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What Is an HDFC Co-op? And How Do You Buy One?

New York is one of the most expensive cities in the world. That’s why it offers a few housing programs to ensure that residents with lower and moderate incomes can afford to live here. One such program is the Housing Development Fund Corporation, typically known as HDFC. Like many other aspects of the NYC real estate market, understanding the program can be complicated. Here, we break down everything you need to know about HDFC co-ops.

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What Is an HDFC Co-Op?

In short, HDFCs are a type of affordable co-op housing designed to be lived in long-term by low-to-moderate income earners. The program came about in the 1970s, when rundown buildings were seized by the city, fixed up, and turned into low-income co-ops. Today, according to the New York City Department of Housing Preservation and Development, there are over 1,100 HDFC co-ops. While they operate pretty much like a typical co-op, buying one is not typical. These units have income and family-size restrictions and strict affordability guidelines.

What Is a Restricted Sale?

HDFCs are also often referred to as “restricted sales” or “income-restricted sales,” because of the restrictions in place to purchase. These apartments have a lower sale price due to the income, household size, and affordability guidelines. “A restricted sale within an HDFC construct expresses that buyers must meet specific criteria, usually financial,” says Mihal Gartenberg of Warburg Realty. “Buyers cannot earn more than a specific amount of money. The amount varies by family size, and also from one HDFC to the next.”

This South Harlem HDFC unit has 2 bedrooms and a fully renovated kitchen. (From a listing at 310 W. 122nd St. #5W)

These income-restriction guidelines are set two ways:

One general rule that applies to all HDFC coops is that buyers shouldn’t be spending more than one-third (33%) of their income on housing costs. That includes mortgage payments, maintenance payments, and utilities. Says Karen Kostiw of Warburg, “HDFC co-ops, unlike market-rate co-op apartments, were devised specifically to create affordable housing stock for lower-income purchasers. They are not meant for shareholders to achieve a profit.”

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How Do You Find an HDFC Co-op to Buy? 

Like most co-ops, HDFC apartments are relatively easy to find online. They are often listed alongside market-rate listings. On StreetEasy, you can search specifically for income-restricted units with the “Advanced Options” function. On the “Advanced Options” page, under “Property Types,” you will see a drop-down menu labeled “Income Restricted.” Select “Only Income-Restricted Listings.” A recent search pulled up 245 current listings. 

Another search option is Housing Connect. This city-run site serves as a portal for rental lotteries and affordable co-ops. Of course, you could also consult a broker. “There are brokers and even specific lenders, including small regional banks and credit unions, that specialize in HDFCs,” says Kostiw. “Not all lenders will lend to HDFC cooperatives. One key question to ask listing agents is, ‘Who are the approved lenders for the building?'”

What Makes Them Different From Other Co-ops?

This 1-bedroom HDFC co-op in Boerum Hill has a sunny eat-in kitchen. (From a listing at 575 Warren St. #2L)

Several factors make HDFC units very different from other co-ops. It goes beyond just the lower cost. The differences include:

Why Do Their Prices Vary From Neighborhood to Neighborhood?

In West Chelsea, this 1-bedroom HDFC unit is asking just $299K — significantly lower than average for the neighborhood. (From a listing at 408 W. 25th St. #4FE)

Prices are based on the U.S. Department of Housing and Urban Development’s AMI, set to create affordable housing options in specific areas. Sales prices are typically significantly lower than market rate — they could even be 50% less. For example, a five-room apartment could be $600,000 as opposed to $1,500,000. But the variation in pricing is all determined by the AMI for a specific neighborhood. 

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Can You Make a Profit Selling an HDFC Co-op? 

An HDFC co-op is meant to be lived in long-term and protect lower- and middle-income shareholders from rising costs. They were not intended to build equity or be sold for a profit. That is why the governing documents outline a structure by which these HDFC buildings receive a partial tax exemption that subsidizes the cost and maintenance for shareholders.

Furthermore, many such co-ops have hefty flip taxes. When someone sells an HDFC unit, any sale profits are split between the seller and the HDFC. The idea is to maintain the successful operation of the HDFC co-op and cover other building expenses. 

“While the flip tax varies from cooperative to cooperative, a shareholder would forgo approximately 30% to 40% of the sales profit on the apartment,” says Kostiw. “The flip tax calculation is typically based on the number of shares assigned to the unit and is outlined in the HDFC’s governing documents.” 

Additionally, a flip tax deters investors from purchasing HDFC units, since it is a significant amount to contribute at the closing table.

Resources for HDFC Buyers

Exposed brick and a modern kitchen feature in this Lower East Side HDFC co-op. (From a listing at 237 Eldridge St. #21)

Wondering whether the city offers resources for HDFC buyers, like down payment assistance or homeownership counseling? It does! The Urban Homestead Assistant Board (UHAB) offers classes. Plus, the HPD now offers a HomeFirst program for first-time homebuyers to help with down payments and closing costs. Qualified homebuyers can receive up to $100,000 toward the down payment or closing costs.


Whether you’re looking to rent or to buyfind your next NYC apartment on StreetEasy.

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