Looking to secure a Long Island mortgage? Discover everything you need to know when it comes to home loans in Long Island.
With a population of 8 million – 40% of New York state’s entire population, Long Island is not only the most populous island in any US state, but also home to a culturally and ethnically diverse demographic.
Long Island is also known for its high property values and unique local regulations – which means that getting a good understanding of the real estate market is essential for securing a Long Island mortgage.
From loan options and rates to tips for finding the best lender – discover everything you need to know in this comprehensive guide by Jet Direct Mortgage.
The Long Island Housing Market: Unique Characteristics
So, what are the unique characteristics that define the Long Island housing market? This expansive, densely populated area has some of the highest home prices in New York, averaging $715K in 2024 – up 10.0% since last year.
In comparison, the median sales price of houses sold nationwide is $412k.
For you as a borrower, this means that you may need a larger Long Island mortgage, in some cases a jumbo loan, a type of loan designed specifically for properties that exceed the financing limits set by the FHFA.
In addition, property taxes in this area are among the highest in the US, and lenders often factor them into loan affordability. So, if you are looking to secure a Long Island mortgage, you will need to account for substantial tax costs in your calculations.
Another key characteristic is Long Island’s proximity to NYC – this factor influences the mortgage market with higher demand, especially for those commuting to the city. This can affect pricing, loan options, and availability.
What Types of Mortgages Can I Apply For?
Before purchasing your dream home, it’s important to get a good understanding of the different types of mortgages that you can opt for.
If you are not sure which one to choose, Jet Direct Mortgage has all the necessary expertise to help you find the loan that is perfect for you and your family. Let’s take a look at the different options that you have at your disposal:
Conventional Home Loans
Conventional home loans are the most standard type of mortgage that you can apply for, as they are not insured or backed up in any way by a government agency.
Lenders will typically require a credit score of 620 or higher for this type of loan – however, if you are looking to secure a Long Island mortgage, keep in mind that a better credit score – above 700, can significantly reduce the interest rate and the overall cost of the loan.
As opposed to government-backed loans, conventional home loans are more flexible when it comes to loan amounts, and impose less restrictions during the approval process. Mortgage Insurance is not required in most cases.
Jumbo Home Loans
Considering that a lot of properties on Long Island are high-value, it is likely that you may need a jumbo loan in order to secure a Long Island mortgage. This type of loan is necessary when home prices exceed the conforming loan limits set by the FHFA.
In 2024, for a single family home, the limits in New York range from a standard limit of $766,550 up to a high cost limit of $1,149,825. Many Long Island properties, especially in affluent neighborhoods like the Hamptons or North Shore, often exceed this limit.
As opposed to conventional loans, jumbo loans usually have higher credit score requirements – a minimum of 700 to 720, as well as higher income requirements since you are borrowing a larger amount of money.
They also require cash reserves enough to cover 6 to 12 months of mortgage payments, as well as a DTI below 43%.
FHA Home Loans
If you are in the market for getting a Long Island mortgage, another option you have at your disposal are FHA home loans – a loan type ensured by the Federal Housing Administration.
In addition, you can get away with a lower credit score compared with conventional or jumbo loans – between 500 and 580. You will need to have a DTI below 50%, and you will be required to pay a Mortgage Insurance Premium.
VA Home Loans
If you are an active duty US military service member, veteran, or an eligible surviving spouse, you can also opt for a VA home loan when applying for a Long Island mortgage. This loan is available through a program developed by the Department of Veteran Affairs.
Key benefits of VA loans include competitive interest rates, no private mortgage insurance (PMI), and more lenient credit and income requirements compared to conventional loans.
This program is intended to make homeownership more accessible and affordable for those who have served in the military.
What Are The Long Island Mortgage Requirements?
What requirements do you have to meet if you are looking to secure a Long Island mortgage? Since there are different types of home loans available to you as a borrower, the answer will largely depend on the mortgage. For example:
- Credit Score – A minimum of 620 for conventional loans, 580 for FHA loans, 620 for VA loans, and above 700 for Jumbo Loans.
