When a San Francisco condo buyer applies for a loan, the lender counts the building's monthly association dues as housing cost, alongside principal, interest, taxes and insurance. Freddie Mac's guide requires homeowners association dues to be included in monthly housing expense on a primary-residence loan. Special assessments with more than ten monthly payments still to go are counted the same way. That figure then becomes part of the debt-to-income ratio that decides how large a loan the buyer qualifies for. Federal ability-to-repay rules under the CFPB's Regulation Z also treat condo and HOA fees as mortgage-related obligations the lender has to consider.
None of this is new. What changed this fall is the cost of each dollar of dues. The Federal Reserve raised its target range a quarter point to 3.75% to 4.00% on September 16, 2026. Freddie Mac's national 30-year fixed average was 7.28% as of October 1, 2026, up from 7.03% a week earlier and 6.34% a year earlier. At those rates, the dues line on a condo listing has a direct effect on how much a financed buyer can bid.
What a dues line costs in borrowing power
Lenders look at total monthly cost, so a dollar of dues uses up qualifying room that could otherwise go toward a mortgage payment. Here is a simple illustration. Take the monthly dues, then work out how much 30-year principal the same monthly payment would cover at 7.28%. Taxes, insurance and lender overlays are left out.
| Monthly HOA dues | Loan principal that payment would carry at 7.28% | Same payment at last year's 6.34% |
|---|---|---|
| $500 | about $73,000 | about $80,000 |
| $1,000 | about $146,000 | about $161,000 |
| $1,500 | about $219,000 | about $241,000 |
Two buyers with the same income can shop for the same list price and still have very different bidding power. Compared with a unit with no dues, a unit carrying $1,000 a month takes roughly $146,000 off what a financed buyer can borrow at October's rates. Fannie Mae's eligibility matrix caps manually underwritten loans at 36% and 45% debt-to-income tiers. Buyers who are already near one of those limits have no slack to absorb dues. A lender can run the actual figures for a specific file, and those numbers matter more than this table.
Cash buyers are exempt from the dues math
A cash buyer never sits through that underwriting step. That helps explain a finding in The Standard's September 20, 2026 report. Deirdre Connor of Old Republic Title Company compiled public records and found that one in three San Francisco homes sold for all cash between January 1 and September 1, 2026. Condos at any price point were more likely than houses to sell for all cash. "I assumed houses would be the cash-heavy side, and they're not," Connor wrote.
The same article describes condo buyers as often downsizers, singles, couples, investors and second-home buyers. Those groups are less likely to need financing than someone stretching for a single-family house. The Standard reported that a Cow Hollow condo listed at $4 million in August 2026 sold all cash for $6.7 million. It also reported that citywide condo inventory was down 50% from a year earlier.
Financing can still win. The Standard described a buyer who financed a North Beach condo against several all-cash offers and won at 16% over asking. The buyer waived contingencies and showed strong proof of funds. Speed was the hurdle there. A cash offer can close in under two weeks, and financed deals take longer. A financed buyer facing a high-dues building has to clear both the speed gap and the qualifying gap.
Where the gap shows up on the map
Citywide numbers blur all this together. September 2026 MLS closings put the median condo or townhouse sale at 105.3% of asking. That was the first September above asking for condos since 2021. Houses closed at 128.8% of asking. Within the condo category, results for July through September split by neighborhood. Condos in South Beach, South of Market and Yerba Buena sold at about asking. Noe Valley condos sold at 122% of asking in a median 12 days.
News coverage this year points the same way. In July 2026, The Standard profiled a buyer named Rafael who passed on a newer high-rise because of its steep HOA fees. In June he bought a condo in a 1907 building near Folsom and Seventh for $575,000, $10,000 below asking, after the unit had sat for nearly a year. That same story quoted agents describing downtown condos as bargains, with SoMa and South Beach resales competing against incentives on new construction.
The Standard's September 3 profile of SoMa called Fifth Street the dividing line. East of it, condos were selling after years of stagnation. West of it, the neighborhood was still recovering. 415 Natoma, a 25-story tower at Fifth and Mission, was described as almost entirely vacant. At Lumina, 338 Main, The Real Deal reported a July 15, 2026 sale just under $6.7 million, about what the seller paid in 2016. More than 75% of units sold there over the prior year went for roughly their 2016 prices or less.
