The fine print in a recent update to Southold Town’s proposed down payment assistance program for first-time homebuyers has been the talk of the town this week, after another local media outlet reported a new cap on the purchase price of the homes would be $1.9 million — up from an initial proposal of $750,000.
But that’s not what the town is actually doing, says Southold Community Development Project Coordinator Andrea Sullivan, who is charged with implementing the town’s Community Housing Plan.
Pictured Above: Town Planning Director Heather Lanza, Assistant Town Attorney Julie McGivney, Planner Mara Cerezo and Community Development Project Coordinator Andrea Sullivan at the June 16 work session, when the down payment assistance program was first discussed. It received generally positive feedback when we first reported on it at that time.
Ms. Sullivan presented the new eligibility guidelines for the plan to the Southold Town Board at its July 28 work session.
The guidelines include a table showing 150 percent of the State of New York Mortgage Agency (SONYMA) Maximum Purchase Price Limit for Suffolk County, which is $1,960,455 — the maximum purchase price allowed for these types of programs under New York Town Law.
While that number is listed in the program guidelines, Ms. Sullivan said this week, the purchase price would actually be limited by the mortgages that people can qualify for if they make under the income limits for the program.
The maximum income for one or two people applying for the program would be $197,160, while the maximum income for three or more people would be $230,000. Those numbers are also based on guidelines established by SONYMA for Suffolk County.
“If their debt-to-income ratio is low and everything is perfect in their application, we’re seeing the highest income realistically would equate to a $950,000 house,” said Ms. Sullivan. “We can’t subsidize a $1.9 million house unless the people are income eligible. This isn’t the number to focus on. It’s income eligibility per household.”
She added that she had explained that distinction to a reporter for The Suffolk Times before an article highlighting the $1.9 million number appeared in that newspaper last week.
She added that “everyone who’s managing Community Housing Funds on the East End” says the $1.9 million cap “doesn’t make any sense,” and does not correlate to the maximum income guidelines from the same agency. She added that, while the town’s Community Housing Advisory Board (CHAB) had approved the program guidelines, CHAB members understood that the $1.9 million number was unrealistic.
“They all reviewed the numbers prior to making it public, and they concluded it’s probably not going to happen,” she said of the $1.9 million purchase price. “They felt the income eligibility parameter was sufficient” to control the price of the house participants could buy.
Ms. Sullivan first presented the program to the Town Board back on June 16, at which time her office was considering setting a purchase price cap of $750,000, because that is the threshold at which first-time homebuyers would not pay transfer taxes for the Community Housing Fund and the the Community Preservation Fund at closing.
The Community Housing Fund receives its revenue through a .5 percent real estate transfer tax paid by buyers of properties above a certain price threshold upon closing, meaning at the higher purchase prices, loan recipients would both be paying into the CHF fund and alsoreceiving funding from it.
But few houses in Southold Town are priced below $750,000, and Ms. Sullivan said she and Assistant Town Attorney Julie McGivney and members of the CHAB agreed that setting the $750,000 just to avoid payment of the transfer taxes overcomplicated the program. The town can also raise the exemption limit for transfer taxes, an option it is exploring.
The town had initially considered creating a pilot program providing $40,000 first-time homebuyer loans to 10 people, but Ms. Sullivan had pitched the higher level of assistance because homeowners who put 20 percent down avoid paying private mortgage insurance (PMI), lessening their monthly carrying costs for years after they purchase their homes.
“The monthly savings is about $1,217,” said Ms. Sullivan at the June 16 work session, referring to the removal of the PMI cost. “Not only are we helping them initially get into homes, but we’re creating long-term affordability.”
The program would require prospective homeowners to put down 2% at closing, while the town would provide 18% of the purchase price through a zero-percent loan repaid upon sale of the property or a cash-out refinance. The income guidelines have not changed in the latest draft.
Applicants must also be a “Southold Town Resident,” defined as someone who “is currently a resident of the town or a nonresident who has been a resident within the past five years.”
Under the $750,000 draft, the maximum loan amount would be $135,000, but with that cap removed, participants buying a potential $950,000 home could receive up to $171,000 through the program.
Ms. Sullivan said she’s hoping the program will be adopted via a Town Board resolution this fall, and a Notice of Funding Availability (NOFA) will be issued in January of 2027, enabling residents to apply.
Town Supervisor Al Krupski suggested at the July 28 work session that the town allocate $1.5 million to the pilot program in 2027, which would amount to about ten loans.
Community Housing in Context
The town currently has just over $8 million in its Community Housing Fund, said Ms. Sullivan, up from $6.7 million reported earlier this year by State Assemblyman Tommy John Schiavoni.
South Fork towns that enacted CHF programs in 2023, at the same time as Southold, have been putting the money to use on a wide array of projects, but Southold has yet to spend any money, as it develops guidelines for its programs.
The down payment assistance program is just one facet of the town’s 2023 Community Housing Plan, which governs the spending of CHF money.
Ms. Sullivan, who was hired in 2025 to administer the plan after a lengthy search for candidates, is also working on a framework for subsidies for developers who want to build affordable housing in Southold.
While earlier this spring she had told the Town Board she expected to have a Notice of Funding Availability for that program by the summer, the town’s Planning Department has since decided to prioritize incorporating the Community Housing Plan into its Zoning Update before making the NOFA available for developer subsidies.
Ms. Sullivan said Ms. McGiveny, the Assistant Town Attorney, is expected to brief the Town Board on the progress toward those code updates and the developer subsidies at its next work session Aug. 11.
Pro-Housing Pledge?
After voting to send a letter to New York State earlier this spring pledging to work to become a Pro-Housing Community, Councilwoman Alexa Suess asked the Town Board at its July 28 work session to finally send the letter. Other board members agreed.
They had been cautious about taking the pledge earlier this year, as Governor Kathy Hochul made major changes to the State Environmental Quality Review Act’s guidelines for review of housing developments.
Board members were also concerned that the grants offered through the program are for projects of a much larger scale that would be appropriate in a small rural town.
Ms. Suess says the town’s letter reflects board members’ concerns about the program.
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