These Two Numbers Will Tell You if You Qualify for a Co-op Board

You've probably heard lots of horror stories about what it takes for a buyer to pass a co-op board. Here's the truth. Acceptance by a coop board begins with your financials. Yes, other issues are considered, but this is the most important, make-or-break one.

The two numbers to be aware of are your Debt-to-Income Ratio (DTI) and your post-close liquid assets (how much money you have left over after you complete the purchase). This is important information for sellers to know as well, so they can be sure their potential buyers have been properly vetted.

Your debt-to-income ratio is the percentage of your income that goes towards mortgage and maintenance. Most co-op boards won't give you exact numbers, so we brokers use some guidelines. Your DTI should be no higher than around 27%. They'll also look to see that that no more than around 30% of your income goes towards total debt. That includes carrying the apartment plus auto loans, student loans, other mortgages, etc.

Next, they'll look to see that you have the equivalent of 12-24 months (or rarely, more) of maintenance and loan payments left over in liquid assets at the time of the closing.

If these numbers don't work for you, don't give up just yet. You might be able to make some changes that will bring them into line. That's a story for another article - but if you need to know sooner, give me a shout.