The 'Material Girl' singer is reportedly splashing out the impressive sum so 23-year-old model Jesus Luz can be close to her £25 million house in the US city.
A source told Britain's The Sun newspaper: "Madonna is buying Jesus an apartment in New York. She has her real estate agent searching for the perfect pad for him in the new neighbourhood where she has just moved.
"She's told them to spend no more than £1.7 million and the property has to be within walking distance of her townhouse. She is financing everything but Jesus will own it once it's found and bought.
"She really wasn't kidding when she told him he'll never have to worry about money from now on."
Other investments Madonna, 51, has made for her Brazilian-born lover are believed to include top DJ tuition and £30,000 of music equipment.
She also keeps him on her payroll and reportedly helped him to get his US visa renewed in December, and to land new modelling contracts.
However, while Madonna is prepared to invest in the home for Jesus, other sources claim she is wary of marrying him, in case he takes her fortune. The couple are instead planning a commitment ceremony.
A source said: 'She is devoted to Jesus and has already started drawing up a guest list. The blessing will be at the Kabbalah centre followed by a reception at her New York house.
'It will not be a legal wedding. She is not taking any chances over her money again.'