HOA fees directly impact condo loan approval by increasing your monthly debt-to-income ratio, potentially reducing how much you can borrow or leading to denial. Lenders also scrutinize the HOA’s financial health, pending lawsuits, delinquency rates, and owner-occupancy ratio as indicators of risk. High HOA fees can signal instability, how HOA fees affect condo loan approval making lenders hesitant even with strong borrower financials.
- “Wait, do banks really care about HOA fees that much?”
- “Can my loan get denied just because the HOA dues are too high?”
- “What if the HOA has pending lawsuits or is broke?”
All fair questions. You’re not crazy for wondering. And yes – HOA fees and mortgage approval are tied together in ways that lenders totally care about.
What are Lenders Actually Looking at With HOA Fees?
You could have a great credit score, solid down payment, no debt — and still get flagged during underwriting. Why? Because high HOA fees can mess with your debt-to-income ratio (DTI).
Here’s why that matters:
- Your DTI tells lenders how much income you have left after paying monthly debts.
- They use this to figure out if your mortgage payment (plus other expenses) is too much for you to handle.
- And yes, HOA fees count as part of your monthly debt load.
So while you may think, “It’s just $400 a month,” lenders think, “That’s $400 less for housing payments.” Boom — that could shrink your approval amount… or kill the loan completely.
How HOA Fees Affect Mortgage Approval (Specifically for Condos)
Condos come with layers of HOA stuff baked right in. And lenders? They know it. So they’re looking way deeper than just the fee amount. They also pull:
- The HOA’s financial health — Are they sitting on reserves, or running on fumes?
- Pending litigation —Is the HOA getting sued? Big red flag for some lenders.
- Delinquency rate — If too many owners are behind on dues, that’s a big problem.
- Owner-occupancy ratio — Too many rentals in the condo complex = higher risk = nope from some banks.
So yeah, HOA fees and mortgage approval is more than just “Can I afford it?” The lender wants to know if the whole setup smells risky.
True story:
A client of mine tried to buy a $320K condo in Miami. Had cash saved, credit score in the 780s. But the HOA fee? $950 per month. Lender ran the numbers, and it crushed their DTI. Bought a townhome instead with $250 HOA fees and got approved in a week.And this doesn’t only hit first-time buyers. Even seasoned investors get burned when they forget HOA dues kill cash flow or spike DTI.
Table: What Lenders Look at with HOA-Involved Properties
| Factor | Why It Matters |
|---|---|
| Monthly HOA Fees | Directly impact debt-to-income ratio — can reduce borrowing power. |
| HOA Reserve Funds | Lenders want to see reserves in case of emergencies, not 0 balances. |
| Litigation | HOAs being sued sends red alert signals for stability and risk. |
| Delinquency Rates | If 15% or more of owners aren’t paying dues, loan could get denied. |
| Owner-Occupancy Stats | More renters than owners usually means higher loan risk = no-go for some underwriters. |
What’s a “Safe” HOA Fee Range for Easy Approval?
There’s no exact number, but here’s what I usually see as green lights:
- Under $300/month — Usually flies under the radar.
- $300–$600/month — Scrutinized. Watch your DTI.
- $600+/month — Harder to get approved unless your income is solid or DTI is low.
Want to spot trouble early? Take that HOA fee, add your proposed mortgage payment, credit cards, student loans, car payments — get the monthly total. Divide that by your gross monthly income. That’s your DTI.
Most lenders want it under 43%. If you’re over that? Chances drop.
FAQs: Real Talk About HOA Fees and Loan Approval
Can I just ignore the HOA when I apply for a mortgage?
Nope. Every lender includes the HOA dues as part of your debt load. It’s not optional.
What if the HOA says their dues will go up next year?
Some lenders only care about current dues. But sharp underwriters look for trends — if those dues keep rising, they might raise eyebrows.
What if I get a private lender or a DSCR loan?
You might dodge the strict Fannie/Freddie rules, but private lenders still want ROI. High HOA fees can burn cash flow fast. If it’s an investment property, it better still cash flow even with the dues baked in.
Is there a way around high HOA stopping my mortgage?
Lower the property price. Put more money down. Or find a unit with lower HOA fees. At the end of the day, the math has to work.
Where can I learn more about smart financing strategies?
Check out the Realpha blog. Tons of ideas to make real estate investing not suck. No fluff, just real talk.
Checklist: Beat HOA Fees Before They Kill the Deal
- Ask the seller or agent for a copy of the HOA’s budget + reserves.
- Get the most recent HOA meeting minutes — that’s where fee hikes live.
- Check the condo’s litigation status online — or just ask your lender for a heads up before final approval.
- Run your real debt-to-income numbers with HOAs included.
I always tell my people: buying a place with an HOA? You’re buying the HOA just as much as the house. Some are cool. Some are broke. Some are chaos with bylaws. Don’t let a $950 HOA payment sneak-attack your loan approval. Lenders check everything. FHA, VA, Conventional… doesn’t matter. They all want to know if the deal’s stable. Tie that into HOA fees and mortgage approval and you’ll stop walking blind into rejections. HOA fees and mortgage approval — understand how lenders think, and you’ll stay approved.