- Debt-to-Income Ratio – Depending on your creditworthiness and the type of mortgage, you will have to show a DTI of 43% or less, or as low as 36%.
- Income Verification – You will also have to show proof of stable income, but additional documentation may be required for jumbo loans.
- Employment History – A long and stable employment history is a must – lenders prefer to see at least 2 years of consistent employment in the same field.
- Loan Limits – As we mentioned earlier, Long Island often exceeds conforming loan limits, which requires jumbo loans – this type of loan has stricter requirements.
- Property Type – If you are applying for a Long Island mortgage, keep in mind that there might be specific requirements if you are buying a single-family home, a co-op, or a condo.
- Appraisal – The property must be appraised to ensure it is worth the purchase price. For jumbo loans, two appraisals may be required to confirm the home’s value.
- Mortgage Insurance – Mortgage insurance is required in some cases and for some types of loans, but it’s not obligatory for others – such as VA loans.
In Long Island’s competitive real estate market, getting pre-approved is critical. Pre-approval involves a lender reviewing your financial documents and providing a conditional loan amount, showing sellers you are a serious buyer.
Tips For Choosing The Best Long Island Mortgage Lender
Congratulations – you are one step closer to securing a Long Island mortgage, and purchasing your dream home! Now, it’s time to choose a the best lender – here are our tips:
- Choose a lender with a strong presence in Long Island, such as Jet Direct Mortgage
- Make sure that the lender offers a variety of loan products
- Opt for an online lender as they have faster and more streamlined processes
- Get pre-approved early to get an advantage when making offers on homes
- Research online reviews and ask for recommendations from friends
- Choose a lender that is responsive, clear, and proactive in answering questions
- Inquire about first-time homebuyer programs
- Pay close attention to customer service – communication is key
Are you ready to secure your Long Island mortgage? Apply now!
FAQ
Do I need a jumbo loan for my home purchase in Long Island?
Whether you need a jumbo loan for a Long Island mortgage depends on the price of the property. If the home’s price exceeds conforming limits, a jumbo loan is required.
Long Island’s high property values, especially in areas like Nassau County and the Hamptons, often necessitate jumbo loans due to the region’s expensive real estate market.
What are the closing costs, and how much should I budget for them?
Closing costs are the fees and expenses required to finalize a home purchase. In Long Island, they typically range from 2% to 5% of the home’s purchase price. These costs include loan origination fees, appraisal fees, title insurance, attorney fees, and taxes.
For a $500,000 home, you should budget between $10,000 to $25,000 for closing costs, depending on the lender and specific property.
How long does the mortgage approval process take?
The mortgage approval process typically takes 30 to 45 days, though it can vary depending on factors like the lender, the complexity of your financial situation, and the local housing market.
Pre-approval can speed up the process, but delays may occur due to appraisals, underwriting, or document reviews. In competitive markets like Long Island, timely communication with your lender is key to avoiding delays.
What’s the difference between a co-op mortgage and a traditional mortgage?
A co-op mortgage differs from a traditional mortgage in that you’re not buying the property itself, but shares in a cooperative corporation that owns the building. Instead of owning a unit, you own a share and a proprietary lease to live there.
Co-op mortgages require board approval and typically have stricter financial requirements, while traditional mortgages apply to purchasing real property like a home or condo.
How are property taxes factored into my mortgage payments?
Property taxes are typically included in your mortgage payments through an escrow account. Each month, a portion of your mortgage payment is set aside by the lender to cover annual property taxes and homeowners insurance. When taxes are due, the lender pays them on your behalf from the escrow account. This ensures taxes are paid on time and spreads the cost over monthly payments.
Experienced Chief Operating Officer with a 20 + year demonstrated history of working in the banking industry. Skilled in all aspects of the residential mortgage market . Strong business development professional with a Bachelor of Science (BS) focused in Business Administration and Management, from St. Joseph College. A direct endorsement underwriter and a licensed Mortgage Loan Originator.
