4 years ago

How to Reduce Your DTI Ratio When Buying a NYC Co-op: https://www.hauseit.com/reduce-dti-ratio-buying-co-op-nyc
Save 2% When Buying a C-op in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/

Meeting the Debt-to-Income ratio requirement for a New York City co-op apartment can seem like a daunting task. While not all New York City co-op boards are equally strict or rigorous when it comes to buyer financial requirements, it can feel like a nightmare if you’re trying to buy into a co-op with a laser sharp focus on your Debt-to-Income Ratio.

Many strict co-ops in New York City have a zero-tolerance policy for Debt-to-Income ratios above their guidelines. This means you’ll be rejected for having a Debt-to-Income ratio of just 25.15% or 25.4% if the building requires 25% or less.

Fortunately, there are a number of ways to structure your co-op offer in order to reduce your debt-to-income ratio and maximize the chances of board approval.

These strategies include receiving a gift, raising your down payment, finding a lower interest rate or changing your loan product, receiving an income stipend or changing your purchase structure to a co-purchase or applying with a guarantor.

If you’re buying a co-op apartment in NYC, you can also save up 2% on your purchase by requesting a Hauseit Buyer Closing Credit: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/

Receive a Gift

Most co-ops in NYC allow a prospective purchaser to receive a gift as a means of strengthening her or his financial profile to meet the Debt-to-Income and Post-Closing Liquidity requirements of the co-op.

Receiving gift money will directly increase your post-closing liquidity since you’ll have more liquid assets left over after factoring in your down payment and closing costs.

A gift will indirectly reduce your Debt-to-Income Ratio by allowing you to increase your down payment, thereby reducing your monthly mortgage payment.

Increase Your Down Payment

Increasing the size of your down payment is the most direct way to reduce your monthly mortgage payment and reduce your overall DTI. This strategy is challenging for many prospective home buyers since the vast majority of co-ops in NYC require a fairly high minimum percentage down of at least 20%.

Furthermore, you may only increase the size of your down payment if it does not adversely impact your post-closing liquidity. Most co-ops in NYC require applicants to have one to two years of monthly housing expenses in liquid assets post-closing, after the down payment and closing costs.

Lower Your Interest Rate

If your DTI is marginally higher than what a co-op requires, you may be able to lower your Debt-to-Income ratio simply by finding a lender who offers a more competitive interest rate.

Change Loan Products

Switching from a 30-year fixed mortgage to an Adjustable Rate Mortgage or similar product with a lower interest rate will reduce your debt-to-income ratio by reducing your monthly mortgage payment.

The challenge with this approach is that many co-op buildings in NYC have outright prohibitions on adjustable rate mortgages.

Looking to buy or sell a home in New York City? Learn how you can save on commission and closing costs at https://www.hauseit.com

Calculate Your Buyer Closing Costs: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
Save 2% When Buying a C-op in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
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Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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