SONYMA DPAL: Down Payment Assistance Loan Guide

A plain-English explanation of New York's primary down payment assistance program for first-time homebuyers.

This guide is for informational purposes only. Program details change. This site is not affiliated with SONYMA, HCR, or any lender. Always verify current program terms at hcr.ny.gov and with a SONYMA-participating lender.

What Is the SONYMA DPAL?

The Down Payment Assistance Loan (DPAL) is a second mortgage offered alongside a SONYMA first mortgage. It is designed to help first-time buyers cover the down payment and/or closing costs when they don't have enough savings.

Key point: The DPAL is a loan, not a grant. It must be repaid — but under specific conditions, it can be forgiven after 10 years if you remain in the home and do not refinance your SONYMA first mortgage.

How Much Can You Receive?

As of recent program guidelines, the DPAL provides:

  • Up to 3% of the purchase price of the home
  • Minimum loan amount: typically $3,000
  • Maximum may be capped based on program limits — verify with your lender

Interest Rate

The DPAL typically carries a 0% interest rate — meaning no interest accrues during the loan term, and your monthly payment on the second mortgage is $0 as long as you comply with program requirements.

Forgiveness — How It Works

The DPAL can be forgiven (you don't have to repay it) if you meet specific conditions:

  • You remain in the home as your primary residence for 10 years
  • You do not refinance your SONYMA first mortgage into a non-SONYMA loan during that period
  • You do not sell the property before the 10-year period ends

Recapture risk: If you sell, refinance out of SONYMA, or stop using the home as your primary residence within 10 years, the outstanding DPAL balance becomes due. Understand this obligation before accepting the loan.

What Happens After 10 Years?

If you have met all program conditions for 10 consecutive years, SONYMA forgives the remaining DPAL balance. You will receive documentation confirming the loan has been satisfied.

Eligibility Requirements

The DPAL is only available when you also take out a SONYMA first mortgage. To qualify, you generally must:

  • Meet the first-time homebuyer definition (not owned a primary residence in the past 3 years — with exceptions for certain target areas and veterans)
  • Meet SONYMA income limits for your county (these vary by area)
  • Purchase a home that does not exceed SONYMA purchase price limits for your county
  • Occupy the home as your primary residence
  • Meet credit and debt-to-income requirements set by SONYMA and your lender
  • Complete a homebuyer education course approved by SONYMA

Target areas: In certain economically distressed census tracts, income and purchase price limits may be higher, and the 3-year look-back rule may not apply. Ask your lender if the property you're considering is in a target area.

How to Apply

You cannot apply for the DPAL directly through SONYMA. Instead, the process works through approved lenders:

  1. Find a SONYMA-participating lender (a list is available at hcr.ny.gov)
  2. Tell the lender you want to apply for a SONYMA mortgage with DPAL
  3. Complete the lender's application and provide required documentation
  4. Complete a SONYMA-approved homebuyer education course (often available online)
  5. The lender submits your file to SONYMA for approval

DPAL vs. Other Assistance Programs

The DPAL is not the only option. New York also has:

  • County HOME programs — many counties administer HUD HOME funds as grants or deferred loans, sometimes forgivable faster than DPAL
  • Community Development Financial Institutions (CDFIs) — local nonprofits may offer additional closing cost assistance
  • Employer-Assisted Housing programs — some employers offer grants or matching assistance
  • State of New York Mortgage Agency Achieving the Dream — a lower-income SONYMA program with deeper subsidies

Multiple programs can sometimes be stacked — ask your lender and a HUD-approved housing counselor what combinations are available in your county.

Common Questions

Can I use the DPAL for closing costs only?

Yes. The DPAL can be applied to closing costs, down payment, or a combination — as long as the total loan doesn't exceed program limits. This is particularly useful when a seller is covering your down payment through a negotiated price, but you still need help with closing costs.

Does the DPAL appear on my credit report?

Yes. The DPAL is a recorded second mortgage lien on your property. It will appear on title searches and may appear on your credit report.

What if I want to refinance?

If you want to refinance into another SONYMA loan, the DPAL can typically be subordinated (kept in place as a second mortgage). If you refinance into a non-SONYMA loan before the 10-year forgiveness period ends, the DPAL balance will generally become due. Always consult your SONYMA lender before refinancing.

Get the Free NY First-Time Homebuyer Guide

Enter your information to receive the guide and, if you choose, request a connection with a local real estate professional who works with first-time buyers.

Information submitted through this form is used to deliver the guide and homebuyer resources. Your information is only shared with a participating local real estate professional if you check both the contact and consent boxes above. Do not submit Social Security numbers, bank account information, birth dates, or other sensitive financial information.

Sponsored placement. Paid advertising only. Not a referral, endorsement, recommendation, or guarantee of services. Users should independently evaluate any real estate professional before choosing to work with them.