Have you decided to buy an apartment? Before jumping into the process of choosing a real estate agent, browsing listings, and scheduling tours, it’s important to get your finances in order. Taking this step early on will help you present a stronger mortgage application and give you a clearer understanding of your financial position—before you fall in love with a specific property.

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Before You Start: How Much Can You Afford?

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To calculate your budget for a home, examine your recent spending patterns. Look at your bank statements and expenses for the past few months, including bills for cell phones, streaming services, and restaurant takeout. The Consumer Financial Protection Bureau provides a spending tracker to help you track your monthly expenses.

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To calculate your budget for a home, examine your recent spending patterns. Look at your bank statements and expenses for the past few months, including bills for cell phones, streaming services, and restaurant takeout. The Consumer Financial Protection Bureau provides a spending tracker to help you track your monthly expenses.

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Next, determine the amount you want to spend each month on your home payment, including principal, interest, taxes, and insurance. Many lenders use the Federal Housing Administration formula, which suggests that you should allocate no more than 31% of your monthly income to housing expenses. However, this amount may vary based on your debt levels. Buyers with no other debt may be able to spend up to 40% of their monthly income on housing. Remember that you’ll still need to budget for other expenses, such as utilities, maintenance, and food. Your debt-to-income ratio, including car payments and credit card bills, should not exceed 43%.

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For example, if your annual gross income is $100,000, your monthly gross income is $8,234, and you can allocate 31% or $2,584 to your monthly mortgage if your total debt is below $3,584 a month. Click here to use a mortgage calculator to estimate your monthly mortgage payment based on current interest rates.

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Besides the mortgage, buying a home involves one-time costs such as closing fees, legal expenses, inspections, and moving expenses. All fees are discussed later. Due to the high competition in the housing market during the pandemic, some buyers are choosing to waive contingencies, which include options to cancel a purchase in case of significant home repairs, renegotiate if the home is appraised below the purchase price, or pull out of the deal if financing is not obtained within a reasonable time frame. Waiving contingencies can make it easier to get your offer accepted, but it also leaves you vulnerable to extra costs after the sale is completed, so be cautious.

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While determining a final number, consider the following factors:

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Your Spending Patterns

Look at your bank statements and expenses for the past few months, including bills for cell phones, streaming services, and restaurant takeout. The Consumer Financial Protection Bureau provides a spending tracker to help you track your monthly expenses.

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Housing Expenses / Income

Federal Housing Administration suggests that you should allocate no more than 31% of your monthly income to housing expenses.

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Debt / Income

Your debt-to-income ratio, including car payments and credit card bills, should not exceed 43%. However, if you’re buying an apartment in a co-op, the typical requirement is for DTI to be 25% or below.

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Tip: Paying a larger amount of cash upfront for your home reduces the amount you need to borrow, lowering your monthly payments and lowering the amount of interest you pay over time. If you can afford a down payment of 20% or more of the home’s price, you usually won’t need to pay for mortgage insurance, a premium that protects the lender in case of default. However, don’t use all your funds for a big down payment, as lenders want to see that you have some savings. Closing costs must be considered, along with costs for moving, renovations, and other unexpected expenses. The approximate closing cost for a co-op is slightly over 1.5% of the asking price, while it’s slightly over 3.5% for a condo or a house.

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Step 0: Choose a Real Estate Agent

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A real estate agent is a valuable resource for anyone buying a home. They act as expert guides and provide objective information and opinions to help you find the right home that meets your needs and budget. They have access to the full range of available listings and can help you negotiate the best deal. A good real estate agent can stay up-to-date with changing laws and regulations, provide emotional support during home-buying, and ensure fair and ethical treatment.

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Question of the Year: Who's Paying the Buyer's Broker's Fee?

In light of the recent NAR settlement, many buyers are questioning whether they’ll have to pay their broker’s commission directly. Understandably, this has caused some hesitation about working with a buyer’s agent. The truth is, most sellers in Manhattan are still paying the broker’s fee, making it an advantageous arrangement for buyers.

 

When you sign an Exclusive Buyer Agency agreement, the buyer’s agent is entitled to a commission. But what are the chances that you, as the buyer, will end up paying any additional costs on top of this? According to the latest data from Compass, the likelihood is remarkably low. Here’s why:

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Compass Buyer-Side Commission Analysis (Manhattan, December 2024)

• 733 new listings were added in Manhattan in December, of which 131 were listed by Compass (17.6% market share).

