Tamara Cane, Home Buyer in Astoria, NY

20% down payment for co ops? Is this for real?

Asked by Tamara Cane, Astoria, NY Tue Apr 23, 2013

20% down payment; is this for real???

Asked by Teteny, Astoria, NY • A moment ago

I'm just curious how it is possible that people really have $40-50K available to put down in cash for a down payment on a condo. This seems absolutely ridiculous to me, and I must be missing something. In this day and age of tight budgets how would one come up with that amount? I have a decent savings, make 3 figures and still no where near that amount. Crazy to think a relatively successful person, with a good job and credit cannot purchase a 3BR apartment anywhere in NYC. Am I missing something? :(

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I agree with you, it's crazy. My co-op in Rego Park used to be 10% down, that's how I got in, but then the Board changed the rules at one of their meetings without ever asking for a vote from us shareholders, and now it is a 20% down building!! They really messed with the available pool of buyers I feel bc I'm trying to sell my apartment now and I'm finding people who have 20% down payments but income so low they can't even pass board requirements, which is another head scratcher! How they have $50,000 in cash on only $70,000/yr income is beyond me!! I reckon people get inheritances or use the savings from their parents, or save for decades and buy much later than the age that I bought at.. With your high income though, maybe you should do what I'm doing, which is buy a house instead.. You can buy a house with as little as 5% down (I do not recommend 3.5% down for people such as us in high cost of living areas bc the up front and monthly mortgage insurance will kill you - might as well do a conventional loan and pay either up front or monthly insurance - not both!) Co-ops are sometimes not all they're cracked up to be, with the cost of maintenance added to your mortgage you can afford a larger mortgage on a house and take more of a deduction on your taxes. Good luck to you :) Also, I tried to explain to the board that if a person uses ALL of their savings on a 20% down payment and then loses their job and has no income, they can no longer pay their mortgage or maintenance for very long. However, if the same person only put 10% down and saved some of their money in the bank, they would have cash leftover for emergencies such as unemployment and can keep paying their bills.. The difference in mortgage payments between 10% and 20% down is surprisingly little, only about $120/month on a $250,000 selling price and less than another $100 for PMI, but in lump sum, it can mean having a $25,000 extra emergency fund!! Alas, they didn't agree with me. What do I know, I'm only an MBA and CPA. Ha.
2 votes Thank Flag Link Fri Apr 26, 2013
Most co-ops do require 20% down payments. Some will let you join with only 10%, but then again some want 25% and even 30%. The gist of this requirement is that the current owners of the co-op units want to keep the corporation in solid financial condition. Someone who puts down a large amount of cash is unlikely, at least in theory, to stop paying maintenance, which is the lifeblood of the co-op.

However you can purchase a condo with as little as 5% down, just as you can purchase a private house with a similar amount of the purchase price down. So you do have other options.

These rules may indeed be arbitrary, but there is a financial logic behind them. And they applied to the current owners when they bought in, just as they apply now to new purchasers.
2 votes Thank Flag Link Wed Apr 24, 2013
Unfortunately most co-ops do require 20% and some require even more, however there a few that do require 10% down; consider working with an agent of your own who can provide any necessary information, or if you know who management is, contact them directly for specifics...
2 votes Thank Flag Link Tue Apr 23, 2013
Yes, almost all coops require 20% down. Only condos need 10% down but you are paying about 40% more for a condo than a coop so it all works out the same. There are people that saved the money or borrowed it from a relative to buy a piece of property. And at 10% you would have to pay the bank PMI (mortgage insurance) so that's built into your monthly payment. These days banks really aren't giving mortgages with only 10% down so coops are right on the mark. You can do 10% on a sponsored coop, but again, the banks don't like it. If you're making 3 figures, you should really start putting away money.
1 vote Thank Flag Link Sat Sep 7, 2013
Most coops require 20% down. Some will accept 10%. Some of the more expensive ones ask over 30% down. Start saving!
1 vote Thank Flag Link Fri May 31, 2013
That's pretty much the way it is with co-ops. The mayority of them require 20%, very few might accept 15%. If saving the 20% will take too long or it's something that you're not willing or able to do, consider buying a condo instead.

Condominiums do not set minimum required downpayment. The required downpayment is set by the lender, and it's determined by what you qualify for and the loan program.

Consider meeting face-to-face with a Loan Officer who is experienced with condo lending. Originating & processing a mortgage for a condominium or co-op is a bit more complex than that of a 1-4 family house. Because of this, you want to make sure the Loan Officer is experienced specifically with condo and/or co-op lending.

If you need a dependable Loan Officer, I'm always available to meet in one of our Queens or Manhattan branches. Good luck my friend!

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
310 Crossways Park Drive
Woodbury, NY 11797
(516) 606-9648 Cell
(631) 659-2011 Office
(516) 918-5383 Fax
1 vote Thank Flag Link Tue Apr 23, 2013
Yes. Its for real. 20% is normal for a coop. Its actually normal for a bank as well without paying Mortgage insurance. But coops want to make sure you are sufficient in funds so they set the bar at 20%. There are some coops in bayside that will take 15% because the coops are very low in price and very low maintenance. Condos and houses will take only 10% but these days, the banks want to see more money down so 20% is very average. Most people that have good jobs save money and have the downpayment. Or they borrow money, etc. but good luck if you want to buy a coop.
Steve HIrsch
0 votes Thank Flag Link Wed Apr 30, 2014
Yes, it's for real - it's a crazy world.
On another note...I'll bet you make more than 3 figures.
0 votes Thank Flag Link Fri Apr 26, 2013
Usually Co ops require a 20% down payment if not more. You might find FHA condo or some houses where you can make as low as 5% down payment.
0 votes Thank Flag Link Wed Apr 24, 2013
Most coop broads requires 10%- 20% down, because coops are not FHA approved.
They just would like to a 80% loan to make sure there is a less changes of
default on the loan.
0 votes Thank Flag Link Tue Apr 23, 2013
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