The Mathematics of Buying in NYC

February 1, 2018 | By Thomas Rainey

It may seem obvious, but New York City is expensive. Buying your first home in New York can be prohibitive for most unless you are prepared and plan several years in advance. Even the most successful 20 and 30 somethings can find that their first apartment will be out of reach without significant help from their parents/family member or a lump sum payment from a year end bonus.


That being said it is not impossible.


First you’ll need a downpayment. Most co-ops in the city will require a 20% downpayment of the purchase price in order to buy. In Upper Manhattan(one of the most affordable places to buy on the Island) the average sale price in December 2017 was $614,000. This is below the average for the whole of Manhattan at $1.18M.





A 20% downpayment for a purchase price of $614,000 is $122,800. Your mortgage payment at that price with a 4% interest rate would be around $2,345/Month.  





In addition to that amount you will be paying your Maintenance (Co-op) or your Common Charges and Taxes (Condo). For the sake of this example we will use a monthly charge of $1,000. In total your monthly cost for this example would be $3,345.





Still with me?? Ok….


Then you need to get approved by a building. Approval needs from building to building vary somewhat, but for the purpose of this example I will draw out a conservative picture.


Co-ops prefer a 30% debt to income ratio. This means that your monthly expenses should be less than 30% of your monthly income.  For this example you would need to make at least $11,150/month to qualify. Condos can vary and are somewhat more flexible, but a 30% debt to income ratio is still a good rule of thumb here.





Finally, the building and seller will prefer that you have 12-24 months post closing liquidity after the sale has been completed.  For this example you would preferably need an additional $40,140 - $80,280 in cash after closing for a smooth approval process.



$40,140 - $80,280


You got it??


At the end of the day you need:

Down Payment: $122,800
Post- Closing Liquidity: $40,140 - $80,280
Monthly Income: Above $11,150
Credit Score: Above 730








Oh and then you have to find the home of your dreams and a few other things that I’ll be happy to chat with you about.


If this is you then you have a shot at becoming one of the celebrated few who own a piece of Manhattan.


Call me to make your dream come true!!


The Uptown Man

Thomas Rainey