HOA dues count against you. Every dollar of monthly assessment goes into the same pot as your principal, interest, taxes, and insurance when a lender decides how much you can borrow, and it does not get discounted. In Scottsdale and across Metro Phoenix, where a gated or golf community can easily run $300 to $600 a month, the dues alone can take $40,000 to $80,000 off your loan amount.

How lenders count HOA dues

Lenders fold the full monthly HOA assessment into your housing expense, then add your other debts to get your debt-to-income ratio. It is not an escrow item and it is not optional. If the association charges $450 a month, we count $450 a month, whether it is paid monthly, quarterly, or once a year.

Most buyers do the affordability math with principal, interest, taxes, and insurance and forget the line that sits outside the mortgage. Then the pre-approval comes back lower than they expected and they think the lender made a mistake. We did not. The Consumer Financial Protection Bureau explains how debt-to-income works, and our own guide to debt-to-income ratio when buying in Arizona walks through the limits by loan type.

What a $100 HOA fee does to your loan amount

At a 7.42% rate on a 30-year fixed loan, every $100 of monthly HOA dues removes about $14,400 from the loan you can qualify for. That is the number to remember. NerdWallet's daily survey put the 30-year fixed at 7.42% APR on October 6, the highest since May 2024, so the same dues cost more buying power now than they did a year ago.

Here is a real example. Say you earn $10,000 a month, you have $750 a month in car and student loan payments, property taxes run $380 a month, and insurance is $190. We cap total debt at 45% of income, which gives you $4,500 to work with.

These are illustrations at a 45% ratio, not a quote. Your own limit depends on credit, loan type, and the file as a whole. But the shape holds. Two houses at the same price, one with no HOA and one with $450 dues, are not the same house to a lender.

A $450 HOA fee is not a $450 problem. At today's rates it is a $65,000 problem.

Why it matters more in the Valley

Because so many Scottsdale, Phoenix, and East Valley neighborhoods have an association, and because the dues run high in master-planned and gated communities. The condo and townhome market is often where first-time buyers start, and those homes tend to carry the biggest assessments relative to price. Our post on buying in an Arizona gated community covers the extra checks a lender runs on those associations.

Condo buyers have one more layer. The lender reviews the project itself: reserves, owner-occupancy share, pending litigation, and special assessments. If you are shopping a condo, read condo financing in Arizona before you write an offer, because a project that fails review can kill the loan no matter how strong you are.

You can see where listings, prices, and days on market are heading in the Homes.com Phoenix housing market report. If you want to browse Valley homes with the HOA fee in view, start with the Arizona Luxury Property Search.

Run your own numbers

Two townhomes, same price, different approval

Picture two $450,000 townhomes in the same Scottsdale zip code. One has $140 a month in HOA dues. The other has $390. On paper they are the same purchase. To the underwriter, the second buyer carries $250 more in monthly obligations, which at 7.42% is about $36,000 less loan. If that buyer was already close to the line, the file stops working. The buyer of the first townhome gets approved at the same income without a second look.

This is why I ask for the HOA amount on the first call, before we talk about price. It is the single most skipped number in a pre-approval conversation, and it moves the answer more than most people expect. A buyer who knows the real qualifying payment can negotiate with confidence. A buyer who finds out at underwriting has to renegotiate, or walk, with an earnest money deposit at risk.

Special assessments and association health

A special assessment is a one-time charge the association levies for a big repair, and lenders pay attention to it. If one is already approved, the underwriter may want it counted, paid off at closing, or explained in writing. An association with thin reserves, heavy delinquencies, or active litigation can also make a condo unfinanceable on certain programs.

Arizona's planned community rules sit in Title 33 of the Arizona Revised Statutes, and they give owners the right to review the budget and governing documents. Ask for both. The lender will. Read the reserve study if there is one. If the association has not saved for a roof or a pool resurfacing, the next bill is coming to you. Our post on Arizona HOA law changes covers what moved this fall.

How the loan type changes the picture

Every program counts the dues, but some give you more room than others. FHA allows higher ratios with strong compensating factors, though a condo must be in an approved project, and HUD's loan information explains the basics. Conventional loans tend to cap ratios lower but have fewer project hurdles for a planned community. VA works too, with its own rules on the association.

Which one fits depends on your credit, your down payment, and the HOA itself. We shop the options on our loan programs page so you are not stuck with whatever one lender offers. If you want to see how we work from first call to closing, read our process.

Four ways to keep the HOA from sinking your approval

• Run the numbers before you tour. Pick a price range with the dues included, not after you fall in love with a house.
• Pay down a small debt. Clearing a $300 car payment frees up the same room as a $300 drop in HOA dues, and it is often cheaper to do.
• Compare associations, not just homes. Two similar townhomes can have $120 and $380 dues. That gap is worth about $37,000 of loan.
• Look at the rate side. A seller credit that buys down your rate lowers principal and interest, which makes more room for the dues. See seller-paid rate buydowns in Arizona.

Want to know what you qualify for with the dues included? Meet the Pillar Mortgage Group team, then start at pillarmortgagegroup.com, book a call, or fill in the form below.

Frequently asked questions