An HOA fee is a recurring charge paid by homeowners whose properties are part of a homeowners association. The money generally supports shared services, common areas, maintenance, insurance, reserves and other expenses established by the association.
HOA fees can add hundreds of dollars or more to the monthly cost of owning a home, but there is no standard amount. What you pay depends on the community, property type, amenities, insurance costs, maintenance responsibilities and financial condition of the association.
Before buying a home in an HOA, find out not only what the current dues are, but what they cover, whether they have recently increased and whether the association has adequate reserves for major future expenses.
Key Takeaways
- HOA fees vary widely and may cover everything from landscaping to insurance and major community amenities.
- Regular dues are only part of the cost because homeowners can also face fee increases and special assessments.
- HOA fees for a primary residence generally aren’t tax deductible, although different rules can apply to rental or business use.
What Is an HOA Fee?
An HOA fee, also called an HOA due or assessment, is money owners pay to a homeowners association to fund the expenses of operating a shared community.
Depending on the association, dues may be collected monthly, quarterly or annually.
If a property is subject to a mandatory HOA, membership generally comes with ownership of the property. You cannot normally decline membership simply because you do not intend to use the pool, clubhouse or other amenities.
HOAs are common in condominiums, townhome developments, planned communities and some subdivisions of detached single-family homes.
The association’s governing documents explain the owner’s obligations, including regular assessments and the services the HOA is responsible for providing.
How Much Are HOA Fees?
There is no useful universal HOA fee for every buyer to expect.
The Consumer Financial Protection Bureau says HOA or condo dues can range from a few hundred dollars per month to more than $1,000 per month. Fees can be lower or substantially higher depending on the property and community.
Some of the biggest factors affecting HOA fees include:
- Location
- Property type
- Age and condition of the development
- Number of homes sharing the expenses
- Insurance costs
- Staffing
- Utilities paid by the association
- Maintenance responsibilities
- Swimming pools, elevators, gyms and other amenities
- Amount contributed to reserves
A condominium tower with elevators, a concierge, a pool and extensive common areas may have far higher dues than a subdivision where the HOA maintains only an entrance, landscaping and a small park.
That means the dollar amount alone doesn’t tell you whether an HOA fee is high or low for that particular property.
What Do HOA Fees Cover?
What HOA fees cover depends entirely on the community’s governing documents and budget.
Do not assume the HOA is responsible for everything outside your walls or that every condo association covers the same expenses.
Common expenses can include:
Common Areas and Amenities
- Clubhouses
- Swimming pools
- Fitness facilities
- Parks and playgrounds
- Walking paths
- Community rooms
- Elevators
- Shared parking areas
- Private roads
- Entry gates
Maintenance
- Landscaping
- Snow removal
- Cleaning common areas
- Pest control
- Road or sidewalk maintenance
- Exterior maintenance when assigned to the HOA
- Repairs to common structures
Insurance and Administration
- Master insurance policies
- Property management
- Accounting and legal expenses
- Community staff
- Security services
Shared Utilities
Some associations also pay certain utilities, such as:
- Water
- Sewer
- Trash collection
- Electricity for common areas
- Internet or cable in some communities
Whether those expenses are included varies significantly, so review the association documents instead of assuming they are part of the fee.
Are HOA Fees Included in Your Mortgage Payment?
Usually not.
HOA and condominium dues are typically paid directly to the association rather than to your mortgage servicer.
They still matter when you’re determining how much home you can afford. A $400 monthly HOA fee is another $4,800 per year of required housing expense even if it never appears in the principal-and-interest portion of the mortgage payment.
Lenders also generally account for required HOA obligations when evaluating your housing expenses and ability to repay the mortgage.
When comparing homes, include association dues alongside principal and interest, property taxes, homeowners insurance and mortgage insurance when applicable.
Why Are Some HOA Fees So High?
A high HOA fee can have many causes, and the size of the fee alone does not tell you whether an association is well managed.
Higher dues may reflect:
- Expensive amenities
- Full-time staff
- Elevators
- Extensive landscaping
- Older buildings requiring more maintenance
- Higher insurance premiums
- Utilities included in the fee
- Large contributions to reserve accounts
- Recent increases in operating expenses
Likewise, unusually low dues are not automatically a bargain.
An association that consistently collects too little may have difficulty paying for major repairs without sharply increasing dues or levying a special assessment later.
What Are HOA Reserves?
An HOA reserve fund is money set aside for major repairs, replacements and other long-term expenses.
Examples can include:
- Replacing a roof
- Resurfacing private roads
- Replacing elevators
- Repairing a pool
- Replacing major mechanical systems
- Repairing common structures
Think of reserves as the association’s long-term savings rather than money intended for routine monthly expenses.
Fannie Mae recommends reviewing an association’s financial statements before buying so you can better understand its financial condition, including whether money has been set aside for future repairs.
Reserves matter because a large expense does not disappear simply because the HOA has not saved enough for it.
What Is an HOA Special Assessment?
A special assessment is an additional charge imposed on owners beyond regular HOA dues.
An association might levy one when it needs money for a major repair or other expense that cannot be fully covered by its operating budget and reserves.
For example, owners might receive a special assessment to help pay for structural repairs, a roof replacement or another substantial community expense.
Depending on the association, the owner may have to pay the assessment as a lump sum or through installments.
Before buying, ask whether there are any pending, approved or recently completed assessments and review the association’s meeting minutes and financial information when available.
Can HOA Fees Go Up?
Yes.
