What Is a Purchase CEMA in New York — and How Much Can It Save You?

New York Purchase CEMA: At a Glance

APPLIES TO

New York condo and 1–3-family home purchases where the seller has an existing mortgage. CEMAs may also be available on refinances. Standard co-op purchases are excluded.

HOW IT SAVES

A Purchase CEMA may reduce mortgage recording tax by limiting the newly taxable amount to the “gap” between the seller’s existing mortgage balance and the buyer’s new loan amount.

NYC MRT RATE (BUYER-PAID PORTION)

As of Q2 2026, the buyer-paid NYC MRT portion is commonly quoted at 1.8% on loans below $500,000 and 1.925% on loans of $500,000 or more. The combined city/state total is higher, so verify current figures with title counsel or attorney .

REQUIRES

The seller’s existing lender must agree to assign the seller’s mortgage. The buyer can still choose their own CEMA-compatible lender; it does not have to be the seller’s bank. Assignment fees are commonly $1,000–$1,500 before added title or legal costs.

TIMING

Start early. CEMA coordination often takes 30–90 days depending on the seller’s lender and cannot be assembled at the closing table.

NEXT STEP

Estimate the gap, ask whether the seller’s lender will assign the mortgage, and compare projected savings against CEMA-related fees. Start with the New York CEMA savings calculator below.

New York has one of the highest mortgage recording tax rates in the country. In the five boroughs of New York City — Manhattan, Brooklyn, Queens, the Bronx, and Staten Island — buyers typically pay 1.8% to 1.925% of the loan amount on their portion of the tax at closing. On a $900,000 mortgage, that’s roughly $17,000. Most buyers see that number on their closing disclosure and assume it’s fixed. It isn’t always.

A Purchase CEMA is a New York transaction structure that can reduce that tax bill, sometimes significantly. The name sounds complicated — Consolidation, Extension, and Modification Agreement — but the idea is straightforward: instead of recording a brand-new mortgage for the full loan amount, the transaction consolidates the seller’s existing mortgage balance with a smaller “gap loan” representing only the new money. Mortgage recording tax is assessed on the gap only, not the full amount.

This is not a loophole. It is an established structure under New York law. But it requires early coordination, the right lender, and a broker or attorney who identifies the opportunity before the deal is too far along to act on it. CEMAs are also available on refinances for homeowners who already own real property in New York — the mechanics are similar, and Gallagher Team can advise on eligibility for both scenarios.

How a Purchase CEMA Works

CEMA stands for Consolidation, Extension, and Modification Agreement. Let’s translate that into plain English.
When you buy a home in New York with a mortgage, the lender records that mortgage against the property. The state charges a tax — mortgage recording tax — based on the size of the loan being recorded. In a standard transaction, the full new loan amount is recorded, and the full tax is owed.

In a Purchase CEMA, something different happens. The buyer’s new lender takes an assignment of — meaning, legally acquires — the seller’s existing mortgage. The parties then record a CEMA that consolidates the old mortgage balance with a smaller gap note covering only the new money being added. The assignment and consolidation still require recording and title work. The tax benefit comes from preserving eligible previously taxed mortgage debt, so only qualifying new money is newly taxable.

The result: the taxable amount can be substantially lower than the full loan, and the buyer’s closing costs reflect that reduction.

CO-OPS ARE EXCLUDED — IMPORTANT FOR NYC BUYERS

This guide and calculator focus on Purchase CEMAs for condos and 1–3-family homes, which involve real-property mortgages. Co-op apartments are different. Co-op buyers receive shares in a corporation and a proprietary lease, not a mortgage on real property. Because no real property mortgage is recorded in a co-op purchase, there is no mortgage recording tax — and therefore no CEMA to structure.

If you are buying a co-op, you do not pay mortgage recording tax and a CEMA does not apply. If you are buying a condo or a 1–3 family home, a CEMA may be available if the seller has an existing mortgage.

For a share-loan purchase, see how NYC co-op financing works, including board approval and building review. Condo buyers should separately review the Fannie Mae condo-rule changes; a potential tax saving does not establish project eligibility.

How New York Mortgage Recording Tax Works

New York mortgage recording tax, or MRT, is charged when a mortgage is recorded against New York real property. The rate can vary by location, loan size, and local rules, so buyers should verify current figures with their title company, attorney, and official resources such as the New York State mortgage recording tax guidance.

In New York City, the buyer-paid portion of the combined city/state MRT is commonly quoted at 1.8% on loans below $500,000 and 1.925% on loans of $500,000 or more, as of Q2 2026. The combined total is higher, and the split among buyer, seller, and lender can depend on local custom and the purchase contract. For NYC properties, your title company or attorney can confirm the calculation through the NYC ACRIS tax calculator.

