So the non-negotiable thing is location, she won't move to Brooklyn. She also stated that she wants to remain at $1,000 a month. I used Bankrates's mortgage calculator and if she found an apartment for under $150k she could pay close to a grand in monthly mortgage payments. Elvis, I love you to bits, but this is not realistic. As you know. But not to fear, all is not lost!
Option #1, Buy a 2 BR and rent out one bedroom. If Elvis got a 2BR for $440,000 (yes, it's possible, but not easy to find), put $40,000 down, and took out a $400,000 mortgage, she would pay around $2660 a month. And I'm telling you right now, you're living so far uptown you'll get nosebleeds. So for the love of god, will you just get over your disdain for the subway, and recognize that a commute from Inwood to midtown is no better than a commute from Brooklyn. The difference in quality for your price range is significant. But fine, okay, I'm talking to a wall. At least the food is good. So moving along, then she should rent out the other bedroom to her sister. Or some other sucker. This seems a little high for Elvis, and $40k down is nothing to sneeze at, but if she could increase the downpayment and lower the mortgage, this is an ideal situation. Nobody buys an apartment thinking it's going to be the only one they ever own. But there is something to be said for buying something and being able to grow into it as your life grows. What if there's baby Elvises? What if Mr. Elvis wants his own music studio? While you don't ever want to buy more home than you can afford, you want to buy as much home as you possibly can.
Option #2- Stay in a studio. Studios can be had in Manhattan for $300k. I don't like this idea, frankly. It drops your monthly payment by less than a thousand, it's still a studio, and while it is an investment it's not like you're exactly moving on up. It may even be one of those cases where it is cheaper for you to rent than to own, given your particularly low rent.
Option #3- Stay where you are and save for option #1, without having to rent out the second bedroom. Hopefully by then your business will have flourished to the point where you can afford to carry the whole mortgage. Use a savings calculator to determine how much you can save in 2 years. For example, $500 a month at 4% is over $12,000. Of course, to get that $40k downpayment, you'd have to save $800 a month at 4% for three years.
And last but not least, just like getting an apartment isn't just paying first month's rent, buying an apartment isn't just about the mortgage. New York City has the highest mortgage fees, $3830 for $200k, so if you doubled that you're looking at $8,000 in closing costs. Also, you must include maintenance in your monthly mortgage calculations. Which means it matters what the maintenance is when you're looking at places to buy. And obviously, the 10% down is an ideal situation, it's not always the norm. All in all, just research up the wazoo while you're dreaming big. One place to start- even though she's an occaisional nut job, Suze Orman has an informative piece on Rent vs. Buy.
So short answer to a long post- it's possible. It may not be easy or quick, but it is defintely within your grasp.