We’re able to help you finance your co-op in DC, MD or VA!
Co-ops are a great option for home ownership in the DC metropolitan area that is very similar to buying a condo.
We have both fixed and adjustable loan programs available with down payments as low as 3%-5%, and a maximum loan amount of $1,089,300.
The loan products offered are similar to condominiums, and the closing costs are typically less than condominiums (particularly at higher sales prices).
Owners must occupy the unit as their primary residence or second home since investment transactions are not allowed with co-op financing. While condominium associations can also limit an owner’s ability to rent their unit, it’s much more common with co-op bylaws and board rules to limit or disallow renting.
Co-ops therefore tend to have a community that is more owner occupied than condos, and the community tends to be more participatory than condos.
We do need to review a co-op’s documentation to confirm it’s eligible for financing, which is something we do during the contract period. If we haven’t financed in a co-op before, or don’t appear on the previously approved lender’s list, that’s fine!
What is a Co-Op?
A housing cooperative is a form of home ownership where a buyer purchases shares and/or membership in a non-profit corporation formed to specifically provide housing to its members.
What is the difference between Co-ops vs Condos?
|Each member owns a proportionate share in the corporation and has occupancy rights to a particular unit. The corporation owns and controls the entire cooperative property.
|Each individual(s) owns and receives a separate deed for their particular unit. Unit owners also own their respective share of the condominium’s common elements.
|In listings, monthly co-op fees can appear to be higher than monthly condo fees. This is due to the monthly co-op fee including property taxes, whereas with condo fees property taxes are separately paid and separately shown. Listed co-op fees may include an underlying / blanket mortgage, which would be a loan taken out by the co-op with monthly payments made by owners alongside monthly co-op fees
|Monthly condo fees are typically limited to the building’s routine maintenance and repair, operation, management, and insurance. Condo fees also include funds deposited into reserves. These costs are also a part of the co-op fee.
|Property taxes are assessed on the whole co-op building. Each member pays their proportionate share of the assessed taxes through their monthly co-op fee.
|Property taxes are assessed separately for each individual condominium unit. Each unit owner then pays their assessed taxes directly to the government.
|Prospective members typically need to complete an interview and be approved by the co-op’s board/association.
What is the same between Co-ops vs Condos?
- Residents share common areas and amenities
- An association/corporation is in place to oversee the building
- Residents split the costs needed to maintain and repair the building
- Residents must follow the rules set in the Bylaws
Co-op Review Process:
Besides reviewing your credit for loan approval, we also are required to review the co-op and verify it meets Fannie Mae and Freddie Mac guidelines.
We’ll work to collect the following documents to review and approve the co-op for financing:
- Master Insurance policy
- Current year’s approved budget
- Last 2 years audited financial statements
- Recorded legal documents:
- Bylaws and House Rules
- Recognition Agreement
- If applicable, Articles of Incorporation
- Proprietary Lease/Ownership Contract
- Stock Certificate
- Lien Search
- If applicable, special assessment verification
- If applicable, any current litigation documentation
We can be flexible…as the pre-approvals we work up for buyers can potentially be valid for co-ops, condominiums, and houses!
For more information on co-ops, I recommend https://www.edmundjflynn.com/co-op-advantages/
We work with either Edmund J Flynn or Monarch Title on co-op transactions, two entities which much experience & expertise in the space.