Outside New York City, mortgage recording tax rates differ by county. That is why the same loan amount can produce a different recording-tax result depending on the property location.

A Purchase CEMA may lower the buyer’s taxable recording amount when the seller’s existing mortgage can be assigned. Instead of recording the full new mortgage, the buyer may pay MRT only on the “gap” between the seller’s existing balance and the buyer’s new loan.

For example, on a $1,000,000 mortgage in New York City, the buyer-paid MRT at 1.925% is about $19,250. On a $1,500,000 mortgage, it approaches $28,875. If a Purchase CEMA leaves only a smaller gap to record, the buyer’s tax estimate may drop substantially before CEMA-related fees are deducted.

The Gap Calculation: Where the Savings Come From

The savings from a Purchase CEMA come from reducing the taxable mortgage amount. These examples use the 1.925% buyer-paid NYC MRT rate for loans of $500,000 or more. Actual savings vary based on loan amount, seller’s existing balance, property location, lender assignment fees, and additional title or legal costs. Use the calculator below as a starting point, then confirm final figures with your title company and attorney before deciding whether to proceed.

The same illustrative 1.925% rate is applied to the full loan and gap in each example, without tax reductions. The standard-closing comparison has no CEMA-specific fees; additional CEMA fees reduce the savings shown. These are mortgage recording tax comparisons, not seller transfer-tax estimates.

These figures are illustrative only and do not constitute a closing cost guarantee. CEMA transactions involve their own costs — commonly $1,000–$1,500 in lender assignment fees as of 2026, plus additional title work and legal fees — which reduce net savings. Your title company and attorney can calculate the actual savings for your specific transaction once you are in contract.

Run Your Own Numbers

The examples above are simplified illustrations. Use the calculator below to estimate potential savings by county, property type, seller loan balance, and new loan amount. Confirm final figures with your title company and attorney.

New York CEMA Savings Calculator

Assignment fees are only part of the cost. The assignment-fee figures discussed above do not include all additional title, recording, preparation and legal charges. The calculator’s $2,000–$4,000 default represents an editable example of total incremental CEMA fees, not a quote. Replace the low and high amounts with transaction-specific estimates, and check who will pay them.

Does the Seller’s Lender Have to Cooperate?

A Purchase CEMA requires an assignment acceptable to the existing mortgage holder, the new lender and title counsel. Do not assume a servicer will participate; counsel should review any applicable assignment rights and requirements. Some lenders participate routinely, some charge assignment fees, some take 60–90 days, and others decline entirely. That is why CEMA eligibility should be reviewed before or shortly after contract signing.

Some lenders — typically larger banks with established CEMA processing operations — participate routinely. Others participate but charge assignment fees. In 2026, assignment fees typically run in the $1,000–$1,500 range, though this varies by servicer and loan type. Some lenders decline to participate entirely, particularly certain servicers and portfolio lenders that do not assign mortgages as a matter of policy.

In many eligible residential transactions — especially one- to three-family homes and individual residential condos — the seller may also benefit through New York’s continuing lien deduction, which can reduce the seller’s transfer-tax calculation. In plain terms: the seller may pay less in transfer tax on their side of the deal because of the CEMA structure. This is often the negotiating point that motivates a seller to push their servicer to cooperate. Title counsel should confirm whether the continuing lien deduction applies in your specific transaction.

The lender’s identity, servicer, and internal processing time all matter. A cooperative lender with a fast turnaround creates no timeline disruption. A slow or uncooperative servicer can add 60 to 90 days to the transaction — or simply take the option off the table. Because participation and assignment requirements need confirmation, CEMA eligibility should be reviewed before or shortly after contract signing. If you are evaluating a New York purchase and want to know whether the structure is worth pursuing, you can request a consultation before the loan application and closing timeline are locked in.

COMMON MISCONCEPTION: YOU DO NOT HAVE TO USE THE SELLER’S LENDER

Many buyers — and some real estate agents — assume that a Purchase CEMA requires the buyer to get their new mortgage from the same bank that holds the seller’s existing loan. That is not correct.

The seller’s lender assigns their existing mortgage to the buyer’s new lender. The buyer chooses their own lender independently. The seller’s bank’s only role is to cooperate with the assignment — they are not originating or servicing the new loan. This means the buyer can shop freely for the best rate, program, and lender fit, and still use the CEMA structure if the seller’s servicer cooperates.

WHAT TO CONFIRM BEFORE STRUCTURING A CEMA

1. Who is the seller’s current lender or servicer?
2. Does that servicer participate in CEMA assignments — and on what timeline?
3. What is their assignment fee?
4. Has title counsel confirmed whether the continuing lien deduction applies on the seller’s side?

