INCOME & ASSET QUALIFICATIONS FOR PURCHASERS:

INCOME:

Manhattan is comprised of many different buildings with varying requirements.

• There are buildings known as Image Builidings where preferable applicants use a much smaller percentage of their income for debt and maintenance – Approximately 15%.


• There are Conservative Buildings where preferable applicants use no more than 25% of their Gross Income for debt service and maintenance.


• And there are Average Buildings where no more than 30% of the Gross Income is allocated for debt service and maintenance.

As a general rule – think less than 30% - 33% of Gross Income for debt and maintenance

Example:
   Sale Price =$800,000
   Maintenance = $950/mo
   Mortgage =$3500/mo
   Total =$4450/mo
   --------------------
   Salary =$200,000/year
   30% of 200k =$60,000

   ---------------------
   Annual Debt = $3500 + $950 = $4450*12 = $53,000 (which is less than $60,000 or 30% of Income)

Note: Some buildings do not consider commission or bonuses as reliable income. In evaluating “commission only” applicants, banks and coop boards will take the average of two or three years’ earnings as their guide. If an applicant’s income is lower than required, he or she should consider obtaining a guarantor, a co-applicant, or a smaller mortgage.

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ASSETS:

Liquidity consists of cash and assets which can be converted to cash within 90 days.
Stocks, Bonds, Treasury Bills & Notes, IRA Accounts, KEOGH Accounts, SEPs, Annuities, Cash Value of Life Insurance, etc

• Image buildings may require liquid assets of two to three times the cost of the apartment


• Conservative buildings look for liquidity equal to the price of apartment


• Average buildings expect two to three years’ maintenance in liquidity


• Lenient buildings require liquidity of at least one year’s maintenance and debt service after the apartment is purchased