• Average buyer-side commission: 2.71% (slightly up from November’s 2.69%).

• Out of the 131 listings that were listed by Compass:

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Breakdown of Buyer-Side Commissions:

• 0 listings offered 0% buyer commission.

• 0 listings offered 1% buyer commission.

• 0 listings offered 1.5% buyer commission.

• 7 listings (5.34%) offered 2% buyer commission.

• 1 listing (0.77%) offered 2.25 commission.

• 63 listings (48.09%) offered 2.5% buyer commission.

• 59 listings (45.04%) offered 3% buyer commission.

• 1 listing (0.76%) offered 4% buyer commission.

• 0 listings offered more than 4% buyer commission.

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Key Takeaways​

• Less than 2.5% buyer-side commission was offered on only 6.11% of listings.

• Less than 3% buyer-side commission was offered on 54.2% of listings.

• The majority of listings (93.89%) offer commissions at or above 2.5%.

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Conclusion

For example, by signing a 2.5% Exclusive Buyer Agency Agreement, the likelihood of you paying any commission is extremely low. According to verified Compass data from December 2024, 93.89% of listings in Manhattan offered a buyer-side commission of 2.5% or more—making it very likely that the seller’s offer will fully cover your agent’s fee. Only 6.11% of listings offered less than 2.5%, and in all of those cases, the difference was 0.5% or less. In exchange, this agreement ensures you have professional representation throughout the complex Manhattan buying process. A dedicated buyer’s agent will advocate for your interests, offer strategic market insights, and guide you toward securing the best possible deal.​

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Ready, set, go!

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Step 1: Financing

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1.1 Assess Your Credit Score

Credit scores, also known as FICO scores, are used by lenders to assess the risk of lending to you. The scale ranges from 300 to 850, with higher scores indicating lower risk. According to the Consumer Financial Protection Bureau, borrowers with credit scores in the mid-to-high700s or above usually receive the best mortgage rates.

To find out your score, go to annualcreditreport.com and get your free report once a year. Note that each of the three major credit-reporting bureaus — Equifax, Experian, and TransUnion — generates its own FICO score based on the data they have. You can find all three scores here.

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If your FICO score is low, you can improve it by paying off high credit card debt and correcting any financial mistakes like errors from identity theft or mixed-up files with similar names. Be patient, as changes to your score may take time, from months for a corrected bill to years for resolved tax liens or bankruptcies. However, cleaning up your credit can significantly impact your mortgage rate.

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1.2. Choose a Lender

Digital lending platforms such as Better.com, Rocket Mortgage, and LendingTree are becoming increasingly popular due to their convenience and potential to reduce bias in the loan industry. However, if you have a history of inconsistent employment, credit challenges, or are relying on gift funds for your down payment, these platforms may flag your application for a more thorough review, which can slow things down. In such cases, working with a traditional lender—an actual person at a bank or credit union—may lead to a smoother experience. Another great option is working with a mortgage broker. Unlike banks, brokers aren’t tied to a single lender and can shop around on your behalf to find competitive rates and terms. Just keep in mind that their fee, typically a percentage of the loan amount, is usually paid by the lender. Banks, on the other hand, may offer better rates to long-term customers with strong financial profiles.

 

Whichever route you take, it’s essential to compare offers from several sources to find the best deal. Ideally, get quotes from a mix of traditional lenders, mortgage brokers, and digital platforms. If you’re not sure where to start, your real estate agent can connect you with a trusted lender from their professional network.​​

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1.3. Get Mortgage Pre-approval

When a buyer’s agent submits an offer, the listing agent will typically request a pre-approval letter. This letter, issued by a lender, estimates how much you’re likely qualified to borrow and helps establish your budget. More importantly, it signals to sellers that you're financially prepared to purchase a home. Pre-approval is different from pre-qualification. While pre-qualification is a rough estimate based on unverified information, pre-approval generally involves a more detailed review of your finances. Many lenders require documents such as pay stubs, bank statements, and tax returns to issue a pre-approval. However, some lenders may offer a "pre-approval" based solely on your credit report, income history, and other basic financial data—making it more similar to a pre-qualification, despite the name. Be sure to ask your lender what’s included in their process so you can gauge how seriously your pre-approval will be taken by sellers.

