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Loading...Loading...Homeowners pay a homeowners association (HOA) fee on a regular basis to cover the costs of maintaining shared community spaces, providing amenities, paying for insurance, and running the association.
When you live in a community with a HOA, you have to pay HOA fees, which are also called HOA dues. Think of them as your part of keeping the neighborhood going. The money is used to pay for shared services, insurance, and administrative work that keeps the community running on a daily basis.
A homeowners association is a group of residents who are elected to run the organization and make sure that the community's rules and bylaws are followed. These groups can be in charge of anything from planned developments and condo buildings to single-family subdivisions and townhome complexes. You usually have to join the HOA when you buy a home in one of these neighborhoods. The fees are too.
It's worth saying again. You usually can't choose not to do it. Paying the HOA fees is part of the deal if the home you're buying is in one. There are a few HOAs that are optional, but that's not the case for most. The covenants, conditions, and restrictions that come with the property stay with the land. This means that every new owner gets them, even if you didn't read the fine print before closing. This is one of those things that surprises people, so it's good to know ahead of time.
HOAs have been growing fast across the country. The Foundation for Community Association Research estimates that roughly 370,000 community associations now manage housing for close to 80 million Americans. That’s about a third of all U.S. housing stock. So if you’re shopping for a home, there’s a solid chance you’ll run into one.
Your HOA board sets the fee amount based on the community’s annual operating budget. They look at what it costs to run everything for the year, divide that total among the homeowners, and that’s your share. Most communities collect fees on a monthly basis, though some bill quarterly or annually. When you’re applying for a mortgage through AmeriSave, these fees get factored into your monthly housing costs right alongside your principal, interest, taxes, and insurance.
The specifics depend on your community, but most HOA budgets fund the same general categories. Common area maintenance is usually the biggest chunk. That includes landscaping, snow removal, pest control, parking lot or road upkeep, and exterior building maintenance in condo communities. Shared amenities like pools, fitness centers, clubhouses, tennis courts, and playgrounds all get funded through these fees too.
There’s also the administrative side. Your fees help pay for liability insurance on common property, which the HOA is required to carry. They fund property management services if your community uses a management company. And they cover routine expenses like bookkeeping, legal compliance, and communication with homeowners. In some communities, especially larger ones here in Louisville and across the Southeast, fees even cover basics like trash collection, water, or exterior lighting.
One thing a lot of buyers miss is the reserve fund. A well-managed HOA sets aside a portion of every fee payment into a reserve account, which is a savings fund earmarked for major future expenses like roof replacements, repaving, or elevator overhauls in high-rise buildings. This reserve fund is a big deal, because when it’s underfunded, the board has to come to homeowners with a special assessment to cover the gap, and that can mean a surprise bill of hundreds or even thousands of dollars. When you’re evaluating a community with AmeriSave’s resources and guidance, asking about the reserve fund health should be near the top of your list.
Special assessments are one-time charges your HOA can levy on top of regular fees. They usually show up when a major repair comes along and the reserve fund doesn’t have enough to cover it. Roof damage after a storm, a failing sewage system, a parking structure that needs structural work. These can be big bills, and they’re not optional.
The best way to get ahead of this is to ask for the HOA’s reserve study before you buy. A reserve study is a professional analysis that estimates how much the association needs to save for future capital expenses. If the reserve fund is healthy, special assessments are less likely. If it’s underfunded, that’s a red flag worth taking seriously.
HOA fees can vary a lot depending on where you live, what kind of property you own, and what your community offers.
The U.S. Census Bureau’s American Community Survey puts the national median HOA or condo fee at $135 per month. But that median hides a wide range. According to the same data, about 5.6 million households pay less than $50 a month while roughly 3 million pay more than $500. Location makes a huge difference. Homeowners in states like New York, Hawaii, and the District of Columbia are far more likely to pay over $500 monthly, while states like Maine, North Dakota, and South Dakota see much smaller shares of homeowners paying these fees at all.
Property type matters too. Condo fees tend to run higher than single-family HOA fees because condo associations usually cover more shared structural expenses like roofs, hallways, and elevators. A single-family HOA might only maintain the landscaping, a pool, and the roads.
How are fees distributed geographically? The Census Bureau found that Nevada, Florida, and Arizona have the highest proportions of homeowners paying HOA or condo fees, with Nevada leading at 51%. This makes sense. These are states where planned communities and retirement developments are especially common. On the flip side, states in the upper Midwest and New England have some of the lowest rates of HOA membership.
One more thing to keep in mind when budgeting through a tool like AmeriSave’s mortgage calculator: HOA fees tend to go up over time. Maintenance costs, insurance premiums, and utility expenses all rise, and your HOA adjusts its budget accordingly. A $200 monthly fee today could be $240 or $260 a few years from now. Build some cushion into your monthly housing budget.
Let’s say you’re buying a $300,000 home with 10% down. Your loan amount is $270,000. At a 6.75% rate on a 30-year fixed mortgage, your principal and interest payment comes to about $1,752 per month. Add property taxes at roughly $250 per month and homeowners insurance at around $125 per month, and your base housing cost is about $2,127 before you even get to the HOA.
