Buying a Condo in California? You’re Buying the HOA Too
A condo can look perfect.
Great location.
Updated kitchen.
Ocean view.
Monthly payment works.
You love the unit.
But here's something I've learned after nearly 24 years in the mortgage business:
When you buy a condo, you aren't only buying the condo. You're buying the HOA
too.
And that distinction can affect far more than your monthly HOA dues.
It can affect your insurance costs.
It can affect special assessments.
It can affect your ability to finance the property.
And eventually, it can affect the next buyer's ability to finance it when you want to sell.
I've discussed these issues publicly, including in an interview with Yahoo Finance about
condominium ownership and HOA-related concerns.
They're also subjects I spend a lot of time teaching because condo financing is one of
those areas where a perfectly qualified buyer can still run into a problem.
The buyer can qualify.
The building may not.
Why Is Condo Financing Different?
When you're buying a traditional single-family home, the mortgage company is
primarily evaluating two things:
The borrower and the property.
With a condominium, there's another layer.
The condominium project itself may also need to qualify.
Depending on the loan program and type of project review, that can mean looking at
issues involving:
HOA finances and reserves
Master insurance
Special assessments
Litigation
Deferred maintenance
Structural concerns
Commercial space
Single-entity ownership
Delinquencies
Ownership characteristics
Other project eligibility requirements
That's why I've seen extremely strong borrowers run into condo financing problems.
You can have excellent credit.
You can have plenty of income.
You can have substantial assets.
And the answer can still be:
We have a problem with the project.
This is also why I've built a significant part of our lending platform around
condominium financing, including access to an in-house condo desk and alternative
options for certain non-warrantable projects.
What Does It Mean When a Condo Is
“Warrantable”?
This terminology confuses a lot of buyers.
Generally, a warrantable condo is in a project that satisfies the applicable requirements
for conventional agency financing.
A non-warrantable condo has one or more project characteristics that prevent it from
satisfying those standard requirements.
That doesn't automatically mean it's a bad condo.
And it doesn't automatically mean nobody can finance it.
It means we need to understand why the project isn't eligible for the conventional
financing being considered.
That's a huge distinction.
A project could have an issue involving insurance.
Another might have litigation.
Another could have significant commercial space.
Another might have an ownership or project characteristic that doesn't work for a
particular conventional loan.
Different problem.
Different potential solution.
I've built a separate resource specifically explaining some of these alternatives:
Fannie Mae and Freddie Mac Condo Guidelines Can Change
This is another reason I don't like blanket statements such as:
“That building can't be financed.”
My next questions are:
Why?
Who reviewed it?
What specifically failed?
And when was it reviewed?
Guidelines change.
Projects change.
HOA financials change.
Insurance changes.
And the financing options available to us can change.
For example, I've recently covered an important 2026 change involving investor
concentration requirements for certain established condo projects under full review.
That change can matter for projects that may previously have had conventional
financing challenges. LinkedIn
So if someone was told a year ago that a condo couldn't be financed, I wouldn't
automatically assume the same answer applies today.
I'd review it again.
HOA Reserves Matter More Than Buyers Realize
Here's another mistake buyers make:
They compare HOA dues.
Condo A: $450 per month.
Condo B: $700 per month.
Therefore Condo A must be better.
Not necessarily.
What does each HOA actually look like financially?
A building has expenses.
Roofs eventually need replacement.
Elevators need maintenance.
Exterior structures deteriorate.
Parking garages require work.
Plumbing ages.
Landscaping costs money.
Insurance costs money.
An association with unusually low dues but inadequate reserves and significant
deferred maintenance may eventually have to address those expenses another way.
And that's where special assessments can enter the conversation.
I've written separately about exactly this issue and why buyers should look beyond the
monthly HOA bill. The Belfor Team
What Is an HOA Special Assessment?
A special assessment is generally an additional amount charged to owners when the association needs money beyond its regular assessments and available funds for a
particular expense.
Suppose a condominium building needs a major repair.
The HOA doesn't have enough money in reserves.
That bill doesn't disappear.
Ultimately, somebody has to pay it.
For an existing owner, that can mean an unexpected expense.
For a buyer, it can materially change the economics of purchasing the condo.
And depending on the circumstances, assessments and the underlying project
condition may also become relevant to financing.
That's why I want these questions asked before closing, not after.
Insurance Has Become Part of the Condo
Conversation
California condo buyers also need to pay attention to insurance.
This isn't merely about getting an HO-6 policy for the individual unit.
The association typically carries master insurance covering certain portions of the
project.
