In a city with over 250 neighborhoods and 145 zip codes, it should come as no surprise: there’s no one-size-fits-all down payment in New York City real estate. While much of the country still follows the 20% down payment rule, building policies and financing strategy in NYC often complicate the picture. Some buyers manage with as little as 5–10%, while others find that 25% barely cuts it.
Condo Down Payments: The 10%–20% Range
Most condos in NYC allow 10% to 20% down—but it’s always building-specific. If your down payment is under 20%, you’ll likely be required to pay private mortgage insurance (PMI), which is typically rolled into your monthly mortgage payment.
Some banks offer special programs for professionals like doctors, allowing down payments as low as 5%. These programs can be appealing—but only if the building accepts the loan product. The best way to find out? Ask your agent to contact the managing agent and confirm whether the board approves these loan types.
Co-ops: A Whole Different Animal
Buying a co-op demands closer attention to building rules and listing details. If a listing says "75% financing allowed," that’s code for a required 25% down payment. But not all co-ops follow the same rules:
- Small, self-managed co-ops may accept as little as 10% down.
- Larger, luxury co-ops—especially in prime locations—might require 50% or more.
Why the variation? It comes down to shared risk. In a co-op, you own shares in a corporation. If one resident defaults, the others absorb the cost. In a condo, the bank can simply foreclose on that single unit without affecting the others.
Beyond the Down Payment: Closing Costs and Reserves
First-time buyers are often surprised by how much they’ll need beyond the down payment. In addition to closing costs—think attorney fees, mortgage fees, taxes, and title insurance—many co-ops require post-closing liquidity. This usually means 1–2 years of maintenance and mortgage payments in the bank after closing.
Where Will Your Down Payment Come From?
Here’s a closer look at the most common sources—and how they’re viewed by banks and boards:
1. Bonuses
Annual bonuses are a common funding source, but boards and lenders may question large or infrequent deposits. In co-ops, bonuses can be used for your down payment, but boards won’t count them toward your recurring income when evaluating your long-term financial stability.
2. Gifts from Family
Gift money is allowed—but it must be in your account before submitting your board package. The donor must also provide a letter confirming the funds are a gift and not a loan. The earlier the gift is transferred, the smoother your approval process will be.
3. 401(k) Loans and Withdrawals
You can borrow up to $50,000 from your 401(k) without penalty and repay it with interest.
- Over 59½ years old? You can withdraw funds penalty-free but will owe income tax.
- Under 59½ and withdrawing (not borrowing)? Expect a 10% penalty plus taxes—an expensive option that should be used cautiously.
What About FHA Loans?
Looking to buy with as little as 3.5% down through an FHA loan? These buildings are extremely rare in NYC. Why? FHA approval requires buildings to waive their right of first refusal—a key protective clause for condo boards.
In condos, boards don’t get to "approve" buyers like co-op boards do. Their only power is the right of first refusal: if they want to block a deal, they must buy the unit themselves. Most boards don’t want to own apartments nor do they wish to be powerless, so they rarely give up this right.
That’s why very few buildings apply for FHA eligibility. Still curious about where to find an FHA condominium? You can search for FHA-approved buildings here: FHA Approved Condo Lookup
Final Thoughts: Make a Plan, Not Just a Payment
As rents continue rising, more buyers are exploring homeownership as a way to lock in stable housing costs. But navigating down payments in NYC isn’t always intuitive. Between building rules, board scrutiny, and financial strategy, a smart plan goes far beyond the number on your bank statement.
Have questions about what’s possible for you? I’d love to help.
