What Is a PUD (Planned Unit Development)?

A planned unit development (PUD) is a community of condos, townhomes or single-family homes where all owners belong to a common homeowners association (HOA). PUDs offer many potential advantages, including shared community resources, recreational facilities and landscaping services. But they can also affect your homebuying process and mortgage qualification. Read on to understand what a PUD is and how it can affect your purchase process and experience in the home after purchase. 

Understanding Planned Unit Developments

Planned unit developments offer opportunities for comfort and community. Real estate developers design PUDs as attractive, comfortable and cohesive places to live. Sometimes, a PUD may create housing at different price points along with recreation, community centers, education, workplaces and more. 

Depending on the PUD, you might find townhomes, condos, single-family homes and senior living. Sometimes, a PUD will blend different living arrangements into a comprehensive development. You might also find grocery stores, shopping boutiques, religious institutions, daycares and office space. Some PUDs also include areas for warehouse or storage to support the self-contained community. 

PUD vs. HOA: What’s the Difference?

A PUD will often have an HOA. However, there is a key distinction between a PUD and an HOA. When you buy into a PUD, you own the individual home, lot and a percentage of the common areas. Everyone who owns a PUD home is automatically part of an HOA. 

On the other hand, a HOA could be a community without common amenities. In some cases, the homeowners own their homes and land; in other cases, the HOA owns the land the home sits on. Whether it's an HOA home or a PUD home, the HOA is run by a board of directors made up of people from the community. All residents in either type of HOA must contribute HOA fees. 

How to Identify PUDs in Real Estate Listings

You can identify PUDs in real estate listings by checking the listing type. If the property looks like a home or a townhome but is listed as a condo, it's likely part of a PUD. You can also look at HOA fees. PUDs typically have higher HOA fees than non-PUD HOAs, as they may include more shared amenities like pools, tennis courts, gardens and community centers. However, it's a good idea to check with the listing agent, as a home can belong to an HOA with additional amenities without being part of a PUD.

Pros and Cons of Living in a PUD

Living in a PUD has many advantages. Here are a few reasons you might consider buying a home in a PUD. 

Pros

• Convenience: You won't have to take care of landscaping or, in some cases, exterior maintenance.
• Beauty: PUDs are well-maintained and visually appealing.
• Access to amenities: These can include a pool, gym, tennis courts, community center and more.
• Connections: Join a built-in community.
• Extras: Easy access to shops, restaurants, office space and more.
• Ownership: With a PUD, you'll own the house and the property it sits on. 

You may get access to a variety of resources and amenities, including:

• Maintained common areas
• Gated access or added security
• Landscaping
• Lawn care
• Streetlights
• Pools
• Community buildings
• Fitness facilities
• Parks
• Childcare
• Exclusive office space
• Walking trails
• Tennis courts
• Basketball courts
• Bocce courts
• Pickleball courts
• More recreational facilities

Cons

While PUDs have many advantages, there are a few significant disadvantages. These include:

• High HOA fees: You can pay $500 to $1,000-plus per month in HOA fees at some PUDs
• Neighbors: PUDs tend to be densely populated, so they may not be the best choice if you want a large piece of land and privacy.
• Limitations on renovations: You won't have the freedom to change your yard or exterior of the home unless it meets HOA criteria
• Challenges in selling: If you decide to move out of the PUD, there may be restrictions on who can buy into the PUD or there could be multiple units for sale, which could drive the price down. 

How to Apply for a Mortgage on a PUD Home

The process of applying for a mortgage on a PUD home is the same as any other mortgage. You'll start by getting prequalified with one or more mortgage lenders. It's a good idea to compare rates with multiple lenders to ensure you're getting the most favorable terms. At this stage, the lender will ask for your full name, Social Security number and income, assets and debt information. 

After preapproval, you'll have a budget range and can start looking for a PUD home. When you find a home and community you're happy with, it's time to make an offer. After the seller accepts the offer, you sign the purchase and sale agreement. To finalize the mortgage and close the home purchase, you'll need to work closely with the mortgage lender and provide any additional documentation.

Lenders will ask for proof of income and information on debts. You may be asked for pay stubs, W-2s, bank statements, tax returns and proof of other assets or retirement accounts. Once the mortgage lender completes the underwriting process, you'll receive final mortgage approval. 

Choosing a PUD vs. Non-PUD Property

Whether a PUD is right for you comes down to personal preference. They offer a lot of advantages if you appreciate a community-based lifestyle and recreational activities at a fraction of the cost of owning all the amenities yourself. However, they may come with higher fees, more restrictions and less flexibility when selling the home. Ready to buy your next home? Find the best online mortgage lenders, self-employed mortgage lenders or interest-only mortgage lenders here.

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