Mortgage Basics

Homeowner Association Dues Affects Your Debt to Income Ratio

Written By  Scott Buehler

When considering a property and you’ve gone through the pre-approval* process to know what your estimated max allowed mortgage is, understand that any monthly commitments have to be included as part of your overall debt-to-income ratio that includes all monthly debts and income.

When you are told your max loan is, as an example, $900/mo, you need to understand that this amount would include any HOA dues. If you are looking at a condo that is $900/mo plus $150 in HOA dues, and your max estimated monthly mortgage needs to be $900/mo or less, then you’d be significantly over and likely wouldn’t qualify.

Understanding this and working with a lower qualified mortgage allowance, HOA dues and fees may significantly affect what you can buy. In my example above, I’d have to lower your total allowed mortgage to fit you in guidelines to get you down to a $750/mo mortgage to account for your $150/mo HOA dues.

* Pre-approval is based on a preliminary review of credit information provided to Veritas Funding which has not been reviewed by Underwriting. Final loan approval is subject to a full Underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.

Scott Buehler

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About Scott Buehler - Author

Your Senior Mortgage Consultant and home loan professional for Utah and California. I've spent years perfecting the home loan process to provide you with the best mortgage experience. Whether you are buying, selling, need to consolidate or lower your rate, call Scott Buehler today at 435-590-1019. Try my Ultimate Guide to Home Purchasing or get started with my pre-qualification questionnaire.

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