There is no first-time home buyer NY tax credit in effect right now. A state bill to create one has been introduced but remains in committee, so the tax benefit most New York first-time buyers can actually claim is a federal one: the Mortgage Credit Certificate, administered in New York by the State of New York Mortgage Agency (SONYMA). Alongside it, the state, New York City, and the Federal Home Loan Bank of New York run mortgage, down-payment, and grant programs that put real money toward a first purchase. Here is what exists today, what is only proposed, and how to use what you can.
The Tax Credit You Can Actually Claim: The Mortgage Credit Certificate
A Mortgage Credit Certificate (MCC) converts part of your annual mortgage interest into a dollar-for-dollar federal income tax credit, every year, for the life of the loan, as long as the home stays your primary residence.1NCSHA. Mortgage Credit Certificate Program Q&A
In New York, the credit equals 20% of the mortgage interest you pay each year, capped at $2,000. The remaining 80% of interest can still be taken as an itemized deduction. Unused credit carries forward up to three years. You claim it by filing IRS Form 8396 with your annual return.2BSK. Additional Tax Benefit for First-Time Low-Moderate Income Homebuyers in New York
Two things to know before you close:
- You must apply through a participating lender when you submit your mortgage application. An MCC cannot be added after closing.
- There is a one-time fee of $250 on loans up to $100,000, or $500 above that amount.
Income and purchase price limits vary by county. In downstate and Long Island areas, income limits run roughly $92,000 to $107,500; in upstate regions like Syracuse, Rochester, and Buffalo, they sit around $67,900 for smaller households. Your lender will apply the figures that match your county.2BSK. Additional Tax Benefit for First-Time Low-Moderate Income Homebuyers in New York
One caveat worth planning around: if you sell the home within nine years, you may owe a federal recapture tax. SONYMA has historically agreed to reimburse homeowners for that cost.
The State Credit That’s Been Proposed But Not Passed
The First-Time Homebuyer Tax Credit Act, carried as S850 in the Senate and A07525 in the Assembly, would create a state personal income tax credit for first-time buyers tied to the local property taxes they pay on a primary residence.3New York State Senate. S850 – First-Time Homebuyer Tax Credit Act4NY State Assembly. A07525 – First-Time Homebuyer Tax Credit Act A similar version introduced in the 2023-2024 session did not advance.
Under the proposal, the credit would run five years and shrink each year: 50% of local property taxes in year one, then 40%, 30%, 20%, and 10%. Any amount exceeding your state income tax liability would be refunded. The bill sets no income cap and no purchase-price cap. Eligibility turns on not having owned a primary residence in the three years before purchase, not being married to someone who owned one in that window, and not owning a vacation or investment property.3New York State Senate. S850 – First-Time Homebuyer Tax Credit Act
The Senate Budget and Revenue Committee voted 4-3 to report the bill in May 2025. As of early 2026 it remains in committee in both chambers and has not been enacted.3New York State Senate. S850 – First-Time Homebuyer Tax Credit Act
The Property Tax Benefit Every New Owner Should Register For
STAR (School Tax Relief) is open to all New York homeowners on a primary residence, not just first-time buyers, but new owners have to take a step to receive it. Basic STAR exempts $30,000 of a home’s full value from school taxes for households with combined incomes of $500,000 or less. Enhanced STAR raises the exemption to $65,500 for seniors 65 and older who meet lower income thresholds.5NY State Tax Department. STAR Program
If you bought after 2015, you don’t get STAR as a line on your tax bill. You get it as a personal income tax credit, paid by check or direct deposit from the state Tax Department, and you need to register with the Tax Department to start receiving it.5NY State Tax Department. STAR Program
Mortgage and Down-Payment Help That Works Like a Tax Break
Several programs don’t appear on your tax return but reduce what a first purchase actually costs. They matter if a tax credit is why you were looking.
