Can Buying in an HOA Affect Your Chances of Buying a Home?

Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
Can Buying in an HOA Affect
Your Chances of Buying a Home? 
       Homeowners Associations (HOA) ... and the fees/dues associated with them ... come in all sizes, shapes, and forms ...    
     While many Chicagoland properties are not associated with any Homeowners Association (HOA), many ... especially those built after or during the 1980's ... are likely to lie within a subdivision with an established HOA - Homeowners Association.
     These Associations usually provide commonly owned facilities or services for the benefit of ALL property owners within the Development.
     Some examples of amenities and services supported by Homeowners Associations/Fees are:  

  • Parks 
  • Pools 
  • Tennis Courts
  • Marinas
  • Clubhouses
  • Recreational Facilities 
  • Signs 
  • Lawn Care/Snow Removal
  • Retention Ponds
  • Walking Paths
  •  More ...  
     The cost of maintaining these facilities is shared among the Association's homeowners.  Homeowners pay fees or dues to cover these costs by monthly, quarterly, or annual payments to the Association.
     Whatever the frequency of payments made to the Association ... when it comes time to seek financing to buy (or Refinance) within an HOA, a monthly cost is calculated for Mortgage Qualifying Purposes.  In the case of Chicagoland Condominium or Townhouse Associations, the dues are typically paid monthly.  Potential homebuyers should be aware, some HOA fees/dues can be fairly substantial.
     It only stands to reason then:  Mortgage Lenders must factor Association dues into a decision to Approve or Deny a mortgage ... even though Association Dues are paid separately from your Mortgage Payment.
     Many potential mortgage clients are unaware or caught off-guard regarding this fact:
     Homeowner Association dues/fees are treated by Mortgage Underwriters just like Real Estate Taxes, Homeowners Insurance, or Private Mortgage Insurance are.  Each of these various sectors of owning property is counted as a housing expense when Approval for Mortgage financing is sought.
     To showcase how this can affect a Mortgage Approval and monthly Mortgage Payments, consider the following comparison between a purchase of two (2) similar properties.
     Borrower #1:  Buys a home of the same Sales Price as a Borrower #2, but ... the property Borrower #1 purchases is NOT located within a Homeowners Association and has NO Association Fees.  
     As a result:  Borrower #1 will have a monthly housing payment lower than Borrower #2 because they will not be paying a monthly HOA fee.
     Borrower #2:  Because of the Homeowners Association associated with the property they hope to buy ... and the fees they will need to pay, Borrower #2 must:  
  • Have a higher monthly income in order to qualify for the payment that includes the HOA fee


     OR Consider other options:  


  • Consider lower-priced homes in order to be able to qualify for a Mortgage/Monthly Payment that includes an HOA fee  
  • Consider same-priced property that does not lie within an HOA or are unaffected by HOA fees/dues  
       When a home being considered for purchase lies within a homeowners Association, it can affect more than the periodic HOA fees/payment you make as a Homeowner.  It can also determine whether you can financially qualify to purchase the home.
     Good communication and ongoing dialogue between all parties ... Borrower (Buyer), Agents, and Mortgage Originator, etc., is vitally important during any property search, but especially in these more unique scenarios.  
     Each helps you secure the information and guidance needed to make sound decisions regarding differing property and financing.  This is even more important when a Homeowners Association and accompanying dues come into play.
     Thoroughly discussing all the options you have (both financially and property-wise) with your mortgage and real estate professionals prior to viewing homes will make for a much more fluid, less stressful home buying experience.         

*  When in need of Mortgage info or service when buying (or refinancing) a home in Will County or elsewhere in Chicagoland, contact me.  I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.
     I'm easily found at:
Gene Mundt
Mortgage Originator  -  NMLS #216987  -  IL Lic. #031.0006220  -  WI Licensed
American Portfolio Mortgage Corp.
NMLS #175656
Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  815.524.2281
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656


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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Gabe Sanders 12/04/2016 11:15 PM
Home Buying
Illinois Will County New Lenox
1st Time Buyers
Chicagoland and Northern Illinois Real Estate
homeowner associations
mortgage advice
hoa fees and dues
buying a home in a homeowner association
mortgage qualification and approval

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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad


First of all I wanted to wish you a very Happy Thanksgiving holiday with your family!

This is such important information. The HOA fees can make a huge difference in what buyers might qualify for and they don't generally consider these nor the implications for qualifying. And some of them can be pretty hefty, and for first time buyers they can be particularly challenging.

And then you get into the issues of challenges with the HOA itself - residents late on paying HOA fees, litigation, low reserves, etc.


Nov 22, 2016 03:30 AM #1
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Gene - Very informative post. Those fees can have a large impact. We're listing a townhome now that has a $350/momth fee and we can see the impact on buyer interest - and it certainly affected our pricing recommendation. But we're also running into issues where the state of the HOA financially or in regards to management can negatively impact a loan approval as well.

Nov 22, 2016 12:19 PM #2
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce - Short Sale

Happiest of Turkey I contemplate the letter that goes to the hoa we belong to that does nothing....and the infractions are becoming more visible and's not just maintaining common is maintaining value.

Nov 22, 2016 07:24 PM #3
Patricia Feager
Selling Homes Changing Lives

This is great information! In my area there are many subdivisions with HOA's. The problems many buyers encountered in this part of TX are rising HOA fees that weren't factored in when their loans were approved. I think the worst I've ever seen were low HOA with awesome amenities. Many people bought new construction because it sounded too good to be true. The problem is, it was too good to be true. Shortly after most moved in, they built schools and those people who were comfortable found out their property taxes went sky high to pay for new schools and the HOA's went up too. Subsequently, many went into foreclosure.


Nov 23, 2016 02:46 PM #4
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Gene.  This is an excellent post that anyone considering a purchase in an HOA community should understand.

Nov 29, 2016 04:28 AM #5
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce - Short Sale

Our HOA fees here are not enough to make that kind of difference...but as you illustrate...they can be elsewhere !

Nov 29, 2016 05:22 AM #6
Dorie Dillard
Coldwell Banker United Realtors® ~ 512.346.1799 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ,

I was so glad Gabe Sanders re-blogged your post. Excellent information. Most of our newer subdivisions in Austin have an HOA. The subdivision I market to is only $400/year but it still counts as it is mandatory.

Dec 05, 2016 04:28 AM #7
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

You Kaina have to get in where you fit in and do your best to do your job

Dec 07, 2016 11:13 PM #8
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I'm not sure that last comment went through properly so I'm sending this other one. Good luck

Dec 07, 2016 11:14 PM #9
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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