First Republic logo, it's a privilege to serve you
First Republic, It's a privilege to serve you logo First Republic, It's privilege to serve you logo
  • Skip to main content
  • Contact us
    • Homebuying Resources
    • Homebuying Resources
      • Getting Started
      • Planning Your Finances
      • Making An Offer
      • After Your Purchase
    • Comfort-ability Calculator
    • Lifestyle Products
    • Lifestyle Products
      • Mortgages
      • Investment Accounts
      • Student Loan Refinancing
    • About Us
    How we can help
    • Events
    • Contact Us
    Tools
    • Historical Interest Rates
    First Republic Logins
    • Banking Online
    • Corporate Online
    • Brokerage Online
    • Trust Online
    • Foreign Exchange Online
    • Eagle Invest
    firstrepublic.com
  • Homebuying Resources Homebuying Resources
  • Comfort-ability Calculator Comfort-ability Calculator
  • Products and Services Products and Services
  • About Us About Us

A Beginner's Guide to Buying a Home in NYC

Jason Novak
Jason Novak Relationship Manager 5 min read
  • Email

New York City’s housing market is unlike any other. Buying your first home in the city may require a large amount of cash, but it’s also a tremendous accomplishment: Once you sign the papers, you will own a home in one of the greatest, most dynamic cities on earth.

Prospective homebuyers in New York face heated competition. Buyers end up in bidding wars over properties due to lack of inventory, which drives up prices even further. As a first-time buyer, how do you gain an edge? 

As you begin your search for a new home, it is essential to be prepared.

Familiarize yourself with NYC's unique homebuying costs before you get serious about your home search.

First things first

A crucial decision for any buyer is where to live. Ask yourself: Do you want a trendy neighborhood close to work? Do you care about living by parks or quality schools, or do you care more about access to nightlife, stores and restaurants? Location is the most important decision you will make because it directly affects your quality of life. Once you’ve chosen your preferred location, find a real-estate agent who is very familiar with that neighborhood and its properties. A knowledgeable agent can give you a huge advantage in the buying process.

Prepare for the costs

Familiarize yourself with costs before you get serious about your home search. New York levies certain taxes on homebuyers that aren’t common in other cities. For example, all buyers in New York state must pay a 1% “mansion tax” on homes costing $1 million or more. Properties sold in New York City costing $2 million or more, however, have an increased mansion tax. This incremental tax is 1.25% for properties $2 million to $3 million and caps out at 3.90% for properties more than $25 million. The city also charges a mortgage tax of 2.05% to 2.175%, depending on the size of the loan. The good news for buyers? Lenders typically cover 0.25% of the mortgage tax.

It’s essential to estimate your costs in advance. Save up and get preapproved or prequalified for a specific loan amount before you start shopping around for a home. Keep in mind that many sellers today do not allow mortgage contingencies in the sales contract, meaning your deposit is at risk if you’re not approved by a bank. Be smart: Get preapproved or prequalified first.

Compare condos versus co-ops

A key decision you will likely have to make once you start home hunting in New York is whether to get a co-op or a condo. There are several key differences.

Co-ops comprise about 85% of all real estate inventory available for purchase in New York. The building is governed by a board of directors. The board must approve all buyers and make other executive decisions, such as authorizing renovations and determining whether to allow rentals. Co-op boards will want to see a buyer’s financial records, employment history and other personal records before approving the purchase.

Co-ops can also enforce other rules, such as requiring that buyers make a down payment of more than 20%. Monthly maintenance fees are often higher than condo buildings.

The upside of buying into a co-op building, however, is the overall purchase price is often lower than buying a similarly sized condo. Additionally, you do not have to pay the mortgage tax or title insurance, because you’re buying shares of a corporation rather than real property. A co-op’s maintenance fees may also be partially tax-deductible.

If you choose the condo route, you will likely pay a higher overall purchase price, but you will have more flexibility to renovate, rent out and eventually sell your condo to whomever you choose.

Know the difference between warrantable and non-warrantable

When buying either a condo or co-op, it’s important to know the difference between the terms “warrantable” and “non-warrantable.” Warrantable buildings are those in which 51% or more of the units are owner-occupied, no more than 10% is owned by one person or entity and less than 20% of the square footage is used for commercial space. Warrantable buildings are deemed to have more price stability because many of the units have already been sold. Some lenders won’t lend to buyers in non-warrantable buildings, due to the concerns over the price stability, until those buildings receive warrantable status.

Keep in mind, however, that many warrantable buildings were once non-warrantable — and buying a condo or co-op in a non-warrantable building that eventually becomes warrantable could be a savvy financial decision. Non-warrantable buildings are also generally newer constructions, which may be appealing to buyers who want more updated features and less initial maintenance.

Build a homebuying support team

When buying property in New York, it’s essential to be financially prepared. Your Relationship Manager can guide you through the financial evaluation and preapproval or prequalifying steps, including helping assess your debt-to-income ratio, credit score, post-loan liquidity and other factors that could affect the buying process. Additionally, your Relationship Manager can help make sure you’re prepared to move forward when your dream home comes along.

