Phoenix condo mortgages: HOA dues and project approval

• Two reviews, not one. The lender looks at your credit and income, and also at the condo project: its budget, insurance, owner occupancy, and any lawsuits.
• HOA dues count. Dues, any second association, special assessments, and your condo insurance policy all go into the payment the lender uses.
• Each loan type has its own building check. A building that works for conventional may not work for FHA or VA, and the reverse.
• Check the building before your contingency deadline. Send me the address and HOA name as soon as you have them.

Who it fits

You're looking at a Phoenix-area condo or townhome in an association, and you want to know if conventional, FHA, or VA will work on that building. Planning to rent it out? Tell me first. How you'll use the unit changes the review.

How it works

I review you and the project. HOA dues, a second association bill, your condo insurance, and any approved special assessment all go into your payment. A listing that says "FHA approved" is a claim, not a document. I check the source.

What it costs

Some management companies charge a fee for the condo questionnaire, and it can take days to come back. That wait needs to fit inside your loan contingency, not the last afternoon of it.

A condo loan reviews you and the building

On a house, the lender looks at your credit, income, down payment, the appraisal, and the title. On a condo, all of that still happens, plus a second set of questions about the project: the HOA budget, the insurance, how many owners live there, how many units one person owns, any lawsuits, and how many owners are behind on dues. The answers decide whether a conventional or FHA loan is even available for that unit.

Phoenix has a lot of condos and townhomes, and the buildings don't share one set of rules. A mid-rise near the light rail, a golf course community in the northeast Valley, a townhome row in Gilbert, and an older association in central Phoenix can look alike online and behave nothing alike in underwriting. Two units at the same price can end up on different loan programs because one building is eligible and the other isn't.

I start with the program that fits you, then check whether the building accepts it. If you wait until after your offer is accepted, the loan contingency deadline turns into a race to collect documents you could have asked for sooner.

How you'll use the unit matters too. A home you'll live in, a second home, and a rental are three different conversations, and the same building can work for one and not another. A rental unit is closer to a DSCR loan conversation (a loan based on the rent) than to an FHA loan. conventional vs FHA · conventional · FHA · VA · DSCR loans

HOA dues belong in your payment

The monthly number that matters isn't just principal and interest. Property taxes, insurance, and HOA dues all go into the housing payment the lender uses to decide what you can carry. Leave the dues out and a condo looks cheaper than it is. Put them in, and a payment that felt easy online can feel tight next to your other bills.

Ask about special assessments. A special assessment is an extra bill from the HOA in addition to regular dues, often for a big repair. Some are paid monthly. Some are due all at once. Either way, the lender can count it as part of your monthly cost. Get the resale documents, the budget, and any assessment letter before you decide a price is affordable.

Watch for two HOAs. Master-planned communities around Phoenix often have more than one association: a neighborhood HOA and a larger community association. If both send a bill, both go in the payment. That shows up in the resale documents, not the one dues figure on a listing. I ask for both names on the first call. Tempe · Scottsdale

Price your condo insurance. The HOA's master policy usually covers the building. You still need your own policy, often called an HO-6 or "walls-in" policy, for the interior, your belongings, and liability. That premium goes in the payment too. Ask what the master policy covers and what it leaves to you. In Phoenix, I look closely at water damage, roofs, and the deductible.

Don't use the seller's tax bill. The taxes on the listing are the seller's bill, which may include exemptions or a classification that won't carry over to you. I'll estimate your taxes from the price you're paying and Maricopa County figures, and we check the number again before closing.

Conventional, FHA, and VA each check the building differently

Conventional. A conventional loan sold to Fannie Mae or Freddie Mac has to meet their condo project standards. People call an eligible project "warrantable." The review looks at owner occupancy, how much of the project one person or company owns, commercial space, lawsuits, insurance, and late dues. There are lighter and deeper reviews. For example, Fannie Mae allows its lighter "limited review" on an established condo when you put at least 10% down on a home you'll live in, or at least 25% down on a second home or rental.

I check the current guide for your loan. I don't guess from a listing photo of the pool.

FHA. An FHA condo loan generally needs the project to meet HUD's condo rules, not just a borrower who wants FHA. A building that worked for a neighbor's conventional loan can still be ineligible for FHA. In some buildings without full FHA approval, a single unit can get its own approval. Approvals also expire, so we check the status now. A line in the listing that says "FHA approved," with no date and no source, isn't enough.

VA. VA has its own condo requirements. If you have your Certificate of Eligibility (the VA document showing your home loan benefit) and want to buy a Phoenix condo, the project needs to be acceptable to VA. A conventional or FHA approval doesn't automatically carry over. Bring your certificate and the address.

A bigger down payment helps some reviews. It doesn't fix the building. More cash can open the lighter conventional review. It can't fix a lawsuit, missing insurance, or a budget Fannie Mae or Freddie Mac won't accept. If someone tells you to put more down "so the building won't get reviewed," ask which rule they mean. I'll match your down payment to what the guidelines actually allow, and tell you when more cash won't help.

When the building doesn't fit the usual rules

Some Phoenix associations won't pass a conventional or FHA review. Common reasons: a lawsuit, one owner controlling too many units, too few owners living there, too much commercial space, or insurance that doesn't meet the requirements. That doesn't always mean you can't buy the unit. It means the usual loan may be the wrong tool for that address.

I also shop loans outside Fannie Mae, Freddie Mac, FHA, and VA when a building or a borrower doesn't fit their rules. These loans have their own credit, savings, and property requirements, and the rate is often higher because the lender is taking on a building the agencies passed on. If a standard FHA or conventional loan fits you and the building, that's usually the cleaner path. I'll tell you which one fits. Already have a quote that ignores the HOA? Bring it for a second opinion. second opinion

Walking away is a real option too. A building with structural lawsuits, a budget that can't keep the project insured, or dues so high the payment no longer fits isn't worth forcing because you love the kitchen. I'd rather you hear that while your loan contingency still protects you.

What to gather before you write an offer

• The full address, unit number, and how you'll use it: your home, a second home, or a rental.
• The HOA name, the monthly dues, and any second association that also bills you.
• The resale disclosure, the current budget, the insurance certificate, and a statement on special assessments or lawsuits.
• How many units are in the project, and whether it's legally a condo or a planned community.
• Your target down payment, and whether you're leaning toward FHA, conventional, or VA.
• Your contract deadlines, especially the loan contingency date and the date to object to HOA documents.

The title documents also show whether you're buying a condominium or a lot in a planned community. Those get different reviews, even when the shared pool looks the same in photos. A townhome that's legally a condo can still need a project review. I read the documents, not the marketing name.

Already under contract? Send me the HOA contact and your contract dates the same day. Project reviews aren't instant. Call or text (602) 448-4470 with the address and HOA name, and we'll get started.

Short note: This post is education, not a rate quote or a loan approval.