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Special Assessments – Should They Be Included in the DTI – Fannie Mae vs. Freddie Mac
Question:
My client is purchasing a property where a temporary special assessment has been passed. This will increase the HOA/Condo fee by $971.16 for 10 months to pay for roof repairs. Do I need to include this additional amount in their DTI for qualifying purposes?
Answer:
Yes, special assessments must be included in the housing/debt ratios. Consider, though, that there is a slight difference between Fannie and Freddie below. Fannie just says to add them, and Freddie states you only have to include special assessments with MORE than 10 months remaining.
However, a lender can always require any obligation they deem appropriate to determine the borrower’s ability to repay the mortgage. Since the assessment is so high, it is possible that they could disregard any selling guide reprieve and still require the payment of almost 1,000/mo, in the ratios for a Freddie loan.