Condos vs co-ops: Key differences for US homebuyers
Upfront and monthly costs are just two areas where these common types of home ownership differ.
In US cities, especially New York, condominiums (condos) and cooperatives (co-ops) are common types of home ownership. In each case, homeowners live in separate units of a building. Often these buildings also feature common areas, such as a lobby, hallways, and laundry room(s).
Despite the similarities, there are important differences to consider in how you may use the property, and in each scenario, ownership has a unique meaning.
What does it mean to buy a condo or co-op?
When you buy a condo, you become the owner of the unit. You will also own a share of any common areas in the building.
When you buy a co-op, you become a shareholder in the cooperative that owns the building. As one of the owners of the cooperative, you have the right to live in the unit. You will also have a vote on issues that affect residents.
Key differences between condos and co-ops in the US
| Condos | Co-ops | |
|---|---|---|
| Who owns the unit? | You own the unit. | The cooperative owns the unit. You own shares in the cooperative, granting you the right to live in the unit. |
| What is the approval process like for homebuyers? | Generally, if you can afford the unit, you can buy it. | You will need to submit a detailed package to the co-op board, including bank statements, references, and other documentation. The board can approve or deny the purchase. |
| How much will I need to provide as a down payment? | Down payments are generally flexible and may be as little as 5%. | Most co-ops require a down payment of at least 20%, and some require more. |
| How do upfront and monthly costs compare? | The purchase price for condos is generally higher, but monthly charges are usually lower. | The purchase price for co-ops is generally lower, but monthly charges are usually higher. |
| Who owns common areas, such as the hallways, lobby, and laundry room? | Along with the other owners, you own a share of these common areas and pay fees to maintain them. | The cooperative owns common areas. As one of the owners of the cooperative, you pay fees to maintain them. |
| How are building-wide services such as garbage removal or a doorman paid for? | You pay common charge fees to the condo association. | You pay maintenance fees to the cooperative. |
| How are real estate taxes paid? | You pay real estate taxes directly to the municipality. | You pay real estate taxes to the cooperative, which then pays the municipality. |
| Can I make alterations to the unit? | Yes, you can generally make alterations, subject to the condo agreement. | Alterations require permission from the cooperative. |
| Can I sublet the unit? | Most condos allow for subletting, subject to any limits in the condo agreement. | Many co-ops prohibit any subletting whatsoever. In other instances, there may be a time restriction, an approval process, and/or a fee. |
| Can I sell the unit? | Yes, you can sell to anyone. | You will need the co-op board’s approval to sell to a particular person. |
In summary
Your current savings, monthly budget, and future plans for the home can all help answer whether a condo or co-op might be right for you. The extensive vetting process for co-ops contributes to stability, because applicants must prove they are responsible and reliable. Condos offer the greater flexibility that comes with full ownership of the unit.
You can also connect with our experienced mortgage representatives for answers to all your homebuying questions. Their personalized guidance will take into account your goals, budget, timeline, and UN contract (if applicable) to help you make all the right decisions.
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