What Are HOA Fees and What Do They Cover?

Average Homeowners Association Fees and What You Can Expect

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.

HOA Fees Explained

HOA fees are mandatory payments you make regularly to the homeowners association that manages the community where you live. Average HOA fees range from $200 to $300, but this can vary depending on location. The HOA fees you pay often go toward shared community costs for amenities or maintenance. 

These fees typically aren’t included in your monthly mortgage payment. Instead, they’re paid directly to the HOA on a monthly, quarterly, or yearly basis.

Do You Have to Pay HOA Fees?

Yes, HOA fees are required if you live in a neighborhood that has an HOA. The fees are legally tied to your property and ensure you have access to services like snow removal and amenities such as an on-site gym or swimming pool. 

What Do Homeowners Associations Do?

A homeowners association is an organization that creates and enforces rules for planned communities, co-ops, or condos to maintain its look and feel. HOA members are typically made up of property owners and residents in the neighborhood. 

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. 

Homeowners associations are often responsible for the maintenance and repair of common community property as well. The fees collected by HOAs help cover shared costs for community members.

What Do HOA Fees Cover?

HOA fees can cover a wide variety of services, depending on community features. Some examples of services and amenities HOA fees can cover include: 

• Maintenance: Snow removal, repairing roofs and/or siding, landscaping, upkeep of shared spaces like sidewalks, gyms, tennis courts, and pools
• Municipal services and utilities: Trash pickup, water, sewage, 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

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 less than $100 to more than $1,000 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 inside 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 often they change.

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. You should consult a tax advisor regarding the deductibility of any fees.

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. The only time you might be able to negotiate is during the homebuying process if the seller agrees to cover some fees at closing (although this wouldn’t be with the HOA directly). You may also find some limited flexibility if you’re facing financial hardship or actively participate in HOA elections and meetings.

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. The HOA could also take legal action against you and place a lien on your home. Depending on the state law where you live, failure to pay HOA dues could result in your home being foreclosed on.

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 where labor and insurance costs are more expensive. 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.

Final Thoughts: HOA Dues Can Provide Community Benefits

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 can save with today’s lower rates.