January 20, 2020 | The King-Brown Team

The KB Team Buyer's Guide to Co-op Board Requirements

NEW YORK CITY BUYER'S GUIDE CO-OP BOARD REQUIREMENTS

Congratulations on your decision to purchase an apartment in New York City. While every Cooperative building has a unique set of financial requirements for prospective purchasers, this guide is designed to provide a starting point and general reference for buyers within the early stages of their search. In order to determine the appropriate budget it is recommended you consult with a local mortgage broker to start the mortgage application process and attain a pre-approval letter from the respective bank. 

INCOME REQUIREMENTS​​​​​​​
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The housing costs, including maintenance and mortgage expenses post-closing should not exceed 25% of the buyer's household gross income (aka. debt to income or DTI ratio). All parties contributing to household income will need to be listed as an 'applicant' on title to purchase the apartment.

Housing costs per month example* = $15,000 x 12 - $180,000
Buyers combined household income = $750,000/year
$180,000 divided by $750,000 = 24% debt to income ratio (Qualifies under 25%)

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* Itemized housing costs per REBNY financial statement include the maintenance of the subject property, financing expenses for subject property post-closing, mortgage debt obligations for alternate properties, bank loans, and auto loans. These numbers are tallied into the 'total projected monthly expenses' section ​​​of the financial statement and used to calculate the debt to income ratio.

ASSET REQUIREMENTS
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While this requirement is often undefined and widely varies, most boards require postclosing liquid assets equivalent to 1-2 years of housing costs (maintenance + mortgage). Some coops want to see 3-5 years of subject property maintenance in liquid assets post-closing. In extreme cases, certain boards (Ex Fifth & Park Avenue) want to see north of 2x the cost of the apartment in assets post-closing.

Using 2 years of housing costs as an example on o $2,500,000 purchase with 25% down; 75% ITV mortgage /monthly payments $8,950/m based on 4% interest rate, 30year mortgage) + $4,750/m maintenance - monthly housing costs of $13,700/m.

​​​​​​​Asset requirement = $328,800 liquid assets post-closing representing 2 years of housing costs.
​​​​​​​Asset requirement = $285,000 liquid assets post-closing representing 5 years of just $4,750/m maintenance payments. 

CREDIT HISTORY

All applicants will complete a credit authorization form; the managing agent for the board will run a full credit & background on each prospective purchaser. 'Good to excellent' credit (typically north of a 700 FICO score) is generally required along with a positive reference letter from a current landlord or managing agent confirming all financial obligations are up to date.


REBNY FINANCIAL STATEMENT

The REBNY Financial Statement is the standard form template used for most Co-op purchases in New York City. This 2-page document is submitted initially with the offer for purchase so the seller can assess the financial qualification of the buyers while considering their offer and submitted again with the Coop board package once the buyers are in contract.
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Note it is imperative the figures provided on the REBNY Financial Statement are thorough and match exactly (to the dollar) the figures represented by he most recent available statements for all assets, liabilities, and income. This document will prove to be the most scrutinized and reviewed item in the Co-op board package and can make the difference of an offer being accepted or overlooked. See REBNY financial Statement on the following 2 pages with financial definitions outlined in detail. 

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