These questions determine whether the CEMA is viable — and whether it clears the cost-benefit threshold after all fees on both sides.

When to Start — and What a Broker Does Differently

A CEMA Cannot Be Put Together at the Closing Table

A Purchase CEMA requires coordination between the seller’s lender, the buyer’s new lender, and the title company — and it has to start early. The seller’s servicer must process and approve the mortgage assignment before the new loan can close. Depending on the servicer, that process takes 30 to 90 days. In some cases, it takes longer.

In practice, this means the conversation needs to happen immediately after the contract of sale is signed — or earlier if possible. Waiting until the loan is in underwriting, or until a closing date has been scheduled, is almost always too late to complete the assignment without causing a delay.

What a Broker Does That a Retail Bank Typically Won’t

A broker is not limited to one lender’s loan menu and can compare multiple options before recommending a path. In a CEMA transaction, that matters for a specific reason: not every wholesale lender accepts CEMA transactions. Some require it to be flagged at the time of application. Others have specific documentation requirements or do not process CEMAs on certain loan types. A retail bank with one internal CEMA policy offers one answer; a broker with access to multiple wholesale lenders can identify which lenders in that network are CEMA-compatible for your loan type and structure the deal with the right lender from the start.

In the wholesale channel, lenders work through mortgage brokers rather than through a retail branch model. That means the broker is coordinating directly with wholesale operations — often more efficiently than a retail loan officer managing the same situation through internal channels. For New York investment property purchases, the CEMA question should be reviewed alongside the financing structure. Investors may also want to compare CEMA savings with investor-focused mortgage options such as DSCR loans, especially when the property’s rental income is central to the loan strategy.

WHAT TO CONFIRM BEFORE YOU APPLY

• Does the seller have an existing mortgage with a remaining balance? (No balance = no CEMA)
• Is the property a condo or 1–3 family home? (Co-ops do not pay MRT and do not use CEMAs)
• Who is the seller’s current lender or servicer — and do they participate?
• Has the buyer’s new lender been confirmed as CEMA-compatible and flagged at application?
• Has the title company been looped in to coordinate CEMA documentation and title search?
• Has the net savings been calculated after assignment fees, additional title costs, and legal fees?

Three Scenarios: What Happens Depending on the Seller’s Lender

Whether a Purchase CEMA is available — and how much it saves — depends almost entirely on the seller’s servicer. Once you’ve run your numbers above, use these three scenarios to understand what drives the outcome.

PURCHASE AND REFINANCE CEMA — GALLAGHER TEAM CAN REVIEW YOUR SCENARIO

Gallagher Team has access to wholesale lenders across New York who actively accommodate CEMA transactions on both purchases and refinances — and we know which ones are CEMA-compatible for conventional, jumbo, and other loan types before the application goes in.

Whether you are buying or refinancing, we can confirm eligibility, identify the right lender, and run the cost-benefit calculation so you know whether the structure makes economic sense for your specific situation. We compare lender compatibility, costs and timing together.

With Gallagher Team, a soft credit review may be available to start. If a hard inquiry is needed, the timing will be explained before submission, and mortgage shopping within a short window generally has limited scoring impact. Programs vary by lender and transaction type, subject to lender approval.

Purchase CEMA vs. Refinance CEMA in New York

A Purchase CEMA uses the seller’s existing mortgage balance to reduce the buyer’s newly taxable mortgage amount. A refinance CEMA works differently: the current homeowner’s existing mortgage is assigned and consolidated with the new refinance loan, so mortgage recording tax may apply only to new money above the current unpaid balance. Both structures depend on lender participation, title coordination, and whether the net savings exceed CEMA-related fees.

Refinance CEMAs are often easier to coordinate than Purchase CEMAs because the borrower is working with their own existing mortgage instead of relying on the seller’s servicer. However, not every lender offers refinance CEMAs, and the savings calculation should still be reviewed before choosing a lender or locking a refinance strategy.

Questions to Ask Before Your New York Closing

• Does the seller have an existing mortgage — and who is the servicer? Has anyone confirmed that servicer participates in CEMA assignments?
• Is the property a condo or 1–3 family home? (If it’s a co-op, you do not pay mortgage recording tax and a CEMA does not apply.)
• Is there an assumption that the buyer must use the seller’s lender? (They don’t — the buyer chooses their own CEMA-compatible lender independently.)
• Has the net savings been calculated after lender assignment fees, additional title fees, and legal costs — not just the gross MRT reduction?
• Is the new lender set up to accept a CEMA structure, and has it been flagged at application?
• If you are refinancing rather than purchasing — has a refinance CEMA been evaluated? The same core savings logic applies: MRT may only be assessed on new money above the existing balance.