Towers can still draw bidding. The San Francisco Business Times reported multiple offers on three units at The Avery in 2026. Even so, wherever monthly dues run highest, the pool of financed buyers who qualify gets smaller, and the remaining competition comes mostly from cash.
Dues will have more to pay for
If dues only covered today's costs, buyers could compare them as a fixed number. Several recent decisions will push costs in many buildings higher.
- The high-rise sprinkler mandate. An August 2026 report from the Board of Supervisors' Budget and Legislative Analyst studied the retrofit for roughly 9,000 units in San Francisco's 126 pre-1970 residential high-rises. It put costs at $15,000 to $224,900 per unit, depending on the building's existing systems. The Board had already moved the deadline from 2028 to 2035. A technical advisory council is reviewing the mandate, and a homeowner coalition is pushing for repeal. Supervisors Stephen Sherrill and Danny Sauter, whose north-side districts include most of the affected buildings, called the one-size-fits-all approach misguided.
- AB 2050. Chaptered on September 29, 2026, the law takes effect January 1, 2032. If an association's reserves are projected to fall below zero within 30 years, it must transfer 15% of its gross annual budget to reserves each year. If the budget can't cover that, a reserve-funding special assessment follows. The governor's office listed it in the September 29 housing package.
- Fannie Mae's reserve floor. When lenders use Fannie Mae's Full Review process on loan applications dated on or after January 4, 2027, the minimum replacement-reserve allocation for capital expenditures and deferred maintenance rises from 10% to 15% of a project's annual budgeted income assessment. Some projects don't budget enough reserves to meet the standard, and lenders can use a reserve study to show those reserves are still sufficient. Since August 3, 2026, a lender using that option must confirm the budget includes the study's highest recommended reserve allocation.
The Fannie Mae rule ties back to financing. A building with thin reserves may need to raise dues to keep its units eligible for conventional loans. If a project fails Fannie Mae's requirements, loans on its units can't be sold to Fannie Mae until the problems are resolved. Significant deferred maintenance and inadequate insurance are among the listed concerns. Fannie Mae explained its tighter rules by pointing to the link between weak reserves, critical repairs, special assessments and higher regular dues. Fannie Mae also doesn't publish its project decisions to buyers. Only lenders and authorized HOA-side users can see them. A financed buyer usually finds out a building's status through the lender, sometimes well into escrow.
Reading a building before reading the price
A condo's list price shows what the seller wants. The association documents show the monthly cost for whoever buys it and whether a lender will finance the unit at all. A financed buyer comparing condos this fall can check:
- The current monthly dues, run through a lender's qualifying math at today's rate before writing an offer.
- The most recent reserve study and budget, including whether the association funds reserves at the study's highest recommended level.
- Any special assessment on the books, since installments with more than ten payments left count as housing expense.
- The year the building went up and how tall it is, which shows whether it falls under the pre-1970 high-rise sprinkler ordinance.
- Project eligibility, confirmed early with the lender, so a non-warrantable building doesn't come up after the inspection period ends.
For comparison, C.A.R. reported San Francisco's August 2026 single-family median at $1,875,000, up 25% from August 2025, with 1.3 months of unsold inventory. C.A.R.'s county table covers detached houses only. When buyers are priced out of houses, a condo is the usual alternative, and the monthly dues decide how much of that alternative a loan can actually buy.
Quick answers
Do dues count against me if I'm buying a second home? Freddie Mac's housing-expense rule cited here applies to primary residences. Other occupancy types follow their own rules, so ask your lender to show how your file is treated.
Will the sprinkler mandate definitely be enforced? No. The deadline has moved to 2035, a technical advisory council is studying alternatives, and a repeal effort is active.
Does AB 2050 raise dues right away? Its reserve-funding requirements begin January 1, 2032. Fannie Mae's 15% replacement-reserve minimum comes sooner. It applies to Full Review loan applications dated on or after January 4, 2027.
Now Homes handles brokerage and mortgage under one roof, so we can review a building's dues, reserve study and lending eligibility together with your qualifying numbers before you write an offer. If you are weighing San Francisco condos this fall, or want to know how your own building's dues affect what buyers can pay for your unit, request a free home valuation and we'll go through it with you.
