"How Do HOA and POA Dues Work When You're Buying a Home?"

The home fits the price range you've been considering. Then you find the association dues, and there's another amount to work into the monthly budget. I'd like us to have that number while you're comparing homes.

Before choosing a home with HOA or POA dues, confirm the amount, payment schedule, covered services, assessments and insurance you would still need separately.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, licensed in fifteen states, NMLS #483943, through C2 Financial Corporation.

HOA means homeowners association, and POA means property owners association. I want us to review the actual association documents for the home you're considering. The name alone doesn't tell us what your payment includes.

Do HOA dues count in my mortgage payment calculation?

Fannie Mae's monthly housing expense guideline includes owners' association dues and special assessments in the housing expense used for qualification. That is a Fannie Mae rule; we'll confirm the treatment for your loan program.

Please give me the dues amount and how often it's paid so we can review the full payment. An annual bill still needs a place in your budget even though you don't pay it every month. The debt-to-income explanation covers how the monthly obligations fit together.

I'd also like us to distinguish the association bill from the mortgage statement. Ask who collects the dues and when they're due. Including an expense in the qualification calculation doesn't tell you where to send the payment.

Ask for the actual coverage and cost breakdown

Please ask the association or management company for the current dues schedule, budget, governing documents and information about assessments. I'd use those documents to work through these questions:

• How much would you pay, and on what schedule?
• Are there separate community and condominium association charges?
• Which maintenance responsibilities belong to the association, and which belong to you?
• Which services, if any, are included, such as trash collection or landscaping?
• Are there current assessments or announced changes that need review?
• What insurance does the association carry, and what remains your responsibility?

Those are questions to verify for the particular home. I wouldn't assume the same services are included just because another community has similar dues.

The condo financing guide covers the separate review of the condominium project. This article is about understanding the costs you'll live with, rather than deciding whether the project meets a loan program's requirements.

Association insurance and your own insurance

The Washington insurance commissioner's condo insurance guide describes two policies working together: the community master policy and an owner's policy, often called HO-6. Your dues paying toward a master policy doesn't establish that all your own insurance needs are covered.

Please have your insurance agent review the master policy and governing documents for the home. Ask which parts of the home you need to insure, which deductibles could affect you, and what protection you need for belongings and liability. Coverage needs to be confirmed from the policies, rather than inferred from the dues amount.

I want the insurance conversation started early enough to include a realistic quote in the payment review. The homeowners insurance preparation article explains the timing.

An invented comparison

This example is made up to show the planning step. It doesn't describe actual community pricing.

You're comparing two townhomes. One association lists a larger dues payment and includes certain exterior maintenance. The other lists a smaller payment, but its documents leave more maintenance to the owner.

I'd put the documented responsibilities beside each dues amount, then add the insurance quotes and any identified assessments. You might still prefer either home. The point is to make that choice with the responsibilities in front of you.

Keep seller contributions separate from ongoing costs

A proposed seller contribution toward dues deserves its own financing review. The article on a seller paying HOA dues at closing covers that arrangement. I'd still review the ongoing dues as an expense you'll have after any agreed contribution runs out.

Common questions

Are HOA and POA dues included in qualifying for a mortgage?

Fannie Mae includes owners' association dues in monthly housing expense. I'll confirm how your loan program handles the documented dues and any assessments, then include the applicable amounts in our review.

Does a higher association fee mean more is covered?

I wouldn't use the amount as proof of coverage. Please compare the current documents, maintenance responsibilities and insurance information for each home so you can see what the fee actually pays for.

Do I need insurance if my condo association has a master policy?

Please have your insurance agent check. A master policy and an individual owner's policy serve different coverage needs. The governing documents and actual policies help establish what you need separately.

Should I compare annual dues as part of my monthly budget?

Yes. I'd spread the annual amount across twelve months for planning while keeping the association's actual payment schedule on your calendar. The home payment tools can help us compare the broader purchase scenario.

Please send me the dues information for a home you're considering so we can review it with the rest of the payment.

Estimates and educational information are not a loan approval or commitment to lend.