Access Equity From an Investment Co-op
Owners of investment co-ops often struggle to find home equity financing. Many lenders do not offer home equity lines of credit for cooperative apartments, and options become even more limited when the unit is used as an investment property. We offer a specialized HELOC program that lets eligible owners access equity in an investment co-op. The HELOC must be placed in the first lien position.
Investment Co-op HELOC Highlights
- Available for eligible investment co-ops
- HELOC must be in the first lien position
- Maximum combined loan-to-value of 70%
- Minimum credit score of 680
- Minimum loan amount of $100,000
- Revolving line of credit
- Borrow funds as needed during the applicable draw period
- Interest is generally charged only on the outstanding balance
First-Lien Position Is Required
An investment co-op HELOC is only available when the line of credit will hold the first lien position against the cooperative shares and proprietary lease. This program does not offer a second-position HELOC for an investment co-op. If an existing first mortgage remains in place, the proposed HELOC would be second position and would therefore not qualify.
This generally means that:
- The investment co-op is owned free and clear; or
- An existing co-op loan will be paid off through the new HELOC transaction
Understanding the 70% Maximum CLTV
The maximum combined loan-to-value, or CLTV, is 70%. This means the co-op’s total financing cannot exceed 70% of its eligible value. For example, if an investment co-op is valued at $1 million, maximum financing could be $700,000, subject to the borrower’s qualifications, program requirements, and available equity. Because the investment co-op HELOC must be in first position, any existing co-op loan generally must be satisfied as part of the transaction.
Minimum Credit and Loan Amount
Eligible borrowers must have a credit score of at least 680. The minimum HELOC amount is $100,000.
- The appraised or approved value of the co-op
- Existing financing that must be paid off
- The borrower’s credit profile
- Income and ability to repay
- The co-op building’s financial condition
- Applicable lender and co-op requirements
Investment Co-op HELOC vs. Primary-Residence Co-op HELOC
Distinguish between the financing available for an investment co-op and a primary residence.
| Occupancy | Available Lien Position |
|---|---|
| Investment co-op | First-position HELOC only |
| Primary-residence co-op | First- or second-position HELOC options may be available |
We offer second-position HELOCs on eligible co-ops when the apartment is the borrower’s primary residence. However, second-position financing is not available when the co-op is an investment property.
Co-op Approval and Building Review
Financing a cooperative apartment differs from financing a condominium or single-family home. The borrower owns shares in the cooperative corporation, along with a proprietary lease, rather than owning the apartment as separate real property.
- Financial statements
- Insurance coverage
- Offering plan and amendments
- Proprietary lease
- Recognition agreement
- Owner-occupancy and investor concentration
- Underlying mortgage
- Delinquency information
- Sublet policies
- Board or managing-agent requirements
Contact us to discuss your investment co-op and determine whether the property and proposed HELOC meet the program requirements.