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1.4. Secure the Funds (Down Payment, Closing Costs, Post-Closing Liquidity)

When a buyer’s agent submits an offer, the listing agent will typically request the following three items:

 

1. A pre-approval letter

2. Proof of funds showing enough to cover the down payment, closing costs, and post-closing liquidity (if purchasing a co-op)

3. A completed REBNY Financial Statement

 

In some cases, agents may only ask for either proof of funds or the REBNY Financial Statement—in which case providing just one will be sufficient.

 

If you need to transfer funds into your account to show proof of assets, be sure to do so in advance. If any portion of the money will be gifted—whether from a parent, spouse, or if the parents are purchasing the home for their child—it's important to disclose this to the listing agent. The seller may request proof of funds from the person providing the gift or the parents buying for children. Additionally, if it’s a co-op, confirm that gifting or parents buying for children is allowed by the building, as some co-ops restrict or prohibit these arrangements. In some cases, co-purchasing might be the solution if the building does not allow gifting or parents buying for children, but allows co-purchasing.

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Step 2: Apartment Shopping

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2.1. Select the Neighborhood

To pick the right neighborhood for you, consider factors like affordability, the location of your work and schools in case you have children, and what your real estate agent suggests based on your needs. Explore the neighborhoods you’re interested in by visiting shops, restaurants, and public spaces. You can also use online tools and quizzes to help determine the best fit for your needs.

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2.2. Shop Around

Check the listings that your real estate agent shared with you based on your criteria. If you’d like to, you can expand your search by browsing real estate websites to get an idea of what’s available in your desired area. While doing that, don’t forget to eliminate neighborhoods that don’t meet your style, size, and price criteria. Your real estate agent will let you know when there is a price change in any apartments you’re interested in. Your real estate agent will also analyze and give you information about the history of each listing, including its length of time on the market and price changes, to determine if a home is overpriced or has been unsold for a long time. There’ll be a lot of back and forth between you and your real estate agent until you narrow your options to the homes you want to view in person.

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2.3. Tour Apartments

Let your real estate agent know which apartments to tour so they can set the appointments. Note that touring in person is crucial! Some buyers opt for virtual tours instead of in-person visits. Although virtual tours are convenient, they may hide some flaws. An in-person showing with your real estate agent will allow you to look closely at a property and reveal things that video tours cannot. During showings, take the time to open closets, pull back curtains, walk through the backyard, and ask questions about the house rules, location, utilities, and past improvements.

 

Did you know we have designated drivers that take us to the apartments you want to tour?

Learn more about our complimentary luxury fleet

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Step 3: Making An Offer

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Finally, after carefully considering the pros and cons of the properties you’ve toured, you think you’ve found your ideal home and are ready to move forward.

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3.1. Evaluate the Market

To determine a fair offer, your real estate agent will provide you “comps” showing comparable homes of similar size that have recently sold in the area and assist you in creating an offer strategy that includes determining the room for negotiation.

Another benefit of having your real estate agent with you is preventing the conflict of interest that might occur if you don’t have one and the seller’s agent represents both you and the seller.

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3.2. Negotiations

Remember that making an offer on a home is the beginning of a negotiation process. You want to pay as little as possible while still securing the home, while the seller wants to get the highest possible price. A convenient starting point for the first offer is 5% below the asking price, but this can vary based on market conditions. You will face multiple bidders in a competitive market, whereas you will have more bargaining power in a soft market. When making your first offer, keep your budget in mind and limit how much you are willing to pay. Your real estate agent will fully assist you during this process and tell you everything you need to know about the current market.

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3.3. Potential Bidding War

In a highly competitive market, where desirable homes are in high demand, you may have to be ready for a bidding war. While the highest offer is often the winner, making a solid first offer can give you an advantage.

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To make your offer stand out to the seller:

• Increase your down payment

• Be flexible about the closing date

• Be willing to waive contingencies
   

Your agent will provide you with the best strategy.

