More HOA Dues = Less House; Personal Litigation


This is another reminder that HOA dues can significantly offset purchasing power, as HOA dues are a payment that affects debt ratios like every other monthly payment.

In this low-rate environment, $100 of HOA dues can offset purchasing power by as much as $20,000.

In other words, a buyer looking at condos might only qualify for a $300,000 unit if the HOA dues are $500.

That same buyer, however, might qualify for a $400,000 single family residence with no HOA dues.


Every mortgage loan application (“Form 1003” to be official) has a question that asks if a borrower is involved in litigation.

This is not to be confused with litigation involving properties, particularly condos. The 1003 refers specifically and only to personal litigation.

If a borrower checks “yes,” underwriters will ask for copies of the complaint/lawsuit and related paperwork.

They may also want to make sure a borrower has sufficient insurance, if the borrower is being sued for a tort claim – accident, etc.

In addition, underwriters may ask for a letter from the borrower’s attorney setting out potential liabilities, total potential attorney fees and/or the nature of the litigation itself.

Being involved in litigation is not a deal killer, but it often can threaten the ability to qualify whether a borrower is a plaintiff or a defendant.

If litigation is major and public record, borrowers should of course fully disclose it.

If litigation is minor, however, and not yet public record they should discuss it with their lender/loan officer.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646

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