What are HDFC co-op income caps?

An HDFC is a housing development fund corporation formed under Article XI of the Private Housing Finance Law to hold affordable housing, often a building the City transferred to its tenants. The affordability is not aspirational. It is written into the building’s governing documents: the certificate of incorporation, the City deed and, where one exists, a regulatory agreement.

Section 576 of the Private Housing Finance Law, carried in the certificate of incorporation and repeated in the City deed, sets the limit at six times annual maintenance plus utilities, or seven times where the household has three or more dependents, subject to a ceiling of 165 percent of area median income. Where the deed or a regulatory agreement sets a lower limit, such as 120 percent of AMI, that limit governs instead. Because the formula runs off each apartment’s own maintenance, two HDFC buildings on the same street can produce different caps, so the figure has to come from the building’s own documents.

Verification is documentary. The managing agent or the board will ask for tax returns, pay stubs and sometimes an affidavit, and it counts the income of everyone who will occupy the unit rather than only the person on the contract. Bonus income, self-employment income and a working adult child in the household all matter.

The failure mode the firm sees most often is a purchaser who signs a contract, then discovers the cap after the package is assembled. Confirming the applicable cap and running the household math before signing is a short conversation that avoids a dead deal and a fight over the down payment.