process of getting a loan and purchasing a property, and they typically equal 3% – 6% of the loan amount.

3. Choose The Type Of Home You Want

You’ll have a few options for housing types in the city, depending on where you’re looking.

  • Co-ops: Housing cooperatives, or co-ops, are extremely common in New York City. When you buy into a co-op, you don’t actually own your unit, but you become a shareholder in the building.
  • Condos: Although slightly less common than co-ops, condominiums are also a popular housing option for New Yorkers. When you buy a condo in NYC or elsewhere, you own your unit – typically within a building of multiple units – and you share ownership of the building’s common areas with the other unit owners.
  • Townhouse: A townhouse is typically a multistory home that shares one or more walls with an adjacent home. Think row houses or NYC’s beloved brownstones.
  • Single-family detached: This type of dwelling exists as a single dwelling that shares no walls with other units or buildings. Detached homes are less common in the city, but you can still find them in certain boroughs.

Think about your needs and wants. Do you want more control over your space? Prefer a building that offers lots of amenities? Don’t want to be in charge of maintenance? Answering these questions will help you figure out which type of home is best for you.

4. Secure Financing

Unless you plan to pay for your new home in cash, you’ll want to get an initial approval from a mortgage lender before you begin house hunting. Getting preapproved will help you determine how much you can afford and show sellers you’re serious about buying a home.

To get a mortgage, you’ll typically need at least a 620 credit score. You can potentially go lower with some government loans, but be aware that these types of loans may limit where you can buy. If you’re planning to buy into a co-op, for example, you won’t be able to finance your purchase with a government-backed mortgage such as an FHA loan.

In addition to a decent credit score, you’ll generally need a debt-to-income ratio (DTI) below 50%. Your DTI is the percentage of your gross monthly income that you spend on debt payments. If you have a high DTI, you might want to consider paying down some debt before applying for a loan.

Your lender will have you provide tax documents and pay stubs to show that you have a steady source of income. They may also verify that you have the funds in your bank account for a down payment.

5. Enlist The Help Of Real Estate Professionals

A good real estate agent will guide you through the home buying process and help you have an overall smoother experience as you purchase your new home. They’ll find houses for you to tour, help you negotiate an offer and deal with any speed bumps that appear along the way.

While a real estate agent is sufficient in most states, it’s customary for buyers in New York to also have a lawyer representing them in the transaction. In the state of New York, only licensed attorneys can create a purchase contract, and you need to have an attorney present at closing. Your lawyer will also go over the details of the transaction, the property you’re buying and the building you’re buying into. They can also warn you of any potential red flags.

6. Select A Neighborhood

New York City is a big place, so you’ll want to narrow down your search to just a few areas. When choosing where you’d like to live, consider your commute to work, the amenities you prefer in a neighborhood (restaurants, stores, parks, nearby subway stops, etc.), noise level, safety and any other features you need to enjoy and feel good in your home.

Utilize the Housing Market Reports from Rocket HomesSM for your prospective neighborhoods to better understand how the market is faring in those particular areas.

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The Top 3 Boroughs For Real Estate In NYC

Which of New York City’s five boroughs is the best to buy a house in?

While Manhattan and Brooklyn get a lot of love, we’re going to focus on NYC’s other boroughs – all of which have healthy housing markets, a little more affordability and plenty to offer in the areas of culture, amenities and recreation.

Queens

RHB Assets From IGX: A street view of a neighborhood in Queens, New York.

Queens is an incredibly diverse borough with some of the best food offerings in the city. Thanks to this and its wide range of living options – whether you’re looking for a hipster enclave, a more classic, bustling urban vibe or neighborhoods that feel practically suburban – Queens is a great place for buyers looking to put down roots in the city.

The median sales price for a home in Queens was $692,691 as of May 1, 2023. This borough remains more affordable than Manhattan, which was NYC’s most expensive borough with a median sales price of $1,357,335 as of the beginning of May.

Queens Real Estate Listings

Queens Trend Report

The Bronx

RHB Assets From IGX: The Bronx, New York City with a mix of residential and commercial buildings

The Bronx, touted as the birthplace of hip-hop, is a diverse and culturally rich place to live. This borough offers many safe and affordable neighborhoods for home buyers looking for a spot with lots of green spaces (including the famous New York Botanical Garden) and plenty to do, like visiting the world-famous Bronx Zoo.

As of the beginning of May 2023, the Bronx was a buyer’s market with a median sales price of $575,086.

Bronx Real Estate Listings

Bronx Trend Report

Staten Island

Houses on Staten Island, New York.

If you prefer the space and peace of suburban living while still having access to all the amenities of city life, Staten Island is the place to be. It’s affordable, spacious and just a ferry ride away from Manhattan.

The Staten Island housing market is fairly balanced, as the median listing price was $659,095 as of the beginning of May 2023.

Staten Island Real Estate Listings

Staten Island Trend Report

First-Time Home Buyer In NYC

If you’re a first-time home buyer or it’s just your first time buying in New York City, working with a real estate agent you trust is vital. They’ll be your guide and help you understand the process and what you need to do to have a successful home buying experience.

Although homeownership can be financially beneficial in the long term and can even be a good investment in some cases, a lot of first-time homeowners in New York City are surprised by just how expensive owning a home can be. Before starting the process, do your homework and make sure you fully understand the costs of buying a home and being a homeowner.

Consider your upfront costs, such as your down payment and closing costs, as well as all the ongoing expenses that come with homeownership, including maintenance and repair costs, HOA fees, insurance and property taxes.

Buying A Home In NYC With Low Income

Due to high prices and large down payment requirements, homeownership can be challenging for many New Yorkers to attain.

However, the city does have some affordable housing stock and assistance programs available to those with lower incomes and less buying power. Up next is a quick rundown of how a few of these programs work.

HomeFirst Down Payment Assistance Program

First-time home buyers living in New York City may be eligible for up to $40,000 in down payment assistance.

HomeFirst assistance comes in the form of a forgivable, 0% interest rate loan. To have your loan forgiven, meaning you don’t need to repay it, your home will need to be your primary residence for at least 10 years.

To qualify, your household can’t earn more than 80% of the area’s median income.

You can learn more about the specifics of the HomeFirst program on the NYC Housing Preservation & Development (HPD) website.

Income-Restricted Housing

If your income prevents you from being able to afford a home in NYC, you might want to consider income-restricted housing.

HPD oversees a portion of the city’s affordable housing stock known as Housing Development Fund Corporation cooperatives (HDFC co-ops). These co-ops are income-restricted, meaning you won’t be able to buy the HDFC co-op unit if you earn more than the income cap.

Typically, households can’t earn more than 165% of the area median income to qualify, but some buildings may have more stringent income requirements.

You can find available HDFC co-ops through your real estate agent or by searching online.

Affordable Housing Lotteries

The city also runs affordable housing lotteries for both renters and buyers who meet income thresholds.

You can sign up for current affordable housing on the NYC Housing Connect portal. Some HDFC co-ops are available as lotteries through this portal.

The Bottom Line: NYC Is A Great Place To Live If You Can Afford It

Buying real estate in New York City can be a great investment, but it’s not something that everybody can afford.

If you’re struggling to find affordable housing in NYC, it might be a good idea to try your luck with one of the city’s housing lotteries or search for an HDFC co-op.

Ready to get started on your home buying journey? Consider working with a Rocket Homes Verified Partner Agent. We’ll match you with a local expert who’s the perfect fit for you.

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Molly Grace

Molly Grace is a staff writer focusing on mortgages, personal finance and homeownership. She has a B.A. in journalism from Indiana University. You can follow her on Twitter @themollygrace.