HDFC income limits for prospective purchasers are not flexible. While income limits vary by HDFC, each building must consistently apply its income limit to all buyers. HDFCs which run afoul of applicable income limits risk losing advantageous property tax treatment.
HDFC co-ops have a maximum statutory income limit of 165% of the Area Median Income (AMI) for potential purchasers. However, many HDFCs have lower income limits. HDFC co-ops sold with a 30-year Regulatory Agreement impose a stricter income limit of 120% AMI.
Other HDFCs determine purchaser income limits using a formula as outlined in Section 576 of the NY Private Housing Finance Law.
This formula considers household size, monthly maintenance and utility costs specific to the apartment being purchased as well as the seller’s original purchase price. As such, income limits for Section 576 HDFCs are different for each apartment.
The HDFC co-op board must comply with the statutory income limit of 165% AMI or any stricter requirement as outlined in the building’s corporate documents.
HDFCs typically utilize a purchaser’s Adjusted Gross Income for the past two years to determine eligibility.
Many HDFCs require purchasers to complete the board application and approval process prior to signing a contract.
Purchasers of HDFC co-ops are not subject to ongoing income limits post-purchase.
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HDFC Income Limits FAQ:
What is the income limit for HDFC co-ops?
HDFC income limits are most commonly 165% or 120% of the Area Median Income (AMI). AMI varies by household size. The 2023 AMI for NYC is $127,100 for a three-person family. Therefore, the income limit for a three-person household in a 165% AMI HDFC is $209,715. The Income limit for a 120% AMI HDFC is $152,520. AMI is determined annually for each city by the U.S. Department of Housing and Urban Development (HUD).
Other HDFC co-ops determine income limits utilizing a formula as outlined in Section 576 of the NY Private Housing Finance Law. This formula factors in household size, the apartment’s monthly maintenance and utilities as well as the seller’s original purchase price.
Income limits for Section 576 HDFCs have a statutory cap of 165% AMI. If the formula-derived income limit exceeds 165% AMI, the HDFC must comply with the 165% AMI statutory limit.
How are income limits calculated for Section 576 HDFCs?
Income limits for Section 576 HDFCs are calculated my multiplying 6 (or 7 for a 3+ person household) by the unit’s annual maintenance fee plus utility costs, plus 6% of the seller’s purchase price.
Let’s say you’re buying a Section 576 HDFC with monthly maintenance of $700 and a monthly utility cost of $97. The seller paid $260,000 for the apartment. There are three persons in your household.
This particular apartment’s income limit is calculated by adding 6% of the seller’s original purchase price to seven times annual co-op maintenance plus utilities.
The purchaser income limit in this example works out to $82,800, as outlined in the steps below:
Step 1: Annual Co-op Maintenance: $700 x 12 = $8,400
Step 2: Annual Utilities: $100 x 12 = $1,200
Step 3: Total Annual Housing Costs: $9,600
Step 4: 7 x Annual Housing Costs: $67,200
Step 5: 6% of Seller’s Purchase Price ($260k): $15,600
Step 6: Total Income Limit: $67,200 + $15,600 = $82,800
Where can I find the income limit for an HDFC co-op?
HDFC income limits are specified within a building’s governing documents such as its Certificate of Incorporation, Bylaws and Offering Plan, and any Deed, Regulatory Agreement, or similar document.
Each HDFC must adhere to the more restrictive of 165% AMI or any income limit specified within its governing documents.
Can an HDFC make an exception to its income limit?
HDFC income requirements are not flexible. The HDFC co-op board must ensure compliance with the statutory income limit of 165% AMI or any stricter requirement as outlined in the building’s corporate documents.
An HDFC co-op may be able to raise its income limit by amending corporate documents, but any change applies to all prospective purchasers.
Can an HDFC building remove its income limit?
An HDFC co-op cannot remove its income limit altogether. HDFCs have a statutory income limit for purchasers of 165% AMI. This limit is outlined in Article XI of the Private Housing Finance Law, under which all HDFC co-ops are incorporated.
While an HDFC with a relatively low-income limit may be able to increase it up to 165% AMI, it cannot remove the income cap altogether.
Are there ongoing income limits after buying an HDFC co-op?
Purchasers of HDFC co-ops are not subject to ongoing income limits. HDFC income limits only apply at the time of purchase. You are not required to sell your HDFC apartment if, after purchase, your income exceeds the building’s income limit.
Is there a net worth limit when buying an HDFC co-op?
There are no net worth restrictions for purchasers of HDFC apartments in NYC. NYC considered implementing an asset limit for HDFC purchasers as part of a regulatory overhaul in 2017, but the plan did not move forward.
