By Lena Polnet, NMLS #17225 | Dynamic Funding Solutions, Inc.
When buyers ask how much home they can afford, the conversation usually focuses on income, credit score, and down payment. HOA fees rarely come up early — but they should. In Pennsylvania’s planned communities and across Florida’s condo and townhome markets, HOA fees directly reduce how much home you can qualify for, and in some cases, they can affect whether you can get a loan at all.
How Lenders Count HOA Fees in Your Debt-to-Income Ratio
Your debt-to-income ratio (DTI) is one of the primary metrics lenders use to determine how large a loan you qualify for. DTI measures your total monthly debt obligations — including the proposed mortgage payment — against your gross monthly income.
HOA fees are included in that calculation. The full monthly HOA fee is added to your principal, interest, taxes, and insurance (PITI) and counted as part of your housing expense. This is non-negotiable — lenders don’t average it, discount it, or exclude it. If the HOA charges $400 per month, $400 goes into your DTI calculation.
How HOA Fees Reduce Your Buying Power
The math is straightforward but the impact surprises most buyers.
At current rates, every $1 of monthly mortgage payment capacity supports roughly $167 in loan amount (using an approximate 6.5% rate on a 30-year fixed). That means:
- A $200/month HOA reduces your qualifying loan amount by approximately $33,400
- A $400/month HOA reduces it by approximately $66,800
- A $600/month HOA reduces it by approximately $100,200
So if your income and credit would otherwise support a $450,000 purchase price, a $400/month HOA might bring your effective buying power closer to $383,000 — before accounting for your down payment. That’s a real difference when you’re shopping in a specific price range.
This is why buyers sometimes get pre-approved for a certain amount and then find that the condo or townhome they want doesn’t actually work with their budget once the HOA is factored in.
Warrantability: The Florida Condo Complication
In Florida especially, HOA fees are just one layer of the condo mortgage issue. The other is warrantability.
Fannie Mae and Freddie Mac have rules about which condo projects they’ll accept as collateral for conventional loans. A "warrantable" condo meets their standards — a "non-warrantable" condo does not, and most conventional lenders won’t touch it. Portfolio lenders and some specialty programs will, but at higher rates and stricter terms.
Key warrantability criteria include:
- HOA delinquency rate — if more than 15% of unit owners are more than 60 days delinquent on HOA dues, the project fails the test
- Investor concentration — if a single entity owns more than 10% of the units (20% in some cases), it’s non-warrantable
- Commercial space — if more than 35% of the project is commercial, it’s non-warrantable
- Active litigation — if the HOA is in material litigation, many lenders won’t approve loans in that building
- Structural reserve requirements — post-Surfside, Fannie Mae and Freddie Mac added requirements around reserve funding for buildings 5 stories or higher; inadequate reserves can make a project non-warrantable
Florida buyers need to know this before making an offer. A building that’s warrantable today may not be in six months if the reserve study flags deficiencies or the delinquency rate climbs.
What to Look for Before Buying in an HOA Community
Before making an offer on any property with an HOA — in Pennsylvania or Florida — ask for:
- Current HOA financials — Are reserves adequately funded? An underfunded reserve is a future special assessment waiting to happen.
- Meeting minutes from the past 12 months — What has the board been discussing? Maintenance deferrals, disputes, litigation, and upcoming assessments all show up here.
- Current delinquency rate — Relevant for both condo warrantability and general community health.
- Pending special assessments — A large assessment coming up adds to your real cost of ownership and may affect your qualifying numbers.
- HOA rules and restrictions — Rental restrictions can affect your exit strategy if you later want to rent the property.
Pennsylvania vs Florida HOA Regulatory Differences
Pennsylvania HOAs are governed primarily by the Uniform Planned Community Act and the Condominium Act. The rules around financial disclosures, reserve studies, and association governance are relatively limited compared to some other states.
Florida has more extensive HOA and condo association regulation under Chapter 718 (condominiums) and Chapter 720 (homeowners associations). Florida law requires condominium associations to maintain reserve accounts for certain items and to conduct milestone inspections for older multi-story buildings. These regulations exist partly in response to the Surfside collapse and have made Florida condo underwriting noticeably stricter since 2022.
For buyers considering Florida condos, the lender review process for the association is thorough — and can extend timelines. I work with lenders that have dedicated condo review teams and know what documentation is needed upfront.
Frequently Asked Questions
Do FHA loans have different rules about HOA fees and condo warrantability? FHA loans have their own approved condo list — a project must be on the FHA approved list or go through spot approval to use FHA financing. FHA approval requires similar criteria to conventional warrantability, plus FHA-specific rules around owner-occupancy ratios. Buyers relying on FHA financing should verify condo approval early in the process.
If I’m pre-approved for $400,000, does that include HOA fees? It depends on how the pre-approval was run. If your loan officer didn’t know the HOA amount at the time of pre-approval, the HOA fee was likely not included. Before making an offer on a property with a monthly HOA, confirm with your lender that the fee is built into the qualifying numbers.
Can I negotiate HOA fees with the seller? You can’t change the HOA fee itself — it’s set by the association and applies to all unit owners. However, you may be able to negotiate a seller credit at closing to cover several months of HOA fees, which reduces your upfront cash requirement at settlement.
Questions about how HOA fees affect your mortgage qualification in Pennsylvania or Florida? Call Lena Polnet at (215) 364-7171 or contact Dynamic Funding Solutions online. NMLS #17144.