An HOA’s expenses change over time just like a household’s expenses. Insurance, labor, utilities, maintenance and repairs can all become more expensive.
The board may therefore increase regular dues according to the association’s governing documents and applicable state law.
This is one reason to look beyond today’s payment. A fee that comfortably fits your budget now may not remain unchanged throughout your ownership.
How to Evaluate HOA Fees Before Buying
Instead of deciding whether a fee is reasonable based only on the monthly amount, determine what you receive for it and how healthy the association appears financially.
Documents worth reviewing can include:
- Current budget
- Recent financial statements
- Reserve information or reserve studies when available
- Recent meeting minutes
- Insurance information
- CC&Rs
- Bylaws
- Rules and regulations
- Information about pending special assessments
- Recent history of fee increases
If you’re considering a condo or townhome, it can also help to understand the difference between HOA and condo fees and exactly which portions of the property you will be responsible for maintaining.
An agent can help you obtain available association documents, but you should read the material yourself and raise questions about anything that could materially affect your cost or use of the property.
Are HOA Fees Tax Deductible?
HOA fees generally aren’t deductible on your federal income tax return when you pay them for a home you use as your personal residence.
The IRS specifically lists homeowners association fees, condominium association fees and common charges among expenses homeowners generally cannot deduct.
The treatment can be different when the property is used to produce rental income.
IRS Publication 527 says owners who rent a condominium can generally deduct dues or assessments paid for maintenance of common elements as rental expenses, subject to the normal tax rules and limitations that apply to rental property.
A special assessment used for a capital improvement can receive different treatment. For example, the IRS says a condo owner generally cannot simply deduct a special assessment for an improvement as a current rental expense, although the owner’s share of the improvement may potentially be recovered through depreciation.
Mixed personal and rental use can make the calculation more complicated because expenses may need to be allocated between the two uses.
Tax treatment depends on how the property is used and the nature of the charge, so consider speaking with a tax professional about your specific situation.
What Happens If You Don’t Pay HOA Fees?
Ignoring required HOA dues can have serious consequences.
The exact process depends on state law and the association’s governing documents, but unpaid assessments can potentially result in:
- Late fees
- Interest
- Collection activity
- Legal expenses
- Loss of access to some amenities when permitted
- A lien against the property
- Foreclosure proceedings in circumstances where state law permits them
Do not assume an HOA bill is optional simply because it is separate from the mortgage.
If you are having difficulty paying, contact the association promptly and determine what options may be available before additional fees accumulate.
What Is an HOA Transfer Fee?
Regular dues are also different from an HOA transfer fee.
A transfer fee is generally a one-time charge associated with changing ownership records when a property in an HOA is sold. Who pays can depend on local practice, the purchase contract and the association.
Movoto’s guide to HOA transfer fees explains how these charges work and when they may appear in a real estate transaction.
Are HOA Fees Worth It?
Whether an HOA fee provides good value depends on what the association provides and what you want from the property.
A buyer may value landscaping, snow removal, a pool and common-area maintenance because those services reduce the work required of the individual homeowner.
Another buyer may prefer to control those expenses independently and avoid community rules.
The useful comparison is not simply “HOA fee versus no HOA fee.” Look at the total cost of owning each property and what expenses you would pay yourself if the association did not provide those services.
You should also consider whether the rules fit how you intend to use the home. Restrictions involving parking, rentals, pets, landscaping or exterior modifications may matter just as much as the monthly fee.
HOA costs and restrictions are among the questions worth investigating before making an offer on a property in a managed community.
Bottom Line
HOA fees pay for the services and financial obligations of a shared community, but what you receive for those dues varies significantly from one association to another.
Before buying, look beyond the advertised monthly fee. Review what it covers, the association’s reserves, recent fee increases, pending special assessments and the rules you will be expected to follow.
Most importantly, include the full HOA obligation in your housing budget. A property can fit your mortgage budget on paper while becoming considerably more expensive once required association costs are included.
FAQ
What is an HOA fee?
An HOA fee is a recurring assessment charged to owners in a homeowners association to help pay for shared expenses such as maintenance, amenities, insurance, management and reserve funding.
How much are HOA fees?
HOA fees vary widely. CFPB notes that they can range from a few hundred dollars per month to more than $1,000 per month. The actual amount depends on the property, location, services, amenities and association budget.
Are HOA fees included in a mortgage?
Usually not. HOA dues are generally paid directly to the association rather than included in the payment to your mortgage servicer, although lenders still consider required association costs when evaluating affordability.
What do HOA fees usually cover?
Depending on the community, fees can pay for landscaping, common-area maintenance, roads, pools, clubhouses, insurance, utilities, property management and contributions to reserve funds.
Are HOA fees tax deductible?
HOA fees generally aren’t deductible for a home used as your personal residence. Different rules can apply when the property is rented or used for business, so the tax treatment depends on the property’s use and the type of expense.
Can HOA fees increase?
Yes. Associations can increase dues in accordance with their governing documents and applicable law as operating costs, insurance, maintenance needs and reserve requirements change.
What is the difference between HOA dues and a special assessment?
Regular HOA dues fund recurring association expenses and reserves. A special assessment is an additional charge that may be imposed for a major expense when regular dues and available reserves are not enough.
Can an HOA put a lien on your house for unpaid fees?
Potentially. The remedies available to an HOA vary by state and governing documents, but unpaid assessments can lead to collections, liens and, in some jurisdictions and circumstances, foreclosure proceedings.
