Assuming this is for a primary home, and not a rental.
1. Take your original loan terms you were planning to take for the condo, then add $500/month extra (minus other costs associated with owning a SFH versus a condo- such as insurance)…. That your tell you how much more you can borrow subject to the same loan terms. This would be a rough estimate of how much more of a home without HOA you could buy…
2) Property Tax: If you pay more for a home, you’ll pay more property tax. Calculate your property tax on the SFH you can buy, versus your condo. You can then refactor how much you can really afford, by sutracting your extra monthly property tax amount from $500, and then recompute how much you can borrow.
3. Primary Home Tax Deduction: Buy a copy of a tax software, and run the numbers of your new loan payment for the SFH and property tax versus the condo.
The $500 extra in a loan, depending on your loan terms, is partially deductible…HOA payments are not. Also, your property tax is also tax deductible (provided you aren’t limited by AMT).
$500/month HOA is pretty steep, imho.
Assuming a 30year fixed loan at say 6.00% with 20% down, every $500/month toward your mortgage corresponds to about roughtly $80k extra you can borrow.
