Financing a New York Co-op or Condo as a European

Q: Can I get a mortgage on a New York co-op?

Yes, co-op purchases are financed with a share loan rather than a standard mortgage. Fannie Mae's Selling Guide describes the lien as your ownership interest in the co-op corporation, represented by shares, together with an assignment of your rights under the proprietary lease. Lenders must also be satisfied with the building itself, so the loan can fail on the building's accounts even when your own file is sound.

Q: Does a co-op loan work as a second home or a rental?

A second home is allowed, a rental investment is not. Fannie Mae's rule for co-op share loans is that the borrower occupies the property as a principal residence or second home, and investment properties are prohibited. Individual building rules on subletting are set by the co-op's own documents, so check them before you plan to rent the apartment out.

Q: What does a lender check about the building?

For a co-op, Fannie Mae's rules require that the corporation qualifies under Section 216 of the Internal Revenue Code, that at least half of the shares have been sold to principal-residence purchasers, that no more than 15% of owners are more than 60 days late on payments to the corporation, and that the budget and two years of audited statements or tax returns show adequate cash flow and reserves. For a condo, the Full Review process tests the same ideas: delinquency of no more than 15% of units, and a budget that funds reserves at 10% or more.

Q: What is a flip tax and does it block a loan?

A flip tax is a fee the co-op charges when an apartment is sold. It does not block a Fannie Mae loan if the building's documents allow it and it is either exempt for the lender on foreclosure, or charged only on profit. A flat or percentage flip tax due on every sale can still qualify if it is no more than 5% of the property's value. Ask for the amount and who pays it before you offer.

Q: Why was a building refused by lenders?

Fannie Mae lists building features that make a project ineligible: operation like a hotel, more than 35% nonresidential space, critical repairs or significant deferred maintenance, an evacuation order, pending litigation about safety, structure or habitability, and termination or insolvency. If a building is on that list, the problem is the building, not your file.

Q: Does buying through a co-op board still matter?

Yes. A co-op runs under its by-laws, proprietary lease and house rules, and these set crucial terms such as the sublet provisions, according to the New York Attorney General. That process is separate from the lender's. We have not found an official source with general figures for what boards require of applicants, so ask the managing agent for the building's application requirements in writing.

At a glance

Figures last checked: 14 October 2026

Co-op loan: A share loan: secured on the shares in the co-op corporation and an assignment of your rights under the proprietary lease.
Occupancy: Fannie Mae buys co-op share loans only for a principal residence or second home. Investment properties are excluded.
Building tests: Co-op: 50% of shares sold to principal-residence purchasers, no more than 15% of owners over 60 days late, audited accounts with adequate reserves.
Flip tax: Eligible if the building's documents allow it and it is a profit-based tax, lender-exempt, or at most 5% of value.
Always ineligible: Hotel-like buildings, critical repairs, evacuation orders, pending litigation over safety or structure, more than 35% commercial space.
Who is tested: Both you and the building. A strong buyer cannot fix a building that fails.

Two approvals, not one

A European buyer in New York usually thinks of the mortgage as a test of their own income and deposit. For a co-op or a condo there is a second test, and it is applied to the building. A lender that sells its loans to Fannie Mae follows Fannie Mae's rule book, and that rule book has separate chapters for the project (the building as a legal and financial unit) and for the individual loan. Our guide to foreign national loans explains which borrowers can use those standard loans at all; this page is about the building side.

The New York market makes this more relevant than elsewhere. Our New York City guide explains why a co-op is a different legal object from a condo: you buy shares in a corporation and receive a lease, not a deed. The financing follows that structure.

Want the numbers for your situation?

The mortgage scan shows which loans fit your status, how much cash you need and what to arrange first.

Start my mortgage scan

How a co-op loan is built

A co-op purchase is financed with a share loan. Fannie Mae's Selling Guide (section B4-2.3-04, revised 6 August 2025) describes what secures it: your ownership interest in the co-op housing corporation, represented by stock or shares, together with an assignment of your rights under the proprietary lease or occupancy agreement. There is no mortgage on a deed, because you do not receive one.

Occupancy. The borrower must occupy the home as a principal residence or second home. Investment properties are prohibited. If you plan to buy in order to let, a co-op share loan from this rule book is not the route.
Flip tax. Some co-ops charge a fee when an apartment is sold. The loan can still qualify when the building's documents allow it and it is exempt for the lender on foreclosure or charged only on the profit. A flat, per-share, percentage or per-room fee due on every sale can qualify if it is no more than 5% of value.
Loan-to-value. The page does not set a maximum percentage. It sets how the ratio is measured, depending on whether you take on a share of the building's own blanket mortgage. The limit comes from Fannie Mae's eligibility matrix and from the lender, so ask what the lender will actually lend.