 

Home Inspection and Appraisal Tips
Article
Home Inspection and Appraisal Tips
Article

Compare condos versus co-ops

A key decision you will likely have to make once you start home hunting in New York is whether to get a co-op or a condo. There are several key differences.

Co-ops comprise about 85% of all real estate inventory available for purchase in New York. The building is governed by a board of directors. The board must approve all buyers and make other executive decisions, such as authorizing renovations and determining whether to allow rentals. Co-op boards will want to see a buyer’s financial records, employment history and other personal records before approving the purchase.

Co-ops can also enforce other rules, such as requiring that buyers make a down payment of more than 20%. Monthly maintenance fees are often higher than condo buildings.

The upside of buying into a co-op building, however, is the overall purchase price is often lower than buying a similarly sized condo. Additionally, you do not have to pay the mortgage tax or title insurance, because you’re buying shares of a corporation rather than real property. A co-op’s maintenance fees may also be partially tax-deductible.

If you choose the condo route, you will likely pay a higher overall purchase price, but you will have more flexibility to renovate, rent out and eventually sell your condo to whomever you choose.

Know the difference between warrantable and non-warrantable

When buying either a condo or co-op, it’s important to know the difference between the terms “warrantable” and “non-warrantable.” Warrantable buildings are those in which 51% or more of the units are owner-occupied, no more than 10% is owned by one person or entity and less than 20% of the square footage is used for commercial space. Warrantable buildings are deemed to have more price stability because many of the units have already been sold. Some lenders won’t lend to buyers in non-warrantable buildings, due to the concerns over the price stability, until those buildings receive warrantable status.

Keep in mind, however, that many warrantable buildings were once non-warrantable — and buying a condo or co-op in a non-warrantable building that eventually becomes warrantable could be a savvy financial decision. Non-warrantable buildings are also generally newer constructions, which may be appealing to buyers who want more updated features and less initial maintenance.

Build a homebuying support team

When buying property in New York, it’s essential to be financially prepared. Your Relationship Manager can guide you through the financial evaluation and preapproval or prequalifying steps, including helping assess your debt-to-income ratio, credit score, post-loan liquidity and other factors that could affect the buying process. Additionally, your Relationship Manager can help make sure you’re prepared to move forward when your dream home comes along.

Show Full Article

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the tax and legal consequences of any strategies mentioned in this document. This information is governed by our Terms and Conditions of Use.


If you’re ready to learn more about purchasing your new (or next) home, we’re ready to help you explore what’s possible.


Contact us
Recommendations
Article
3 Ways to Find the Perfect Off-Market Home
3 Ways to Find the Perfect Off-Market Home
Colleen Callanan
Colleen Callanan 3 min read
Article
3 Ways to Find the Perfect Off-Market Home
Colleen Callanan
3 Ways to Find the Perfect Off-Market Home
Article
5 Ways to Make Your New Neighborhood Feel Like Home
5 Ways to Make Your New Neighborhood Feel Like Home
James Sherrer
James Sherrer 3 min read
Article
5 Ways to Make Your New Neighborhood Feel Like Home
James Sherrer
5 Ways to Make Your New Neighborhood Feel Like Home
Article
4 Responsibilities for New Homeowners You Should Know
4 Responsibilities for New Homeowners You Should Know
Manny Khalifa
Manny Khalifa 4 min read
Article
4 Responsibilities for New Homeowners You Should Know
Manny Khalifa
4 Responsibilities for New Homeowners You Should Know

Products and Services
  • Mortgages
  • Investment Accounts
Tools
  • Comfort-ability Calculator
  • Historical Interest Rates
How we can help
  • About Us
  • Events
  • Contact us
Connect with us
firstrepublic.com
Animation
  • Locations
  • Privacy Center
  • Your Privacy Choices
  • Security & Fraud Prevention
  • Accessibility
  • Terms & Conditions
  • Contact us
© 2023 First Republic Bank.

Banking products and services are offered by First Republic Bank, Member FDIC and Equal Housing Lender

Investment Advisory services are provided by First Republic Investment Management, Inc. Trust and Fiduciary Services are offered through First Republic Trust Company, a division of First Republic Bank; and First Republic Trust Company of Delaware LLC and First Republic Trust Company of Wyoming LLC, both wholly owned subsidiaries of First Republic Bank. Brokerage services are offered through First Republic Securities Company, LLC, Member FINRA / SIPC. Insurance services are provided through First Republic Securities Company, DBA Grand Eagle Insurance Services, LLC, CA Insurance License # 0I13184, and First Republic Investment Management, DBA Eagle Private Insurance Services, CA Insurance License # 0K93728.

Investment, Insurance and Advisory Products and Services, and Foreign Exchange Transactions, are Not FDIC Insured or Insured by Any Federal Government Agency, Not a Deposit, Not Bank Guaranteed and May Lose Value.
You are now leaving mylife.firstrepublic.com
You are now leaving mylife.firstrepublic.com to visit First Republic. Here you’ll find a variety of products designed to support you every step of the way through life’s milestone moments. From a cost-effective way to access cash to flexible lending options and student loan debt refinancing, First Republic has a solution that can be tailored to meet your financial needs.
Back Continue