That coverage can matter to the HOA financially, and it can also matter when we're
evaluating project eligibility for a mortgage.
Again:
The borrower can qualify while the building creates the problem.
That's why the mortgage team should be looking at the project early.
Don't Wait Until You're 10 Days Into Escrow
This may be the biggest practical takeaway for buyers and real estate agents.
Don't wait.
If you're seriously considering a condo, send us the property information early.
I'd rather investigate a potential project problem before you're emotionally attached to
the unit, have spent money on inspections and appraisal, and are racing toward a
financing contingency deadline.
Our condo desk can help us determine what we're dealing with.
If conventional financing works, great.
If it doesn't, we can determine whether another financing channel may be appropriate.
Sometimes the condo truly doesn't work.
Sometimes it simply doesn't work with that particular loan.
Those are two very different answers.
What Should California Condo Buyers Look At?
You don't need to become an HOA accountant before buying a condo.
But you should understand what you're buying into.
Along with your real estate agent and appropriate professionals, investigate things such
as:
HOA reserves. Is the association preparing financially for future repairs?
Insurance. What does the master policy cover, and are there issues that could affect
financing?
Special assessments. Are there existing assessments or major projects being
discussed?
Litigation. Is the HOA involved in litigation that could affect the project?
Deferred maintenance. Are expensive repairs being pushed into the future?
Monthly dues. What exactly are you receiving for them?
Project financing eligibility. Does the building work with the mortgage program you
intend to use?
That's a much more useful analysis than simply asking:
“How much are the HOA dues?”
Can You Finance a Non-Warrantable Condo?
Potentially, yes.
This is an area where having access to multiple lending channels matters.
Certain projects that don't satisfy standard conventional agency requirements may
have financing available through portfolio, Non-QM, specialized jumbo or non-
warrantable condo programs, depending on the specific property and borrower.
My non-warrantable condo resource covers several of the project characteristics that
can lead buyers into this territory, including litigation, investor ownership, commercial space and short-term-rental characteristics. The Belfor Team
The important part is identifying the problem.
“Non-warrantable” isn't the diagnosis.
It's the category.
I want to know why it's non-warrantable.
That's what helps us determine whether there's another solution.
Condos Still Matter for California
Homebuyers
None of this is an argument against buying condos.
Actually, I think the opposite.
California desperately needs more realistic entry points into homeownership.
I've written recently about the decline in California condo construction and why condos
historically played an important role as starter homes. The Belfor Team
In markets like San Francisco, Oakland, San Jose, Orange County, Los Angeles and San
Diego, detached homes can be extraordinarily expensive.
A condo can potentially give a buyer a lower-cost entry into a neighborhood where a
detached house isn't realistic.
But affordability isn't simply the purchase price.
You need to understand the entire ownership structure.
Mortgage.
Taxes.
Insurance.
HOA dues.
Potential assessments.
And the financial health of the project you're joining.
The Bottom Line
Don't fall in love with the countertops and forget about the building.
When you buy a condo, you're buying your unit.
But you're also buying into the finances, insurance, maintenance obligations and
governance of the HOA.
And from the mortgage side, we're not simply asking:
Does the buyer qualify?
We're also asking:
Does the condo qualify?
Those two questions can make the difference between a straightforward closing and a
financing problem nobody saw coming.
So before you buy a condo in California:
Qualify the buyer.
Review the building.
Understand the HOA.
Because you're not just buying the condo.
You're buying the HOA too.
MORE:
Non-Warrantable Condo LoansWhy California Stopped Building CondosHOA Special Assessments: What Condo Buyers Should Know
About the Author
Michael Belfor is a Branch Manager and Loan Originator with American Pacific Mortgage with approximately 24 years of mortgage experience. He has been an APM President's Club and Top 1% producer since 2017 and works with conventional, jumbo, FHA, VA, Non-QM, TIC and specialized condominium financing.
Buying a Condo in California? HOA & Condo Financing Guide 2026
Buying a condo in California? Learn how HOA reserves, insurance, special assessments, project eligibility and non-warrantable condo financing can affect your mortgage.
California condo financing
condo financing California, non-warrantable condo loans, HOA reserves, HOA special assessment, Fannie Mae condo guidelines, Freddie Mac condo guidelines, condo project approval, California condo mortgage, condo insurance requirements, first-time condo buyer California:Can an HOA affect mortgage approval?What makes a condo non-warrantable?Can you finance a non-warrantable condo?Can a buyer qualify but the condo fail financing?Do HOA reserves affect condo financing?Can special assessments affect a condo mortgage?What should I check before buying a condo in California?
Comments