What Are HOA Fees and What Do They Cover?
Key Takeaways
- HOA fees, or HOA dues, are costs homeowners pay if their property is in a community with a homeowners association.
- HOA fees fund the HOA’s operations, providing services and amenities to the community.
- Residents in HOA communities are required to pay HOA fees to avoid penalties.
- There may be other costs, such as fines and special assessments, that homeowners may have to pay to their HOA.
Your mortgage payment typically includes your principal, interest, taxes, property insurance, and mortgage insurance (if your loan requires it). And if your home is a part of a homeowners association (HOA), you’ll potentially be required to pay HOA fees, also called HOA dues.
So, if you’re shopping for homes in an HOA community, it’s a good idea to learn more about HOA fees so you can budget the cost into your home search.
What Are Homeowners Association (HOA) Fees?
HOA fees are regular mandatory payments you make to the homeowners association managing your community. Average HOA fees range from $200 to $300, but this can vary widely depending on location, the available amenities, and more. The HOA fees you pay often go toward shared community costs like a community pool, gym, or common space, and maintenance such as pest control, snow removal, and utilities in shared spaces.
What Is an HOA?
A homeowners association is an organization that creates and enforces rules for planned communities, co-ops, or condos to maintain its look and feel. HOAs are also often responsible for the maintenance and repair of common community property. HOA members are typically property owners and residents in the neighborhood.
HOAs typically utilize a tiered framework for establishing community guidelines, governing documents, an elected board, a review committee, and a voting and approvals system.
What Are HOA Guidelines?
HOA guidelines can include the number of cars in your driveway, whether cars can be parked on the street and for how long, and what kinds of trees or bushes you can plant in your yard. The rules for a community can be found in the HOA’s restrictive covenants, also known as a Declaration of Covenants, Conditions, and Restrictions (CC&Rs). Violating an HOA’s CC&Rs can come with penalties or fines, so it’s important to be aware of these guidelines.
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What Do HOA Fees Cover?
HOA fees can cover many services, depending on community features. Some examples of services and amenities HOA fees can cover include:
Maintenance and repairs: Snow removal, repairing roofs and/or siding, landscaping, upkeep of shared spaces like sidewalks, parking lots, gyms, tennis courts, and pools
- Municipal services and utilities: Trash pickup, water, sewage, snow removal, lighting in common areas, and internet access
- Amenities: Access to on-site fitness centers, pools, parks, and playgrounds
- Insurance: Policy to protect the HOA from insurance claims
- Reserve funds: For emergency and unexpected expenses or projects in the future
- Social events: Community gatherings like block parties, potlucks, yard sales, and movie nights
- Security: Surveillance equipment, gate locks, and security staff
- Pest control: Prevention and treatment in common areas like clubhouses, lobbies, and pools
As the services covered and amenities provided by HOAs vary, you may want to check with the HOA to see what they offer. That may help your decision-making while shopping for a new home.
How Much Are HOA Fees?
HOA fees vary, depending on what expenses they cover and the size of your homeowners association. The Consumer Financial Protection Bureau (CFPB) estimates that HOA fees can range from a few hundred dollars to more than $1,000 per month.
For example, a luxury condo with multiple amenities located in a popular city may have HOA fees of more than $1,000 per month, while a smaller home in a quiet community with just a couple of amenities may land closer to $100 per month.
Sometimes, larger HOAs with more members have lower fees, because there are more members to split the cost. Keep in mind that HOA fees can change over time. If you want to buy a home in an HOA, you can review the association’s financial disclosures before the sale is finalized to see what the HOA fees cover and how often they change.
Other HOA Costs
In addition to the HOA dues, homeowners in HOA communities should be aware of other potential costs. These include:
- Fines or penalties: If your HOA determines you’ve violated one of its covenants, you may face a fine or penalty. These covenants may be about behavior or property upkeep. They may be assessed a violation and have ongoing costs if the violation isn’t addressed promptly. These costs can vary based on the infraction and the history of the behavior, but may range from tens to hundreds of dollars per infraction.
- Special assessments: Sometimes, an HOA may experience an unexpected cost. In these cases, the board may issue a special assessment to recoup the costs. These special assessments are typically divided up equally among the properties in the HOA. So, a $10,000 repair cost shared by 200 homes would be $500 for each property.
Because these are ad hoc costs, anyone considering buying a home in an HOA community should leave room in their budget to cover these.
How to Pay HOA Fees
HOA fees typically aren’t included in your monthly mortgage payment because they go to property management, not your lender. Instead, they’re paid directly to the HOA or its specific property management company on a monthly, quarterly, or yearly basis.
Your HOA should have a property management website or other tool that lets you access an online payment portal to set up one-time or recurring payments. Other payment methods might include Automated Clearing House (ACH) payments, mailing in a check, paying in person, or paying over the phone.
Homeowners Association Fees FAQs
There’s a lot to consider when weighing the pros and cons of buying a home in an HOA community and the expenses that come with it. Here are answers to some common questions about HOA fees:
Are HOA Fees Negotiable?
Generally, HOA fees aren’t negotiable because they’re agreed-upon amounts set by the HOA board and detailed in the HOA’s restrictive covenants.
What Happens if You Don’t Pay HOA Fees?
If you fail to pay your HOA fees, you could lose certain privileges or access to amenities your HOA manages and face late fees or other costs. Depending on your state law, failure to pay HOA dues could result in legal action, a lien on your home, or foreclosure.
Are HOA Fees the Same as Condominium Fees?
HOA fees and condo fees serve similar purposes and work in similar ways. Both cover the costs of repairing and maintaining common areas as well as paying for common services. Homeowners associations typically include people who own single-family homes or townhomes, while condo associations usually include people who own units in a building.
Why Are HOA Fees So High in Some Areas?
Certain HOAs have higher fees due to factors such as luxury amenities or location in a high-cost area with steep labor and insurance fees. Additionally, if a homeowners association prioritizes maintaining sizable reserve funds, your HOA fees will be higher but will also protect you from huge surprise bills down the road.
Are HOA Fees Tax-Deductible?
HOA fees aren’t typically tax-deductible for homeowners. If the property you buy is used as a rental property and isn’t your primary residence, you may be able to deduct HOA fees as an expense but always consult a tax advisor to confirm deductions.
Final Thoughts: Understanding HOA Fees
HOA fees play an important role in maintaining shared spaces, preserving property values, and supporting the overall quality of a community.
While costs and coverage vary, understanding what HOA fees fund and how much they’ll cost you can help you better evaluate whether an HOA neighborhood aligns with your lifestyle and long-term homeownership goals. If you’re ready to buy a home in an HOA neighborhood (or any neighborhood), get prequalified today with Freedom Mortgage to see your personalized options and find out how much you.
Victoria Araj is the Senior Director, Managing Editor at Freedom Mortgage. In her 20 years of working for top mortgage lenders, she’s held roles in mortgage banking, public relations, editorial content, and more. She has a bachelor’s degree in Journalism with an emphasis in Political Science from Michigan State University, and a master’s degree in Public Administration from the University of Michigan. She has spoken at several industry conferences, where she’s discussed the importance of editorial content for brands.
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