The Case for Skipping an HOA: What It Costs You
By WealthyDesis Team · August 6, 2026
An HOA fee does two things to your finances at once: it cuts into what you can borrow right now, and it eats the growth that money could have earned if you’d invested it instead. For immigrant buyers, condos in particular add a third wrinkle that single-family homes don’t have: the building has to qualify for financing, not just you.
The two costs of an HOA fee, in real numbers
Cost one: reduced mortgage eligibility
Lenders count HOA dues as debt in your debt-to-income (DTI) calculation, the same way they’d count a car payment or student loan. Every dollar of monthly HOA fee is a dollar that can’t go toward your mortgage payment under the same DTI cap.
Take a borrower earning $10,000/month gross, a lender capping total debt at 45% of income ($4,500/month), and a 7% 30-year rate:
| No HOA | $350/mo HOA | |
|---|---|---|
| Available for principal & interest | $4,500 | $4,150 |
| Maximum loan amount | $676,384 | $623,776 |
A $350 monthly fee, fairly typical for a mid-size condo building, cuts this borrower’s buying power by roughly $52,600, even though the fee itself never adds up to anywhere near that over the life of the loan. The mechanism is straightforward: DTI caps size your loan off payment room, not total dollars paid, and an HOA fee eats into payment room permanently.
Cost two: the opportunity cost of the fee itself
Separately from what it does to your eligibility, the fee is money leaving your account every month for as long as you own the property. Put that same $350/month into an investment earning a 7% average annual return instead, and it grows to roughly $427,000 over 30 years, compared to about $126,000 paid out in raw HOA fees with nothing to show for it. That doesn’t mean HOAs are never worth it. A building with a pool, gym, exterior maintenance, or security can justify the trade for plenty of buyers. But it’s the number to weigh against what you’re actually getting, not just the sticker amount.
The financing risk specific to condos: non-warrantable buildings
Beyond the dues, condo purchases carry a project-level underwriting risk that single-family homes simply don’t. Fannie Mae and Freddie Mac don’t just evaluate you as a borrower on a condo purchase; they evaluate the whole building. A condo project can fail to qualify, or become “non-warrantable,” for reasons that have nothing to do with your personal finances:
- HOA reserves funded below the required minimum (recently raised to 15% of the annual budget under updated 2026 guidance, up from 10%)
- More than roughly half the units rented out rather than owner-occupied
- Active litigation involving the HOA, especially anything structural or safety-related
- One owner or entity controlling more than a small share of the units
If the building is non-warrantable, conventional Fannie Mae or Freddie Mac financing isn’t on the table at all, and you’d need a portfolio loan or non-QM product instead, both of which usually carry higher rates and larger down payment requirements regardless of your own credit or income. Worth checking before you fall for a specific unit: ask your lender to pull the condo questionnaire and the HOA’s most recent reserve study early in the process. Warrantability gets assessed at the time of your application, not locked in permanently from an earlier sale.
Why this matters more for the Two Tracks
If there’s a real chance you move back to India, or split time between the US and India, within the next several years, the rental-restriction clauses buried in an HOA’s governing documents (the CC&Rs) matter more to you than to a buyer planning to stay put. Some HOAs cap what share of units can be leased at once, or ban renting entirely for a set period after purchase, which can directly conflict with a plan to keep the property as a rental after you relocate. Read the CC&Rs’ rental section before you buy, not after you need to lease the unit and find out you can’t.
What happens if this is mismanaged
- Comparing HOA-free and HOA properties by sticker price alone: a slightly cheaper condo with a $400/month HOA fee can end up costing more in reduced buying power and forgone investment growth than a pricier single-family home with no fee — run both numbers before comparing listing prices.
- Not checking condo warrantability before writing an offer: if the building fails Fannie Mae or Freddie Mac’s standards, you could lose access to conventional financing altogether mid-contract, forcing a scramble for portfolio financing at a worse rate or losing your earnest money.
- Assuming HOA dues are fixed: HOA boards can raise dues or levy special assessments, sometimes for tens of thousands of dollars per unit, to cover underfunded reserves or unexpected repairs — a low current fee is not a guarantee of a low fee going forward.
- Buying into a rental-restricted building without checking the CC&Rs: if part of your reasoning for buying is keeping the option to rent the property out later, a building that caps or bans leasing removes that option entirely, regardless of how good the rest of the deal looks.
- Treating “no HOA” as automatically the better financial choice: a single-family home with no HOA still has exterior maintenance, roof repairs, and landscaping costs — they’re just not itemized as one predictable monthly line, which can make budgeting for them easier to neglect.
What to check before you decide
Ask for the HOA’s most recent budget and reserve study, and check how much of the annual budget goes to reserves versus operating expenses. A building sitting right at the reserve minimum is a good candidate for a dues increase or special assessment sooner rather than later. If renting the property out later is part of your plan, read the CC&Rs’ leasing section before you make an offer, not after.
Next step: if you’re weighing a condo against a single-family purchase more broadly, see renting vs. buying on a visa for the broader version of this trade-off, or run your numbers through the mortgage eligibility tool with and without an HOA fee to see the DTI impact directly.
Sources: Fannie Mae — Condo Project Eligibility standards, Freddie Mac condo guideline updates, 2026. This article is educational information, not financial advice — specific DTI caps, reserve requirements, and HOA rules vary by lender and building, so verify current terms with your loan officer and the HOA directly before making an offer.
Frequently asked questions
Do HOA dues count against my mortgage approval amount?
Yes. Lenders include HOA dues in your monthly debt-to-income calculation the same way they count a car payment, which directly reduces the loan amount you can qualify for at a given income and interest rate.
What is a non-warrantable condo and why does it matter?
A non-warrantable condo is a condo project that fails Fannie Mae or Freddie Mac's eligibility standards — things like insufficient HOA reserves, too high a share of renter-occupied units, or active litigation. Units in non-warrantable buildings can't get standard conventional financing, forcing buyers into portfolio or non-QM loans at higher rates and larger down payments regardless of their personal credit.
Can I rent out a condo I buy if I move back to India later?
Only if the HOA's governing documents allow it. Some HOAs cap the percentage of units that can be rented, or ban leasing entirely for a period after purchase — check the CC&Rs before buying if keeping the option to rent it out is part of your plan.
How much does a $350/month HOA fee actually cost me over 30 years?
It reduces your mortgage buying power by roughly $52,600 at typical DTI limits, and if invested instead at a 7% average return, that same $350/month would grow to roughly $427,000 over 30 years — versus about $126,000 paid out in raw fees with no offsetting growth.
Written by WealthyDesis Team
Reviewed for accuracy against current IRS and USCIS guidance at time of publishing.