As the prices of single family residences (SFRs) continue to climb, we have more and more borrowers shifting their home searches to condos and townhouses. The problem is that they (and their Realtors) often do not account for the impact of HOA dues on their maximum qualification amounts.
HOA dues range from $200 to well over $1,000 in high end areas. The average we see in the Bay Area is probably around $400.
$400 in HOA dues shaves off about $80,000 (depending on rates) from a borrower’s maximum qualification.
If a borrower qualifies for a $500,000 SFR, he will only qualify for a $420,000 condo with $400 in HOA dues.
A rule of thumb in this rate environment: each $100 of HOA dues removes about $20,000 from a maximum pre-approval.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646
