Affordable Homeownership in Brooklyn: A Guide to HDFCs for Buyers

In New York City, affordable housing is often associated with rentals. Still, an alternative for those looking to own a home without breaking the bank is limited equity housing co-ops, specifically Housing Development Fund Corporations (HDFCs). These co-ops are tailored for lower-income individuals and families, offering below-market prices and strict income caps.

What Are HDFCs?

HDFCs were established to address housing challenges by allowing tenants to form co-ops and take ownership of their buildings, primarily in cases where landlords neglected their responsibilities. Initially sold for a mere $250 per unit, these co-ops have appreciated over the years, with prices now ranging from $350,000 to $500,000, still considerably lower than market rates. Currently, there are approximately 217 HDFC listings in NYC, showcasing a variety of options in different neighborhoods.

Affordable Living with HDFCs

One of the major advantages of HDFCs is their affordability, not just in terms of purchase prices but also monthly maintenance fees. These co-ops often benefit from partial tax exemptions and subsidies, helping to keep operating costs and maintenance charges minimal. Prospective buyers must meet specific income caps tied to the area median income (AMI), ensuring that HDFCs primarily serve as affordable, long-term housing rather than investment properties.

Qualifying for an HDFC Co-op

While prices for HDFC co-ops have increased, especially in rapidly gentrifying neighborhoods, potential buyers face the challenge of creating a down payment while adhering to the income cap. Despite this, HDFCs attract buyers with lower incomes but significant assets, such as retirees or those with familial financial support. Financing for HDFCs can be challenging to secure due to limited equity co-op structures, often resulting in all-cash transactions.

How to Find an HDFC Co-op

To begin your journey toward purchasing an HDFC co-op, contact the Urban Homesteading Assistance Board (UHAB), an organization dedicated to assisting low- to moderate-income residents in their housing goals. Utilize advanced search features on real estate listing platforms like StreetEasy to filter for HDFCs and ‘income-restricted’ properties. Due diligence is key; research whether the building is approved for financing and understand the maximum income guidelines.

The HDFC Experience

Many HDFC co-ops foster a sense of community, with long-term residents and a family-oriented atmosphere. Succession guidelines allow shareholders to pass down their units, enabling multiple generations of a family to reside in one apartment. However, engaging with the building’s governance actively is essential, particularly in buildings that may require renovations or repairs.

Closing the Deal

The sales process for HDFC co-ops is similar to that of traditional co-ops, albeit with additional paperwork and a slower timeline due to government oversight. After government approval and board acceptance, the closing process can take several more weeks.

HDFCs offer a unique opportunity for affordable homeownership in Brooklyn, attracting individuals and families seeking long-term housing solutions. By understanding the income guidelines and engaging with reputable organizations like UHAB, you can navigate the process and make informed decisions in pursuing an HDFC co-op.

If you’re interested in pursuing this option, we highly recommend real estate attorney, Rashidah Siddiqui. You can find her online here!

If you’re interested in learning more about the buying process, download our free Buying Into Brooklyn Ebook. We share a ton of valuable resources to demystify the buying process and help you become a Brooklyn home-owner.