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3.4. Submit a Formal Offer

After you and the seller have agreed on a price, your agent will draft a formal offer for you to review. The seller’s agent will then review the offer, and if it is accepted, you may need to provide a cash deposit (also known as “earnest money”) to demonstrate good faith. This deposit will be held in escrow until closing and will be applied to your down payment.

The formal offer should include the terms and conditions of the purchase, including payment information and any contingencies (if they have not been waived). Legal requirements and the specific process may vary depending on your location.

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Tip: Avoid Emotional Attachment

This can be the most challenging aspect of purchasing a home. Be ready for potential setbacks, as counteroffers and rejection are common. Remember, even if the seller verbally accepts your offer, they may still entertain and accept other offers (this may depend on your state’s laws). Furthermore, even after you have a signed contract, there’s still a chance of problems arising — for instance, the co-op board might reject the sale in the case of a co-op purchase. Having a real estate agent is crucial to leading the process as smoothly as possible and keeping everything under control.

Once your offer on a home has been accepted, the process of becoming a homeowner begins. While you may be eager to move into your new home, it is essential to take the necessary steps to ensure that you get a home in good condition and at a fair price.

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3.5. Review the Contract

After you and the seller have agreed on the price, concessions, and closing timeline, the seller’s attorney will draft a contract. Analyze the contract of sale, building financials, board minutes, and contingencies with your attorney and let them negotiate to revise the terms if needed. It’s vital to have a good real estate attorney who has time for you and actively seeks your interest.

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3.6. Conduct a Home Inspection

This step could also be done after signing the contract as long as the purchase contract is contingent on home inspection. However, having this done before signing the contract is the safest and most reasonable way. While your attorney's reviewing your contract, work on getting the apartment inspected before signing the contract. Home inspections can uncover potential issues preventing you from buying the home. The inspection usually takes around one to three hours, depending on the size and type of the property. Condos and co-ops typically cost around $400-$500.​​

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3.7. Sign the Contract and Put the Deposit Down

You sign the contract and put the deposit down.

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Step 4: Closing

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4.1. Secure the Mortgage

This step is likely to take the most time compared to other parts of the process. Once you're in contract, it's important to stay in close communication with your lender and make sure you're on track to secure your mortgage. While you may already have a pre-approval, lenders will typically request additional documentation before issuing a formal loan commitment.

 

Some of the items they may ask for include:

– Updated bank statements

– Recent pay stubs or income verification

– Employment verification (especially if there's been a change since pre-approval)

– Letters of explanation for large deposits or financial gifts

– Proof that funds for the down payment and closing costs have been transferred to a U.S. account (for international buyers)

– Confirmation of any outstanding debts or liabilities

 

Responding promptly and thoroughly to these requests will help keep your mortgage process on schedule and reduce the risk of delays before closing.

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4.2. Get an Appraisal

Before finalizing a mortgage to purchase the home, the lender will need to assess the property’s value to ensure it aligns with the amount you are borrowing. An appraisal considers factors such as the home’s layout, square footage, and comparable sales in the area to determine the home’s value. The lender chooses the appraiser, but as a buyer, you can ensure that the appraiser is licensed and familiar with the area. Ask to see the appraiser’s credentials and how many appraisals they have performed in the area. If you are not satisfied, you can request that the lender choose a different appraiser.

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Appraisal fees, usually paid by the buyer, vary greatly based on the scope of work and the size of the home. On average, a single-family home appraisal costs around $400, but some may cost over $1,000.

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4.3. Navigating the Board Application Process(****)

Once you’ve signed the purchase contract for a condominium or co-op, the next critical step is while working on finalizing your mortgage is often the board application and approval process. Unlike single-family or multifamily homes, condos and co-ops require you to meet certain criteria set by the building’s governing body. Here’s what you need to know, from start to finish:

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Understanding the Purpose of the Board Application

Condos and co-ops have boards that maintain standards for who can live in the building. These governing bodies want to ensure that future residents will be financially responsible, respectful community members who contribute to the overall harmony of the property.

 

What’s in the Board Package?

Your board application (often referred to as the “board package”) typically includes:

 

• Financial Documents: Tax returns, pay stubs, bank statements, and proof of funds demonstrating your ability to meet monthly maintenance or common charges.

• Personal Information: Personal and professional references, employment history, and sometimes letters of recommendation.

