Your mortgage payment typically includes your principal, interest, taxes, property insurance, and mortgage insurance if your loan requires it. If your home is a part of a homeowners association (HOA), you may also be required to pay monthly or yearly dues.
HOA fees are typically not included in your monthly mortgage payment. Instead, they are paid directly to the homeowners association. If you’re shopping for homes within an HOA, it’s a good idea to budget the cost of those fees into your search.
What do homeowners associations do?
A homeowners association is an organization that creates and enforces a set of rules for a community to maintain its look and feel. These associations often are responsible for the maintenance and repair of common property, too. Members of a homeowners association are typically made up of residents within the neighborhood.
Homeowners associations can mandate aesthetics for the neighborhood. These can include the number of cars in your driveway, whether cars can be parked on the street and for how long, the kind and type of window treatments, and what kinds of trees or bushes you plant in your yard.
If you want to make renovations to your home after purchasing it, be sure to check that those changes aren’t against HOA rules. Some homeowners associations require consistent paint colors, roof styles, or fences throughout the neighborhood. Other HOAs may restrict the number of pets you can have and their breed.
All of the rules for a community can be found in the HOA’s restrictive covenants which can also be called a Declaration of Covenants, Conditions, and Restrictions (CC&Rs). Violating an HOA’s CC&R can come with penalties or fines, so it’s important to be aware of their guidelines. Learn more about restrictive covenants.
What do HOA fees cover?
HOA fees can cover a wide variety of services. Some associations start with maintenance services like landscaping, trash pickup, snow removal, or sidewalk repair. In townhome or condo communities where there may be shared infrastructure, HOA fees might also include the cost of roof repairs or siding. If your homeowners association has a pool, gym, or park, the fees may also cover upkeep for those spaces.
How much are HOA fees?
HOA fees vary depending on what expenses they cover and the size of your homeowners association. Sometimes larger HOAs with more members have lower fees because there are more members to split the cost. The Consumer Finance Protection Bureau estimates that HOA fees can range between a few hundred dollars to more than one thousand dollars a month.
Keep in mind that HOA fees can change over time depending on the needs and size of the community. If you are looking to buy a home in an HOA, you can review the association’s financial disclosures prior to the sale being finalized. This allows you to see what the HOA fees cover and how regularly the fee changes.
Are HOA fees tax deductible?
HOA fees are not typically tax deductible. If the property you buy is used as a rental property and is not your primary residence, you may be able to deduct HOA fees as an expense. You should consult a tax advisor regarding the deductibility of any fees.
Homeowners association fees versus condominium fees
HOA fees and condo fees have similar purposes and work in similar ways. Both cover the cost of maintaining and repairing common property and paying for common services. Homeowners associations are typically made up of people who own single-family homes or townhomes. Condo associations are usually made of people who own units in a building.
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* Freedom Mortgage Corporation is not a financial advisor. The ideas outlined above are for informational purposes only, are not intended as investment or financial advice, and should not be construed as such. Consult a financial advisor before making important personal financial decisions.
Last reviewed and updated July 2022 by Freedom Mortgage Corporation.