What the lender tests in the building

Fannie Mae's co-op project rules (B4-2.3-02, revised 6 May 2026) are a set of tests on the corporation. These are the ones that matter most to a buyer:

Tax status. The corporation must qualify as a cooperative housing corporation under Section 216 of the Internal Revenue Code, and the lender must hold evidence of it.
Sales. At least 50% of the shares must have been sold to principal-residence purchasers, or be under contract for new construction.
Arrears. No more than 15% of owners may be more than 60 days past due on what they owe the corporation, including special assessments.
Accounts. The latest operating budget and two years of audited statements or corporate tax returns must show adequate cash flow and adequate reserves. A negative cash flow is limited to 5% of the latest audited statement, may not be an operating loss in two consecutive years, and must come from an isolated, non-recurring expense.

None of these tests concerns you personally. They are why two apartments at the same price in different buildings can get different answers from the same lender.

Why a building is refused: the ineligible list

Fannie Mae also keeps a list of project features that make a condo or co-op ineligible (B4-2.1-03, revised 5 August 2026). Check the building against it before you spend money on a survey or a lawyer:

Managed and operated as a hotel or motel, or primarily transient in nature.
More than 35% of the space used for nonresidential or commercial purposes.
In need of critical repairs, including material deficiencies and significant deferred maintenance.
Subject to an evacuation order because of an unsafe condition.
The corporation or association is named in pending litigation about safety, structural soundness, habitability or functional use.
Terminating or in insolvency proceedings.

A building with an evacuation order or critical repairs does not stay ineligible for ever: the rule is about the condition, and it ends when the building is remediated and judged safe. That can take longer than the contract allows for.

If you are buying a condo instead

A condo is real property that you own by deed, with a share in the common areas. The building tests are similar in spirit. Under the Full Review process (B4-2.2-01, revised 5 August 2026), no more than 15% of the units may be 60 or more days past due on common expense assessments, and the same limit applies to each special assessment. The budget must fund replacement reserves at at least 10% of the budget, unless a reserve study is used under the stated conditions.

Which tests apply depends on the type of project and on the review route the lender uses. A condo can also sit in the ineligible list above. A condo is not free of building tests.

The board approval is a separate gate

Passing the lender's tests does not complete a co-op purchase. The corporation is run by a board elected by its shareholders under its by-laws, and the by-laws and proprietary lease set crucial terms, including the sublet provisions, according to the New York Attorney General. The Attorney General also encourages prospective purchasers to read the annual report that discloses contracts the board entered into, before signing an agreement of sale. We have not found an official source with general figures for what boards require of applicants, and we do not state any. Treat the building's own documents as the authority.

Before you make an offer

Ask the broker whether the building is a co-op or a condo, and read the offering documents.
For a co-op, ask whether it qualifies under Section 216 and for the latest audited statements.
Ask the managing agent for the budget, the reserve balance and any special assessments, current or planned.
Ask whether there is a flip tax, how it is calculated and who pays it.
Ask for the board's annual report on contracts and read it before you sign.
Ask whether the building has an evacuation order, critical repairs or pending litigation.
Check the commercial space and any hotel-style or short-let use.
Ask the lender, in writing, whether it will lend on this building and at what percentage.
Put any subletting rule or board application requirement in writing before you commit.

What a mortgage scan adds

The scan helps with the lender side: whether your own file suits the standard route or a foreign national loan, and what percentage and cash you should plan for. It cannot tell you whether a particular building passes. For that you need the building's documents and the lender's answer.

Questions people moving from Europe ask

Can I get a mortgage on a New York co-op?

Does a co-op loan work as a second home or a rental?

What does a lender check about the building?

What is a flip tax and does it block a loan?

Why was a building refused by lenders?

Does buying through a co-op board still matter?

Continue your research

Sources (5)

Figures and rules on this page were checked against these sources on 14 October 2026. Rates, prices and local rules change, so confirm anything you rely on before you commit.

Made, reviewed and approved by Bas Terpstra, AFM- and PGN-certified
Basterpstra B.V., Drachten, the Netherlands (AFM 12050993)

Who made this guide. Bas Terpstra makes, reviews and approves every guide, using AI tools and public sources as a starting point. Rules and figures change, so treat this as general information and confirm the details for your own situation.

This page is general information, not personal financial, legal, tax or immigration advice. Nothing here is an offer, and no rate, loan amount, approval or visa outcome is promised. Mortgage availability is subject to immigration status, income, credit, appraisal and lender criteria, and lending, tax and local rules change. Consult a licensed US lender, an immigration attorney and a cross-border tax adviser. Any property securing a loan may be at risk if payments are not made.