SONYMA Mortgages and the Down Payment Assistance Loan
SONYMA’s Achieving the Dream mortgage is a 30-year fixed loan at the agency’s lowest rates, with no points and no prepayment penalty. The minimum down payment is 3%, and you must put in at least 1% from your own funds (3% for co-ops). You can layer other grants and subsidies on top with no limit. Eligible properties include single-family homes, condos, co-ops, and two-to-four-family homes meeting age and use rules, and buyers must complete a homebuyer education course.6NY HCR. Achieving the Dream Program Income and purchase price limits vary by county; your lender will confirm the figures for yours.7NY HCR. Achieving the Dream Income and Purchase Price Limits
The Down Payment Assistance Loan (DPAL) can be attached to a SONYMA mortgage. It carries 0% interest, requires no monthly payments, and is fully forgiven after 10 years. The loan is the greater of $3,000 or 3% of the purchase price, up to $15,000. Sell or refinance before 10 years and partial repayment kicks in, but the balance owed drops by 1/120 each month, and any shortfall from sale proceeds is forgiven. The trade-off: a DPAL raises your mortgage rate by 0.40%, except in SONYMA’s Homes for Veterans, Graduate to Homeownership, and ENERGY STAR tracks, where the surcharge is waived.8NY HCR. Down Payment Assistance Loan
You don’t apply to SONYMA directly. Work through a participating lender; contact information is available through the agency or at nyhomes.org.9NY HCR. SONYMA Programs
SONYMA generally requires buyers to be first-time homeowners, meaning no primary residence ownership in the prior three years. Veterans with an other-than-dishonorable discharge are exempt, as are their spouses and co-borrowers. Through Homes for Veterans, eligible veterans get rates 0.375% to 0.40% below standard SONYMA rates and the same DPAL terms with no surcharge.10NY HCR. Homes for Veterans Program
NYC HomeFirst
If you’re buying in one of the five boroughs, the HomeFirst Down Payment Assistance Program, run by the city’s Department of Housing Preservation and Development, provides forgivable loans up to $100,000 toward a down payment or closing costs. The loan equals 20% of the purchase price or $100,000, whichever is less.11NYC HPD. HomeFirst Down Payment Assistance Program
You must be a first-time owner (no ownership in the prior three years), buy a one-to-four-family home, condo, or co-op in NYC for owner-occupancy, complete an HPD-approved homebuyer education course, and contribute at least 3% of the price from your own funds. Household income must sit at or below 120% of Area Median Income: $136,080 for a single person, $194,400 for a four-person household.11NYC HPD. HomeFirst Down Payment Assistance Program
The loan is fully forgiven if you live in the home long enough: 10 years for loans of $40,000 or less, 15 years for larger amounts. City-funded loans carry a 15-year requirement regardless of size.12ACCESS NYC. HomeFirst Down Payment Assistance
Homebuyer Dream Program Grants
The Federal Home Loan Bank of New York runs the Homebuyer Dream Program Suite, which gives outright grants (not loans) toward down payments and closing costs. You apply through a FHLBNY member bank or financial institution.13FHLBNY. Homebuyer Dream Program Suite
- HDP: up to $30,000 for first-time buyers at or below 80% of AMI.
- HDP Plus: up to $30,000 for first-time buyers above 80% but not above 120% of AMI.
- HDP Wealth Builder: up to $30,000 for first-time buyers at or below 120% AMI who live in a majority-minority census tract or are first-generation homebuyers. Can be combined with HDP or HDP Plus for up to $60,000.
The 2026 grant rounds are open, with the initial allotment period ending August 28 and rounds closing November 27 or when funds run out.13FHLBNY. Homebuyer Dream Program Suite
The Mortgage Recording Tax: No Exemption Yet
New York imposes a mortgage recording tax that most states don’t. Rates run roughly 1% in most municipalities, 1.3% in Rockland and Westchester counties, and 2.05% to 2.175% in New York City. On a $578,000 mortgage at 1%, that’s about $5,780 at closing.14New York State Senate. Harckham-Rosenthal Bill Would Trim Taxes for First-Time Homebuyers
S.4488/A.5350 would exempt first-time buyers from this tax. As of early 2026 it has been introduced but not enacted, and there is no existing exemption or reduction for first-time buyers under current law. Budget for the tax as a closing cost.14New York State Senate. Harckham-Rosenthal Bill Would Trim Taxes for First-Time Homebuyers
What’s Happening at the Federal Level
There is no active federal first-time homebuyer tax credit. The last one expired in 2010. Two bills are pending in the 119th Congress (2025-2026):
The First-Time Homebuyer Tax Credit Act of 2025, reintroduced in July 2025, would create a refundable federal credit worth up to 10% of a home’s purchase price, capped at $15,000. It would phase out for buyers earning above 150% of area median income and for homes priced above 110% of the area median price. Only federally backed mortgages would qualify, and buyers could receive the credit at closing through their lender rather than waiting for tax time.15U.S. Senate. Whitehouse, Heinrich Colleagues Reintroduce Bill to Make Homeownership More Accessible16Congress.gov. S.2402 – First-Time Homebuyer Tax Credit Act of 2025
The Bipartisan American Homeownership Opportunity Act of 2025, introduced in May 2025 as H.R. 3475, would instead give a refundable credit equal to the buyer’s actual down payment, up to $50,000. It phases out at $300,000 for joint filers, $225,000 for heads of household, and $150,000 for single filers. The credit must be repaid if the home is sold or stops being the buyer’s principal residence within five years.17Congress.gov. H.R.3475 – Bipartisan American Homeownership Opportunity Act of 2025
Both bills are in committee. Neither has been scheduled for a vote.
A Note for Anyone Still Repaying the 2008 Federal Credit
The 2008 version of the federal first-time homebuyer credit was structured as an interest-free loan, repaid over 15 years at one-fifteenth per year starting with 2010 tax returns. That schedule ended with 2024 returns, and the IRS has announced that Form 5405, used to report the repayment, will no longer be revised.18IRS. About Form 540519Every CRS Report. First-Time Homebuyer Tax Credit20IRS. Instructions for Form 5405