How Do HOAs Work When You Buy a Condo in California?

Written by Armando Novelo, NMLS 237243, a mortgage loan officer in West Covina with over 20 years of experience helping Southern California buyers.

An HOA, or homeowners association, manages the common areas and sets rules for a condo community. When you buy a condo, the HOA also has to be approved by the mortgage program, not just you.

This is one of the biggest differences between buying a condo and a single family home.

Does the HOA affect your loan approval?

Yes, the HOA must meet lending guidelines for the loan to be approved. It is not enough for the buyer to qualify.

For FHA loans, the condo project must be FHA approved. For conventional loans, the project must meet Fannie Mae or Freddie Mac guidelines.

That means lenders review the HOA’s financials, insurance, reserves, and even how many units are rented versus owner-occupied.

An anonymous client once found a great deal on a condo but didn’t realize the HOA was the issue. What people do not realize until they are in it is that the property itself can block the loan, even if the buyer qualifies.

What is a non-warrantable condo?

A non-warrantable condo is a property that does not meet standard lending guidelines. That means it cannot be financed with typical FHA or conventional loans.

This can happen for several reasons. Too many rentals in the building, low reserves in the HOA, pending litigation, or insurance issues.

When a condo is non-warrantable, it usually has to be financed through a non-qualified mortgage. These loans often require more money down and come with higher interest rates.

A real mistake I see is buyers getting excited about the price without understanding why it is lower.

Why are some condos priced below market?

If a condo is significantly cheaper than similar units, it is often because it is non-warrantable.

Sellers lower the price to attract either cash buyers or buyers willing to use more expensive financing options.

I have seen buyers assume they found a hidden deal, only to realize financing options were limited.

One Google review reflects how I guide clients through this: “Armando caught things we would have never noticed.”

What should you check before making an offer?

You need to review the HOA before you fall in love with the property. That includes reserves, insurance, rental ratios, and any legal issues.

I always check the condo project early in the process so my clients do not waste time or lose deposits.

What people do not realize until they are in it is how late these issues can show up if no one checks upfront.

Final Thoughts

HOAs are not just about monthly dues and rules. They directly impact your ability to get financing and the long-term value of the property.

The key is making sure both you and the condo qualify before moving forward.

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