Listed on the next page are financing sources and programs that can be used to create cooperative housing, including not only financing itself, but also enhancements that may make financing easier. Using the cooperative principles as the touchstone broadens the possibilities for organizing cooperative housing ownership entities so as to take advantage of the widest range of financing methods. The list should give you an idea of the multitude of sources available to finance your transaction. Keep in mind also, that there may be uses of the funds that can be sliced off, to make it easier for a specific funder to help you and your development take a small step in the right direction. This type of funding can also provide option money or an earnest money deposit required to get the property under option or under contract.
Property development can include grading, sewers, utilities, streets, and sidewalks.
Resident and board training and educational opportunities are needed as part of the creation of the cooperative. Gap financing provides financing for the difference between the permanent mortgage and the total funds required. This is usually necessary, because most conventional lenders will lend only up to 75 or 80 percent of the appraised value or the total development cost of the project. Gap financing can be provided through the use of a second or third mortgage on the real estate. Many of the intermediary lenders and local and state sources of financing are willing to lend their funds as soft loans, thus providing gap financing.