Illustration photo of house with tax records.

Your Home Loan Limits Could Change! – Property Assessments and HOA Dues

by Greg Stidham, REALTOR®

You’ve been pre-approved to purchase a house and the maximum loan amount is shown on your pre-approval letter. Your lender might also tell you that you are fully underwritten and provide you with a “good as cash” letter to include with your offer. Everything looks in order but has anyone told you about the property tax assessments or HOA dues on the home you’re interested in? Have you told your lender about these fees and dues?

I’ve seen loan limits change dramatically because of higher than expected property taxes and assessments.

I’ve seen loan limits change because of higher than expected HOA dues.

You should be aware of these fees and dues before your dreams are crushed while in escrow.

What are Assessments?

Assessments are a common occurrence associated with property ownership in California. These additional fees found on yearly property tax bills help pay for a variety of community services and amenities from sewers and parks, to libraries and weed abatement. Each assessment has a name that corresponds to the jurisdiction that levied the assessment.

One well known assessment comes from the Mello Roos Community Facilities Act of 1982. This assessment began after passage of the law in 1982 as a way to help fund new public improvement projects following the new property tax restrictions brought on by the Prop 13 law in 1978. These assessments are labeled as “cfd” (Community Facilities Districts) on your property tax bill but are affectionately known in the community as “Mello Roos”.

Some communities have low additional assessments and some communities have very high additional assessments. In California, property assessments are NOT the same in every community.

Your loan limits could change.

You should make sure your real estate agent and lender are aware of these fees before you write the offer on your dream home.

HOA Fees and Dues.

HOA dues serve a purpose. They often provide maintenance, landscaping, security, insurance, and help keep property values up as a result of providing these amenities. I am NOT suggesting that HOA dues and fees are bad. I think they work well for certain properties.


I have seen loan limits change because of unaccounted monthly HOA dues. You need to keep your lender in the know about these dues when they process your financials to see what you can afford, especially if your budget is tight and your LTV (Loan-To-Value) is high.

Heads up! Stay proactive.

Professional real estate agents can easily look up HOA Dues and Property Assessments on a home. Not all real estate agents will be on top of this and your lender may not know until you or your agent tell them. Most don’t discover these assessments until several weeks into escrow. At this point, everyone will be asking YOU, the buyer, if you can come up with extra cash needed to close on time.

Do you have the extra cash?

I don’t like to see my buyers stuck in this bad position. Aren’t you under enough stress? If you haven’t had a conversation about Assessments and HOA dues with your real estate agent and lender, do it before you write the offer.

Thank you for taking time to read this blog post. My goal is to help make the home buying and selling process as stress free as possible. If you are in the Northern California communities of Davis and Woodland or the greater Sacramento area, please contact me. You deserve to work with a real estate agent that cares about you and is looking out for your interests.


You can also read this Blog Post at Greg’s website at Coldwell Banker.