One of the most common questions that we get from buyers is regarding the financial requirements associated with different types of property in New York City. So there are really two buckets of properties. You can either be looking at houses and condos or co-ops. Regardless of what you think you might be buying, it's always a good idea to get a pre-approval at the beginning of the process. This is when you sit down with a lender and they review your financials and they give you an estimate for how much of a loan you can realistically get. So this helps you set your budget and make sure you are only looking at properties you can actually buy. For house and condos, the financial requirements there is really just the financial requirements of the bank so if you can get the money, you can generally buy the property. If you are looking at co-ops, there is an additional hurdle you need to overcome which is the co-op's financial requirements and co-ops are generally much more conservative than banks so while you might satisfy the bank's requirements, you still might not be able to buy a co-op if you don't satisfy those additional financial requirements. So when you're thinking about a co-op, they will generally have three metrics that you're going to need to pass and all three of them are going to be more restrictive than a bank. The first is the down payment. While a bank might give you a loan for 10% down, sometimes even less, it's extremely rare to see a co-op that requires less than 20% down and there are even co-ops that require more than that. Some only effectively allow cash purchases. So when you're looking at co-ops, it's always important to look at what the minimum down payment required is for that property. So the second requirement the board is going to look at is your debt to income ratio so that's when they take all of your required monthly payments and divide it by your monthly income and this is the monthly payments that would be required if you were to buy the apartment so if you have no other debt, it's going to be your monthly maintenance payment plus your mortgage payment but if you have other debt like student loans or a car payment or other real estate, all of that is going to be added into that debt payment as well. And the third requirement that the co-op is going to look at is your post closing liquidity. So this is when they take that same monthly payment that they were using in the debt to income ratio and looking at how many months of payments you have liquid post closing. So liquid just means available so cash is obviously as liquid as it gets. If you also have investments such as stocks which can be sold relatively easily, those will be included but if you have other assets like retirement or real estate, those are not going to be included. So if you have 12 to 24 months of post closing liquidity, that will satisfy most co-op boards. So it's the down payment, the debt to income ratio and the post closing liquidity and you should be looking at all three of those to make sure you're not going to run into any issues with the co-op board. So if you have any questions and you want to run through your financials and make sure you're going to be able to qualify for a certain apartment or price range of apartments, feel free to reach out to me.
My email is james@yoreevo.com. I read all of my emails, I respond quickly and I'm happy to help.