Shopping for a River North condo and wondering how the building’s assessments could change your loan approval? You are not alone. In high-rise neighborhoods with strong amenities, monthly dues and special assessments can shift your buying power more than you expect. In this guide, you will learn how lenders treat assessments, what to review in a building’s financials, and how to plan your offer so you avoid surprises and delays. Let’s dive in.
What condo assessments include
Condo assessments fund the day-to-day and long-term needs of the building. Lenders look at these expenses because they affect both your monthly budget and the project’s financial health.
Monthly assessments (HOA dues)
Monthly assessments pay for building operations like management, insurance for the building, utilities if included, routine maintenance, staffing, and amenities. Lenders count this recurring fee as part of your housing cost, which is included in your debt-to-income ratio. Higher dues reduce the mortgage amount you can qualify for at a given income and down payment.
Reserve fund
The reserve fund is cash set aside for major repairs and replacements such as roofs, elevators, and mechanical systems. Strong reserves lower the risk of a large special assessment. Thin reserves are a red flag for lenders and can trigger more documentation, a project review, or limits on loan programs.
Special assessments
A special assessment is a one-time or short-term charge when regular funds are not enough for capital work or unexpected costs. If the assessment will be paid in installments, lenders usually add the monthly installment to your debt-to-income ratio. If you plan to pay it in a lump sum at or before closing, the lender will require proof of funds. If terms are unclear, some loan programs may pause or decline the project until documentation is provided.
HOA delinquencies
Delinquencies are units that are behind on dues. High delinquency levels signal stress in the association’s cash flow. Many loan programs have thresholds for acceptable delinquency levels and may require extra review or find a project ineligible if delinquencies are high.
How lenders treat assessments
Different loan programs look at the building and your monthly costs in specific ways. Your lender will verify details with the association before issuing a final approval.
Conventional loans
Conventional lenders include monthly HOA dues in your monthly obligations. Known special assessments are documented and either added to your DTI if paid in installments or verified as funds to close if paid in a lump sum. Project risk factors such as low reserves, high delinquencies, heavy commercial space, litigation, or unusual assessments can require a project review or limit eligibility.
FHA loans
FHA requires a condo project to meet FHA approval standards, either through the approved list or a single-project approval. The financial stability of the association, reserve funding, and any known assessments are part of the review. Some assessments or severe delinquency can make a project ineligible until resolved or approved.
VA loans
VA loans also review HOA dues, reserves, and assessments, and use their own condo eligibility rules. Known assessments must be disclosed and may need to be paid or escrowed, depending on terms.
Portfolio and local lenders
Local banks and credit unions sometimes offer more flexibility on buildings with marginal characteristics. In exchange, they may require stronger borrower reserves or charge higher rates. Treatment varies by lender, so ask early.
River North factors to watch
River North’s building mix and age profile can shape both dues and the likelihood of special assessments.
Amenity-rich buildings
Many River North condos are in high-rise, mixed-use buildings with doormen, fitness centers, pools, and onsite services. These amenities increase operating costs, which often means higher monthly assessments. Lenders factor that higher ongoing expense into your DTI.
Older high-rises and capital work
River North has both newer developments and older mid-to-late 20th-century buildings. Older buildings may face façade repairs, elevator modernization, roof or HVAC replacement, or code-related upgrades. These projects are common triggers for special assessments.
Investor mix and occupancy
Urban neighborhoods often have a blend of owner-occupied and investor-owned units. A higher share of rentals can correlate with higher turnover and in some cases higher delinquency. Lenders consider these ratios when reviewing project stability and program eligibility.
Taxes are separate from dues
Cook County property taxes and utilities are separate from HOA assessments. Your total monthly housing cost includes mortgage principal and interest, property taxes, homeowner’s insurance, monthly HOA dues, and any assessment installments. Assessments do not replace property taxes.
How assessments change your pre-approval
Most pre-approvals assume a typical HOA fee as a placeholder. If the building you select has higher dues than assumed, your maximum loan amount can drop because the dues count toward your monthly obligations. If a special assessment requires installments, the monthly installment is added to your DTI, which can further reduce your qualifying amount.
Known lump-sum assessments increase your cash to close. Your lender will require documentation showing how and when the assessment will be paid. Expect your pre-approval to remain conditional until the condo project documents are reviewed.