• Purchase Details: A copy of the signed contract, loan commitment letter (if financing), and any other closing-related documents.

• Application Forms and Fees: Each building has its own set of forms and processing fees, so follow instructions carefully.

 

Tailoring Requirements to Your Property Type

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• Co-op Boards: These are often the most thorough and stringent. They have significant discretion in deciding who is approved and may request interviews, additional documents, or clarifications. Approval is not guaranteed, so it’s essential to present a well-prepared, polished package.

• Condo Boards: While typically less restrictive than co-ops, condo boards still require documentation and sometimes personal interviews. Their primary focus tends to be on financial stability and adherence to building rules.

• Single-Family & Multifamily Homes: If you’re purchasing a single-family or multifamily home, there’s no board approval process. After the contract is signed and inspections are completed, you can proceed directly to closing.

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Timelines and Variations

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• Timing: The board review process can take anywhere from a few weeks to a few months. Delays may occur due to incomplete documentation, high application volume, or additional questions from the board.

• Communication: Your real estate agent and attorney will guide you through the process, helping to ensure all documents are complete and submitted promptly. Keep open lines of communication to address any board requests quickly.

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Preparing for the Interview (If Required)

Some boards, especially co-ops, require a personal interview. To prepare:

 

• Be Professional: Dress appropriately, arrive on time, and have a polite, friendly demeanor.

• Know Your Documents: Be familiar with what you submitted and ready to clarify any details.

• Demonstrate Commitment: Show that you intend to be a responsible, long-term community member.

Staying Organized and Proactive

 

Checklists: Use a checklist to track required documents, fees, and deadlines.
Follow Instructions Exactly: Every building’s application process is unique. Carefully follow the board’s instructions to avoid delays.
Be Responsive: If the board requests additional information, provide it as soon as possible.

 

Final Approval and Next Steps

Once the board approves your application, you’re clear to move forward to the closing phase. From there, you’ll coordinate with your attorney, mortgage lender (if applicable), and any other relevant parties to finalize the purchase and schedule your move-in.

 

In Summary

For condos and co-ops, the board application process is a crucial step that can influence whether you’ll be able to close on your new home. Preparation, organization, and transparency are key. By understanding what’s required, following instructions meticulously, and presenting yourself as a financially sound, community-minded resident, you can help ensure a smoother path to approval. For single-family or multifamily home purchases, no board approval is required, streamlining the process and allowing you to move forward more quickly.

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4.4. Title Search

Title search includes examining public records to determine and confirm a property’s legal ownership. Title searches are conducted through many sources, including deeds (*), tax liens, land records, and court judgments, among others. A clean title is required for any real estate transaction to be completed. Transactions cannot be completed if a title search determines a lien on the property.

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4.5. Homeowner’s and Title Insurance

To protect your investment, you should purchase homeowner’s and title insurance (*), which your lender typically requires. Your real estate agent can assist you during this process. The American Land Title Association provides a database of title insurance companies by state. You can compare homeowners' insurance rates on sites like Insure.com and NetQuote.com and potentially save by combining homeowners' and auto insurance with the same company. Consumer Reports offers an online guide for buying homeowner’s insurance.

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4.6. Final Walk-Through

Before closing on your new home, you must do a final walk-through with your real estate agent to ensure everything is as outlined in the sales contract. Check everything during daylight, including fixtures, built-ins, lights, water, appliances, and toilets. If new issues arise, such as an uncleared attic or broken window, request a credit at the closing to pay for removal or repairs.

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4.7. Close the Deal

On closing day, all parties involved, including the seller, buyer, and representatives, will sign the papers to finalize the deal officially. Buyers must bring a check to cover their part of the closing costs. This might include Mortgage Recording Tax (***), Mansion Tax, Transfer Taxes (**), attorney fees, and more. After all documents are signed and funds are distributed, the deed of ownership will be transferred to you.

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(*) It is not applicable if the apartment you’re buying is in a co-op building.

(**) It is applicable if the apartment you’re buying is in a new development.

(***) It is applicable if you’re getting a mortgage.

(****) It is applicable only for condo and co-op purchases.

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Congratulate Yourself!

You’ve done it! The apartment is now yours. Grasp the keys tightly and relish the excitement of entering your new home for the first time. Imagine the wonderful life you’ll lead within its walls.