Suppose you’re in the market to purchase a New York City co-op or condo. Congratulations! You’ll probably need a mortgage — but getting one can be challenging. Fortunately, preparing for the process will build your home-buying confidence. So, if you’re wondering how to get a mortgage for a co-op or condo, consider this your ultimate guide — from the documents you’ll need to the differences in closing costs — here we tackle it all.
Table of Contents
Brooklyn Homes Under $800K on StreetEasyArticle continues below
Fort Hamilton
338 101st Street
$675,000
2 |
2
Ocean Hill
210 Hull Street
$450,000
2 |
1
Bushwick
23 Bleecker Street
$673,750
1 |
1
Crown Heights
960 Sterling Place
$599,000
1 |
1
Bensonhurst
1562 West 6th Street
$625,000
2 |
2
Wingate
406 Midwood Street
$535,000
1 |
1
Clinton Hill
201 Clinton Avenue
$699,000
1 |
1
Bay Ridge
7115 Third Avenue
$419,999
2 |
1
East Flatbush
132 East 46th Street
$749,000
4 |
3
Borough Park
1229 65th Street
$448,000
1 |
1
Sheepshead Bay
9 Canda Avenue
$520,000
2 |
1
Gravesend
2580 Ocean Parkway
$589,000
3 |
2
What Is a Condo vs. a Co-op?
Before reviewing how to get a mortgage, let’s walk through the primary differences between condos and co-ops.
A condominium is a private residence in a multi-unit building. When you buy one, you own your unit, and you partly own the building’s commonly used property, like the gym or rooftop lounge.
A co-op is structured differently. It’s a cooperative (hence the term co-op), and when you buy into one, you’re purchasing shares in the building. This co-op vs. condo explainer goes more in depth.
Manhattan Homes Under $800K on StreetEasyArticle continues below
Lincoln Square
180 West End Avenue
$510,000
Studio |
1
Kips Bay
200 East 24th Street
$535,000
1 |
1
Lenox Hill
205 East 77th Street
$429,000
Studio |
1
Greenwich Village
100 West 12th Street
$575,000
Studio |
1
Chelsea
210 West 19th Street
$795,000
Studio |
1
Lower East Side
577 Grand Street
$635,000
1 |
1
Upper West Side
200 West 79th Street
$459,000
Studio |
1
Upper West Side
336 West End Avenue
$775,000
1 |
1
Turtle Bay
230 East 50th Street
$699,999
2 |
1
Upper West Side
203 West 87th Street
$779,000
2 |
1
Lenox Hill
55 East 65th Street
$675,000
1 |
1
Manhattan Valley
210 West 103rd Street
$625,000
1 |
1
Getting Mortgage Approval for Condos vs. Co-ops
If you’re wondering how to get a mortgage for a co-op or condo, the most significant need to know is that the two main entities need approval during the mortgage process: the building and the borrower.
The mortgage lender must approve the building
Condo buildings are generally easier for lenders to approve if most of the buyers in a building are using their units as primary residences. On the flip side, some condos are non-warrantable, which means they don’t meet all the lending requirements. New construction is an example, if the building is not complete or too many units are investment properties.
When it comes to getting a mortgage, co-ops present even more challenges, mostly because there are more reasons for co-op buildings to be considered non-warrantable. Here are three instances:
If one person in the co-op has too many shares, that could make the bank uneasy. What if that person gets into financial trouble and can’t pay the dues for the building? That could be detrimental to the co-op’s financials.
If the co-op’s financial statements aren’t up to snuff, that could make a lender nervous too. The lender may require two years of the co-op’s tax returns and bank statements, showing available reserves.
If the building is involved in multiple lawsuits, that’s a big red flag for a lender. No one wants to get involved in ongoing litigation since cases can quickly drain financial resources.
The mortgage lender must approve the borrower
Let’s talk condos first. Generally, a 20% down payment is the minimum. And you have to present the typical mortgage package to your lender, including the mortgage questionnaire, insurance info, financials, and a budget.
Put simply, once your lender approves you and the condo seller agrees to sell to you, congrats: you’re a condo owner!
On the other hand, a co-op requires a little more convincing because, as mentioned earlier, it’s a cooperative. First, you need to get your mortgage approved by a lender. The process is similar to that of a condo. Afterward, you must present that approved mortgage package to the co-op board. And the board might ask for even more information. They may want to see more available cash in the bank, some letters of recommendation, or additional employment verification. These tips will help you prepare for a co-op board interview.
Once the board has all the necessary info and reviews your package, they can accept or deny you at their discretion.
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Astoria
33-34 Crescent Street
$500,000
2 |
1
Astoria
34-32 35th Street
$799,000
1 |
1
Jamaica
109-48 164th Street
$729,000
3 |
2.5
Arverne
450 Beach 65th Street
$599,000
3 |
2
Briarwood
87-51 139th Street
$769,000
3 |
2
Ozone Park
133-22 87th Street
$480,000
2 |
2
Long Island City
27-09 40th Avenue
$775,000
1 |
1
Long Island City
27-09 40th Avenue
$675,000
Studio |
1
Jackson Heights
35-06 88th Street
$430,000
1 |
1
Elmhurst
87-14 57 Road
$499,000
1 |
1
Ozone Park
137-29 95th Street
$729,000
3 |
2
Ditmars-Steinway
22-54 46th Street
$749,000
1 |
1
Closing Costs for Mortgages: Condos vs. Co-ops
One great perk for co-op buyers — closing costs are typically cheaper than those associated with a condo purchase. Co-op closing costs generally hover around 2-5% of the purchase price, whereas a condo’s closing costs depend on the loan’s size, title insurance, etc.
More Tips on How to Get a Mortgage
There are more things to consider when thinking about how to get a mortgage.
Do you need a good credit score to get a mortgage?
Many borrowers don’t realize that there’s not an official minimum credit score for a mortgage. Lenders establish their own requirements. With this in mind, a score lower than 600 may be a problem. Ideally, your score should be around 700 or better.
But a low credit score doesn’t always count you out. There are extenuating circumstances. If you can plunk down a hefty down payment or manage to lower the debt impacting your credit score, it may be possible to get a mortgage.
Should you use a mortgage broker or mortgage banker?
It’s up to you. The most significant difference between a mortgage banker and a mortgage broker is that a banker works for one institution and closes your mortgage using bank funds. A broker shops your loan around to many institutions to help you secure the best financing deal.
Should you get preapproved for a mortgage?
Yes, it would certainly help. It signals to listing agents and home sellers that you’re a serious, qualified buyer. Learn more about preapproval and how it differs from prequalification.
Which should you get first: a mortgage broker or a real estate agent?
They often work hand-in-hand. In fact, a real estate agent may send you to a mortgage broker first to get preapproved, or vice-versa. Consider them both essential to your home-buying journey.
While the mortgage process for either condos or co-ops may seem onerous, have some patience. Your dream home is out there — you just have to gather the right paperwork to get it!
Disclaimer: The content on this site is not intended to provide legal, financial, or real estate advice. It is for information purposes only, and any links provided are for the users’ convenience. Please seek the services of a legal, accounting, or real estate professional before any real estate transaction.