We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is a Cooperative Mortgage?

Mary McMahon
Updated Jan 20, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A cooperative mortgage is a loan to assist with the purchase of cooperative housing such as a condominium or home in a cohousing community. Traditional lenders may be reluctant to extend loans to buyers because of the increased risks associated with cooperative housing, and traditionally, cooperative mortgages have come with higher interest rates and other unfavorable terms. Some lenders specialize in this type of home loan and may offer a better deal than a conventional lender.

Cooperative housing is typically owned by a corporation or similar organization. Members buy shares in the corporation, rather than own their own housing, and make monthly payments to cover maintenance of common areas, insurance, and other costs associated with running the cooperative. Loans for cooperative housing can be risky for lenders, as the risk of default is higher and the corporation may have a loan on the property, which would make the cooperative mortgage a second loan. This can create problems in the event the lender needs to pursue collection action.

The terms of a cooperative mortgage can vary by lender. Some lenders offer deals for low down payment loans, where borrowers may put down as little as 5% of the total purchase price, while others require 20% or more. The interest rate may be higher than that of a conventional mortgage unless the borrower has excellent credit and appears to be a low risk. Other terms, such as requirements to carry mortgage insurance, may also be included in the loan.

Borrowers can use a cooperative mortgage to buy a share in cooperative housing and must abide by the terms of the housing corporation as well as the mortgage. The cooperative may have an owner-occupied requirement, which is a mandate that a certain percentage of units be occupied by owners rather than renters. This is supposed to reduce risks for the cooperative, as new tenants typically need to pass a board interview and demonstrate that they are suitable additions to the community, and a constant turnover of tenants would be a nuisance for the cooperative.

Buyers interested in cooperative housing who know they will need a cooperative mortgage can talk to a broker about their options. A member of the cooperative may have a recommendation for a specific mortgage broker or loan product, but it is advisable to research independently as well and get a broad overview of the available options. Loan rates can also be highly variable, and it is important to review all loan offers to determine when they expire, as a low rate might not last very long and the borrower will need to move quickly to lock it in.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.