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This roomy 2-bed at 1400 Fifth Avenue is available for $825K and has a maximum annual household income requirement of $298K. This roomy 2-bed at 1400 Fifth Avenue is available for $825K and has a maximum annual household income requirement of $298K.
Like a miracle, in a sea of listings you discover a two bedroom that is not only under $600,000 but also under $300,000. Better yet, it’s in a desirable neighborhood, has recently been renovated and comes with a den, a large living room and an eat-in kitchen. What’s the catch? It is nearly certain that if you stumble across this or any similar listings, you are looking at an HDFC (Housing Development Fund Corporation) unit. While there are no hidden catches, purchasing an HDFC unit, if you even qualify, is a decision that should be given careful consideration.

Qualifying for an HDFC Unit

First, there is the problem of qualifying. Unlike a typical co-op, to qualify, you may need to make less—rather than more—money. For example, if you’re a family of four and your declared household income is greater than $150,000 annually, you will likely not qualify for most HDFC units currently on the market. Ironically, this means that a family struggling to qualify to rent an average-priced two-bedroom apartment under the “40-x-the-monthly-rent” rule makes too much money to qualify for most HDFC purchases.

More surprising to many would-be HDFC buyers is what one is expected to bring to the table. Like most co-ops, HDFC co-ops require at least 20 percent down. This means that first-time buyer mortgages, which frequently require only 3 percent to 5 percent down, are out of the question. But cash-strapped HDFC co-ops often require much higher down payments and even seek cash-only deals. In other words, in order to buy into a HDFC building, you will need to be income poor but asset rich.

If you are among the rare breed of New Yorker who qualifies for an HDFC unit, you will be among the lucky few who have the option of purchasing an apartment well under market value. Whether or not it is a strategic purchase in the short- or long-term, however, is another question.

This is an HDFC building with income restrictions. (165% AMI). Gifting and co-purchasing on a case-by case basis.

One Occupant $137,940

Two Occupants $157,575

Three Occupants $177,210

Four Occupants $196,845

Reasons to Buy an HDFC Unit

If you do qualify for an HDFC unit, the short- and long-term gains can be significant. Since the units are usually, but not always, well below market value, your mortgage will likely carry for much less than current market rent on a similar unit. In addition, most HDFC units, which were created to provide affordable housing to people living on low to middle incomes, have relatively low maintenance fees (usually ranging from $300 to $650 monthly). Again, this means significantly lower monthly costs. If so inclined, this also means having more money on hand to invest in one’s unit. As a result, even a unit that requires a gut renovation—and many HDFC units do—may turn out to be a strategic purchase.

Of course, much depends on whether or not you plan to stay for decades or simply for a few years. If you’re buying an HDFC unit with the intention of staying for decades, you’re likely making a great decision. If the unit is located in a co-op with solid financials and it otherwise meets your criteria in terms of space and location, you will save thousands of dollars on housing every year and more importantly, you’ll own in a market where owning can be a challenge, even for fully employed professionals. By contrast, if you plan to move, an HDFC unit may turn out to be an investment you live to regret.

225 South 3rd Street, #9 3 225 South 3rd Street, #9
This is a Pre-war HDFC co-op with the following income restrictions in order to purchase:

- One buyer must make under $100,400

- Two buyers must make under $114,600 combined

Reasons to Avoid Buying an HDFC Unit

Buying real estate in New York City is nearly always a great long-term investment. The one exception to this rule is the purchase of an HDFC unit. While HDFC units are increasingly experiencing bidding wars and in some instances, even being sold at or close to market value, they are also subject to restrictions that work in the favor of co-ops rather than sellers. 


Most notably, HDFC co-ops impose a high flip tax on sales. Typically, 30 percent of a seller’s profits are kicked back to the co-op at the time of the sale. In some buildings, however, the flip tax can be as high as 50 percent. Depending on the co-op, exceptionally high flip taxes may apply to all sellers or only to those who choose to sell after owning for a short period of time (e.g., less than five years). Thus, while HDFC units are frequently sold at a profit (bear in mind that many of these units were originally purchased from the City for a mere $250—yes, $250—so making a profit is inevitable), as a rule, it is never advisable to purchase an HDFC if your ultimate goal is to sell the unit at a profit.

High flip taxes are not the only downside to HDFC purchases. While some HDFC buildings resemble well-managed market-rate co-ops, others have suffered from years of poor management and neglected maintenance. Before purchasing an HDFC unit, you are advised to research the building’s financial history and to investigate whether or not the building has any recent safety or maintenance violations on record. While no one welcomes maintenance fee increases, in HDFC buildings tenants often face the opposite problem. After all, in buildings where many or most residents are living on fixed incomes, keeping maintenance fees low is often considered a greater priority than addressing major building repairs. As a result, one may end up owning their dream apartment but in a building with compromised conditions, and this can impact one’s quality of life, as well as the value of their investment.

