How Different Property Types Affect Qualifying

When you’re getting pre-approved for a mortgage, the type of property you choose can impact how much you qualify for. It’s not just the purchase price that matters—different property types come with different costs and qualifying rules.

Why the Property Type Matters

Lenders calculate how much you qualify for using gross debt service (GDS) and total debt service (TDS) ratios. These factor in your mortgage payment, property taxes, heating costs, and other debt payments.

If you were pre-approved for a single-family home and then switch to a condo, mobile home, or multi-unit property, the numbers can change—sometimes for better, sometimes for worse.

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Condos and Mobile Homes

Condos come with monthly condo fees, and mobile homes in parks often have lot fees. These fees are included in your debt service ratios, which means they can reduce your maximum purchase price.

For example, if you were pre-approved for $500,000 on a single-family home and then found a condo with $400/month in fees, those fees could drop your budget below $500,000. The same thing applies to lot fees with mobile homes.

Multi-Unit Properties

With multi-unit homes, lenders often allow you to use a percentage of the rental income from the other unit(s) to help you qualify. This can increase your budget.

For example, if you were approved for $600,000 but found a $675,000 home with a legal basement suite, the rental income might make the deal work.

Why It’s Important to Communicate With Your Broker

If your property type changes during your search, let your broker know right away. This ensures your pre-approval reflects the correct numbers and helps you avoid surprises when you’re ready to make an offer.

FAQ

Do condo fees affect how much I can spend on a home?
Yes. Condo fees are factored into your qualifying ratios and can reduce your maximum budget.

Can rental income help me qualify for more?
Often, yes. With multi-unit properties, lenders will use a portion of the rental income in your application.

Do lot fees for mobile homes affect qualifying?
Yes. Just like condo fees, lot fees are included in your debt service ratios.

Final Thoughts

Your property type can make a big difference in how much you qualify for. Understanding the impact of condo fees, lot fees, or rental income early in the process helps you plan your budget and avoid surprises.

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