Residential real estate in New York City often comes down to two choices: a co-op or a condo. Understanding the essential differences between the two is a good first step toward making an informed buying decision.

A housing cooperative, or co-op, is a unique animal. In owning a co-op apartment, a person does not technically own their apartment. What they own are shares in the corporation that owns the entire building, and with that ownership of shares comes the right to lease an apartment, specifically the one you are “buying”.  Residents elect a Board of Directors that has the right to screen and approve or reject new residents and make decisions regarding operating policies and procedures and capital improvement and maintenance projects. The Board of Directors run the building.

Condominiums, on the other hand, are individual and separately saleable units each legally considered real property within a single larger building. Whereas with a co-op you own shares of stock, with a condo, you actually own the apartment outright, and get a deed to the property. There is still a pooled ownership component to condos, as common areas and shared spaces and utilities (such as laundry rooms, hallways, courtyards, elevators, HVAC systems, etc.) are mutually owned. Condos have homeowner’s associations, or HOA’s that all residents pay into for the maintenance and repair of these common-use amenities and structures. 

Financing options for coops and condos are similar, but not identical. Generally speaking, at least in New York, you need to get a “Conventional” mortgage to buy a co-op or condo. Though few and far-between, there are SOME condo developments approved for FHA or VA loans whereas you can buy a co-operative ONLY with a Conventional loan. 

Co-op board approval is probably the biggest difference between the two, and one that has many shy away from co-ops and seek out condos instead. The problem with that is that at least here in Westchester County, NY, there are SO many more co-ops than condos, so you are really limiting your selection by ruling out co-ops altogether, however depending on your financial standing you may need to avoid co-ops and their stricter financial requirements.

Co-ops require a financial application totally separate from your mortgage application, and often stricter standards. You can qualify for a mortgage and not be approved for a co-op.