Due diligence checklist before you write an offer
Request these items as early as possible. Build a condo-document review contingency into your offer so you have time to analyze them.
Financial and budget documents
- Current association budget
- Most recent financial statement or CPA review or audit
- Current reserve balance and any reserve study
- Recent months of association bank statements if available
Assessment and delinquency information
- List of all current and planned special assessments with payment schedules and buyer obligations
- Delinquency report showing percent of units current versus delinquent
- Collection and lien policies
Governing documents and legal
- Declaration, bylaws, rules and regulations
- Meeting minutes for the last 12 months
- Any pending litigation disclosures
- Insurance certificate and summary of coverages
- Estoppel letter and the lender’s condominium questionnaire
Capital projects and maintenance
- List of recent and planned capital repairs with timelines and estimated costs
- Any permits or city citations that could require repairs or fines
Occupancy and use
- Percent owner-occupied and number of leased units
- Any commercial space and its percentage of the project
Red flags and what to do next
- Low or no reserves. Likely need for a special assessment soon. Ask about planned funding and timing.
- High delinquency percentage. Cash flow is pressured and maintenance could be at risk. Verify collection policies and recent trends.
- Repeat or large special assessments. Indicates ongoing capital needs. Confirm the full scope and whether more phases are coming.
- Pending litigation. Can limit loan programs or delay closing. Obtain details and discuss with your lender and attorney.
- High investor concentration or substantial commercial space. May affect eligibility for certain loan programs.
If you encounter one or more of these, talk with your lender about options. Some programs can approve with conditions or require a higher down payment. In negotiations, you can request seller contributions toward assessments or adjust pricing to reflect known costs.
Plan your offer and timeline
Before you offer
- Share the association budget, questionnaire, and any assessment details with your lender for a quick read.
- Estimate your total monthly cost, including dues and any assessment installments, to confirm your budget.
- Ask for an estoppel or a written statement of dues and assessments from the association or management.
While under contract
- Use a condo-doc review contingency with clear deadlines so you can negotiate if issues arise.
- Send the full document set to your lender immediately to avoid underwriting delays.
- Coordinate with your attorney to interpret special assessment language and owner obligations.
When comparing buildings
- Do not compare by price per square foot alone. Compute your effective monthly housing cost instead.
- Favor buildings with recent reserve studies, healthy reserves, and lower delinquency for more predictable ownership.
Quick cost worksheet
Use this simple framework to compare River North buildings:
- Start with your projected monthly mortgage principal and interest.
- Add the monthly portion of Cook County property taxes.
- Add homeowner’s insurance if not included in dues.
- Add monthly HOA assessments.
- Add any special assessment installment amounts.
- Compare the total to your lender’s DTI guidance and to your personal comfort level.
Work with a team that understands condos
You want a smooth closing and a building that will be easy to own and resell. That takes careful review of the HOA’s financial health, clear communication with your lender, and proactive document gathering early in the process. Our team helps buyers navigate Chicago condo dynamics and stay ahead of underwriting requirements so you can make a confident choice in River North.
Ready to compare buildings or sense-check an assessment scenario? Reach out to TGI Realty for a friendly consultation, and we will help you plan your next steps with your lender and attorney.
FAQs
How do monthly HOA dues affect my mortgage approval for a River North condo?
- Lenders include monthly HOA dues in your recurring obligations, which raises your DTI and can lower the maximum loan amount you qualify for.
What happens if a River North building has a special assessment during my purchase?
- If paid in installments, the monthly amount is added to your DTI. If paid as a lump sum at or before closing, you must document the funds for closing.
Do condo assessments replace Cook County property taxes?
- No. Assessments are separate from property taxes. Your budget should include mortgage payment, taxes, insurance, HOA dues, and any assessment installments.
What condo documents will my lender ask for in Chicago?
- Expect requests for the budget, financials or audit, reserve balance or study, delinquency report, meeting minutes, the condo questionnaire, insurance summary, and details on any assessments.
Can I use FHA or VA for a River North condo purchase?
- Possibly. FHA and VA have project approval rules that review association finances, reserves, and assessments. Your lender will confirm if the specific building is eligible.
What are common red flags that can delay or derail financing?
- Low reserves, high delinquencies, pending litigation, unusual or repeated assessments, high investor concentration, or significant commercial space can trigger extra review or limit loan programs.
