How co-op boards test your finances
A NYC co-op board reviews your finances before it approves a sale. There is no law that sets the numbers. Each board writes its own standards, and many never publish them. Industry sources describe the same three tests again and again, which this calculator runs:
- Debt-to-income ratio (DTI). Your monthly mortgage payment, plus maintenance, plus other monthly debt payments, divided by your gross monthly income. Targets of about 25% to 30% are commonly reported, with some buildings allowing the low 30s.
- Post-closing liquidity. The liquid assets you will have left after the down payment and closing costs, expressed as months of mortgage plus maintenance. One to two years is commonly cited; stricter buildings ask for more.
- Minimum down payment. 20% is the most common requirement. Some buildings want 25% or more, and 10% is uncommon.
| Preset | Max DTI | Liquidity | Min down |
|---|---|---|---|
| Strict | 25% | 24 months | 25% |
| Typical | 28% | 18 months | 20% |
| Lenient | 30% | 12 months | 10% |
Worked example
You want an $850,000 two-bedroom with $1,500 a month in maintenance. You will put 20% down ($170,000) and borrow $680,000 at 6.5% for 30 years, so principal and interest come to about $4,298 a month. Your household earns $260,000 a year ($21,667 a month) and pays $450 a month on a car loan.
- Monthly obligations: $4,298 + $1,500 + $450 = $6,248
- DTI: $6,248 ÷ $21,667 = 28.8%, just over a 28% limit and under a 30% limit
- Liquidity: $400,000 in cash and brokerage, minus $170,000 down and $25,500 in closing costs, plus half of $120,000 in a 401(k), leaves $264,500. Divided by $5,798 of mortgage plus maintenance, that is about 46 months.
Liquidity is not the problem here; the ratio is. Against the typical preset you would need about $268,000 of income at this price, or a price around $814,000 at the same maintenance. A bigger down payment would also work, since you have liquidity to spare: it lowers the mortgage payment and the DTI.
What counts as liquid
Cash, CDs, money market funds, Treasury bills, savings bonds and brokerage accounts are generally treated as liquid. Real estate, unvested stock, personal property and insurance policies generally are not. Retirement accounts are counted by some boards and not others, which is why you choose the percentage to count. Set it to 0% to see the strictest reading.
Limits of this calculator
- It uses gross income. Some boards use only earned income.
- The maximum price holds maintenance constant; a larger or pricier unit often has higher maintenance.
- It does not include a building's flip tax if you agree to pay it, which reduces your liquidity. Use the flip tax calculator.
- Lenders run their own debt-to-income test, which may differ from the board's.
Next steps
Estimate your closing costs with the NYC closing cost calculator, then assemble your application with the co-op board package checklist. For more on how boards read your numbers, see co-op financial requirements and the co-op board interview.