A co-op requires 25% DTI. Do work expense reimbursements included as gross income? If I apply for forbearance on my student loan is it not included?

Asked by JB, New York, NY Wed Aug 21, 2013

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Darryl Shurg…, Agent, Ronkonkoma, NY
Thu Aug 29, 2013
As to the DTI requirement....that's something distinct to the coop. However, can you blame them? During the Goldilocks years of easy lending with fannie/freddie lowering the bar on qualification, Alt A and conduit products, and unwary coop boards relying on the mortgage approval as financial strength of their new applicants.

When coop mortgages go into default the owners usually stop paying their monthly common charges. This leaves the costs of the coop building or community to the remaining owners. if too many people don't pay their charges the whole corporation could go bankrupt.

So hopefully you can appreciate the reason for financial scrutiny that is more strict than the lender.

The lender has fannie mae insuring 80% of the purchase price on their loan. The Coop has nothing protecting them other than cash reserves and strength of the other owners in the corporation.

The good news is that not all coops will have such a strict financial requirement. If you don't qualiify on that one your agent can probably find you another place.
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Joseph Hasti…, Agent, Bayside, NY
Thu Aug 22, 2013
DO NOT contact the managing agent. They have no idea who you are. Get the information through your Broker. That is in part, what you hired a Broker for. The answer will be no on expenses (but you already knew that) and your student loan will show on your credit report so, it will still be a liability, forbearance notwithstanding.

Yes, this board wants seriously qualified prospective shareholders with a DTI of 25%. Good luck.
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Belal Mohd, Agent, Rego Park, NY
Wed Aug 21, 2013
Contact the managing agent. Lay all your cards on the table. Although they may never tell you whether you will be approved or not, try to get a definitive answer about the ratio. Some co-ops are very strict about DTI.
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Anna M Brocco, Agent, Williston Park, NY
Wed Aug 21, 2013
Expense reimbursements are generally not included as gross income; as to the forbearance, check with the board; keep in mind that if you stop paying your student loan for the allotted time, interest will continue to accrue.
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Janet Nation,…, Agent, Baldwin, NY
Wed Aug 21, 2013
I agree with Javier, a 25% DTI is extremely low not and unrealistic for the average purchaser. Regarding your your Schedule A, any unreimbursed expenses is NOT included as income by lenders and probably will be the same for co-op boards. Your question on the forbearance is not clear. Guessing what you are asking, forbearance is not typically included as current debt if postponed for at least 12 months.
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Tom Dawson, Agent, New York, NY
Wed Aug 21, 2013
You definitely need to ask the coop board these questions. Each board will have somewhat different standards so no one answering here will be able t OK give you the answer.
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Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Wed Aug 21, 2013
Lenders do not require such low DTI, if the co-op is requiring this, then in reality the question all together is for the co-op themselves. If they have determined a maximum DTI requirement, they might have something on reimbursed expenses and forbearance on any sort of debt.

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Javier Meneses
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