Finally, while you may not be planning to move, you can’t always anticipate when and why you will need to move for work or personal reasons. Again, on this account, HDFC units pose unique risks. As already noted, only a small percentage of New Yorkers qualify for HDFC units and cash-strapped HDFC co-ops are frequently looking for buyers with large down payments and even for cash-only deals. This means that HDFC units often sit on the market for weeks and even months longer than units in non-HDFC buildings. To make matters worse, most HDFC co-ops also place restrictions on rentals. This means that in addition to waiting longer than usual to turn over a unit, you may find yourself unable to rent out your unit while waiting to sell.

While there is no reason to avoid purchasing an HDFC unit, it’s by no means recommended for serial movers or buyers hoping to profit from their real estate investments in the short term. With HDFC purchases, the return on investment is something typically only realized in decades, not years.

409 Edgecombe Avenue, #6A 409 Edgecombe Avenue, #6A (Sotheby's International)
Beautiful bright pre-war three-bedroom apartment with open views of Yankee Stadium, Harlem River and Jackie Robinson Park. Located in historic Hamilton Heights atop of Coogan's Bluff. Your new home has been tastefully renovated throughout.

This is an HDFC Building - 120% of AMI which is set annually. Income guidelines are as follows: 1 person $95,520 2 persons $109,200 3 persons $122,880 4 Persons $136,440

1400 Fifth Avenue, #2P (Corcoran)
1400 Fifth Avenue, #2P 1400 Fifth Avenue, #2P (Corcoran)
1400 Fifth Avenue, #2P 1
Please note there are HDFC income requirements-– this home has to be your primary residence, and your gross annual income cannot exceed $298,250.00 for all occupants over 18.

775 Lafayette-Avenue-07
From the Listing: Located on a beautiful tree lined block on Lafayette Avenue in Bedford Stuyvesant. This spacious 3 bedrooms, 2 bathrooms HDFC unit with 1100 square feet is located on the ninth floor, unit 9D of the Shelton. See floor plan and full details here.

323 West 43rd-Stree-t006
From the Listing: Own this charming one-bedroom home and live in a low monthly mortgage and maintenance payment and get so much more compared to studio-sized apartments with the same monthly payment. This is the best buy for the discerning buyer seeking value and lifestyle. Come see for yourself. Step into this renovated and inviting Midtown jewel with windows in every room and feel right at home. The apartment is in excellent condition and move-in ready. See floor plan and full details here.

1842 Adam Clayton Powell Boulevard-02
From the Listing: NEW TO MARKET - This is a rare opportunity to own an architecturally and tastefully designed, spacious, fully renovated 3 bedroom / 1.5 bath penthouse (4 flights up) a block away from Central Park and Morningside Park to the west. See floor plan and full details here.

From the Listing: Welcome home to this warm and inviting, extra-large, bright, and sunny high-floor three bedroom, 1.5 bathroom, mint-condition prewar home with rich oak floors, three exposures, extraordinary all-day sunshine, roofline and open city views on a quintessential, tree-lined East Village block. See floor plan and full details here.

From the Listing: This beautiful spacious apartment is move-in ready, with many unique features, having been recently renovated with high-end finishes, fixtures and appliances and freshly painted (including ceilings and closet interiors). See floor plan and full details here.

330 SOuth 3rd Street
From the Listing: In order to be eligible, you must meet the income requirement guidelines at 120% of AMI which is approximately $95,000 for one person, $109,000 for two persons per household. Maintenance includes real estate taxes, building maintenance, heat and hot water. See floor plan and full details here.

512 East 11th Street East Village
From the Listing: Welcome Home to this breathtaking studio in the heart of the East Village! The open kitchen features custom cabinetry with tons of storage space and stainless steel appliances. The living space is bright and fits a queen-size bed. There is a walk-in closet next to the bathroom that has been completely renovated with subway tiles and a deep soaking tub. Gleaming hardwood floors run throughout the entire apartment. See floor plan and full details here.

648 Grand Stree Williamsburg
From the Listing: Located in the heart of one of the most sought-after neighborhoods in New York City, this spacious one-bedroom apartment is the perfect opportunity to own a property at a low monthly cost. The apartment comes with a newly renovated bedroom with southern exposure, a full kitchen stocked with relatively new appliances, a washer and dryer, a newly renovated bathroom styled with New York City subway tile, and exposed brick walls that bring out the character in this great property. See floor plan and full details here.

Additional Info About the Building

Contributing Writer Cait Etherington Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.