Payment + HOA fees

[Shae123]

So realtor keeps telling about how the HOA fees affect my max purchase price.  But is there a way for me to calculate how the fees effect the max purchase price?

For instance, 160k + $140 HOA = $1245 payment <--- the lender told me that, but I don't want o keep asking about every single property if I don't have to.  

Is there a way for me to calculate this?

[Anonymous]

HOA fees are added into your DTI so it will vary with each place as the fee varies.  So when factoring your expected DTI level you add:

Payment, interest, insurance, PMI, and HOA's for front end ratio

All of the above plus any loan/credit cards/payments.

Typical guidelines allow for about 31% front end and 43% back end DTI.

[Anonymous]

There are two ways to do it.  One is accurate, the other is accurate enough.

The "accurate enough" way is:  If you're looking at a 30 Year amortization (30 year fixed, any ARM, basically, not a 20 or 15 Year Fixed), then the quick calc is that for every $5-6 up or down in HOA, your qualification changes about $1k in loan amount.    

Method #1 works if you are generally shopping in a similar area, similar property type and there isn't wide variance.  Realize it is also only as accurate as the original prequal.  I'm in Chicago.  That method doesn't work as well here if someone is shopping in radically different neighborhoods.  Example, high rise with doorman HOA in an older building can run 4-5x's what I pay in my little three story walk up.  When you start rounding numbers that vary that significantly, you run into issues. 

If you're talking about places that are +/- $20, that first method works.  If you're in an area with wild swings, it can easily be done in a spreadsheet for you.That will be more accurate. 

Are you seeing HOA's that vary by $10's and $20's or $100's?

[Shae123]

I've seen some that are $100 and some that are $280.

[Anonymous]

That's a big enough swing where it could make an impact. Roughly, if you're at that $100-end of things, your buying power goes up about $7,500.  If you're at the $280-end, your buying power goes down about $25-26k. 

Major problem with that is that I am referring to loan qualification.  Depending on your down payment, it would change the home price. I don't know if you're 3.5% down or 20% down....it would magnify the price swings. 

As big or bigger than HOA, does your area immediately reassess taxes based on the new sales price?  Chicago does not so normally when we do these calculations we need two variables on condos...HOA and taxes.  Both directly influece DTI.