Yes. They need to ensure your debt to income ratio meets their requirements. Property taxes are a requirement. They can use the real taxes with exemptions, but will they? It depends on the mortgage broker - some do and some don't. You can get the correct assessment for the home from the township assessor. IF they will give it to you in writing, you can use that and most mortgage brokers will take that. I would try that angle and if it doesn't work, you may need to get a mortgage lender who will calculate the real taxes or get another property, unfortunately. Or pay down debt or increase your down payment to make it work.
This is a real problem lately with non homeowner owned properties. The taxes are artificially inflated because they have not been reassessed and they are artificially inflated because the exemptions are not in play.
You can not appeal property taxes unless you are the owner of the property, to my knowledge.