With a condo you own your unit as real estate. With a co-op you own shares in a corporation that owns the building, and the loan is a share loan, which fewer lenders make and the board must approve.
Side by side
| Co-op | Condo | |
|---|---|---|
| What you own | Shares in the corporation, plus a lease on your unit | The unit itself, as real property |
| The loan | A share loan secured by your shares | A mortgage on the unit |
| Approval | The co-op board approves you and your finances | Usually no buyer approval |
| Lenders | Fewer, often local or specialist | Many |
| Building debt | The co-op’s own mortgage is part of your monthly costs | Separate; dues cover shared costs |
When a co-op fits
- You want the price and community a co-op offers.
- Your finances will satisfy a board review.
When a condo fits
- You want more lender choice and fewer approvals.
- You may rent the unit out, which many co-ops restrict.
Guides and calculators
Questions
What are the requirements to get a co-op loan?
The lender’s credit and income rules, plus the co-op’s: many boards set their own limits on debt, savings left after closing and financing. Get the board’s rules early.
What are the disadvantages of a co-op?
Fewer lenders, a board that can turn you down, limits on renting and sometimes on financing, and a share of the building’s own mortgage in your monthly costs. See also: Co-op loans.
Are co-ops cheaper than condos?
Often, for a similar unit, because the board process and financing limits narrow the pool of buyers. Monthly costs can be higher, since they include the building’s mortgage and taxes. See also: Warrantable vs non-warrantable condos.