Now add a $200 monthly HOA fee, which is right in the typical range for a mid-size planned community. Your total monthly housing cost jumps to $2,327. Over a full year, that’s $2,400 just in HOA fees, or roughly 8.6% of your total annual housing costs. That’s not a small number, and it’s one reason lenders, including AmeriSave, factor HOA fees into your debt-to-income ratio when you apply for a mortgage. The fee doesn’t go toward your loan balance or build any equity. It’s a pure operating expense for the community.
For most homeowners, no. If you live in the home as your primary residence, the IRS treats HOA fees the same way it treats your utility bill or your lawn care costs. They’re personal expenses, and you can’t deduct them.
There are two main exceptions. If you own a rental property that belongs to an HOA, you can deduct the fees as a business expense on Schedule E of your tax return. You’d report them under rental expenses, and they’d lower your taxable rental income. If you only rent the property part of the year, you can deduct a proportional share. Say you rent it out for nine months and use it personally for three. You could deduct 75% of the annual HOA fees.
The second exception is the home office deduction. If you’re self-employed and use part of your home exclusively and regularly for business, you can deduct the corresponding percentage of your HOA fees. The IRS has specific rules about what counts as a qualifying home office, so it’s smart to check IRS Publication 587 or work with a tax professional before claiming this one. Special assessments for capital improvements are generally not deductible either, though you may be able to recover that cost through depreciation on a rental property.
Late fees come first. Then the community can suspend your access to shared amenities like the pool or clubhouse.
If you keep falling behind, the HOA can place a lien on your property. A lien is a legal claim against your home that has to be settled before you can sell or refinance. In many states, HOA liens take priority over other debts, which gives the association real leverage. This is something your AmeriSave loan team can help you understand if you’re buying in a community with an HOA, because lien risk is part of the title search process.
In extreme cases, some state laws allow HOAs to pursue foreclosure on a property when fees go unpaid for an extended period. This doesn’t happen overnight, and the HOA can’t just knock on your door and take your house. But the legal authority exists in many jurisdictions, and it’s a serious consequence worth knowing about. If you’re struggling to pay, the smartest move is to talk to your HOA board early. Many communities will work out a payment plan before things escalate to legal action.
Ask for the HOA’s governing documents before you close. That means the covenants, conditions, and restrictions, the bylaws, the most recent budget, and the reserve study. These tell you what the community requires, what your money goes toward, and whether the association is financially healthy.
Look at fee history. Has the HOA raised fees every year for the past five years? That’s not necessarily bad, but you want to know the trend.
Check the reserve fund balance against the reserve study’s recommendations. A community that should have $500,000 in reserves but only has $150,000 is likely headed for a special assessment. Borrowers working with AmeriSave can factor this kind of analysis into their overall budget planning when they’re running the numbers on a home purchase.
Read the rules. HOA covenants can be detailed and sometimes surprisingly strict, covering everything from fence heights and paint colors to how many pets you can have and whether you can park a boat in your driveway. You don’t want to find out after closing that your community doesn’t allow something that matters to you. Also look at the meeting minutes from the past year or two. They’ll tell you what issues the board has been dealing with, whether there are ongoing disputes, and what capital projects are coming up. These details don’t show up in the listing, and they can change how you feel about the purchase.
HOA fees are a real, ongoing cost that can add up quickly, but they don't just go away into thin air. When a community is well-run, your fees go toward keeping the area safe, clean, and nice-looking. This helps keep the value of your property high over time. The most important thing is to do your research before you buy. Check the budget, the reserves, and the rules to make sure the total monthly cost of housing fits your budget. AmeriSave can help you figure out how much your HOA fees will add to your mortgage so you know what you're getting into before you sign.
The American Community Survey from the U.S. Census Bureau says that the average HOA or condo fee in the U.S. is $135 a month. The amount you pay will depend on where you live, how big your community is, and what services the association provides. Some homeowners pay less than $50 a month, while others pay more than $500, especially in New York, Hawaii, and the District of Columbia. When you get preapproved with AmeriSave, make sure to include the expected HOA fee in your monthly budget so you know how much your housing will really cost.
Most HOA fees go toward things like landscaping, taking care of common areas, shared amenities like pools and gyms, liability insurance on community property, and administrative costs like property management. Fees are also used by some communities to pay for security, trash pickup, and upkeep of the outside of buildings. Most of the time, a part of your payment goes into a reserve fund for big repairs that will need to be done in the future. You can see exactly what your fees cover by looking at the HOA's annual budget. AmeriSave can also help you see how these costs fit into the big picture of your loan.
No, usually not. Most HOA fees are paid directly to the association, not through the HOA. Property taxes and homeowners insurance sometimes go through your mortgage servicer, but not these. It's not common for a lender to set up an escrow account for HOA fees, but it can happen. No matter what, your lender will include the HOA fee when figuring out your debt-to-income ratio during the mortgage approval process. AmeriSave takes HOA fees into account when deciding if you qualify so that you can afford the total monthly cost.
Yes, HOA boards look at their budgets on a regular basis. If costs go up, they can raise fees to keep the community funded. Fees go up because of rising insurance premiums, higher maintenance costs, and inflation. Some groups have rules that limit how much their fees can go up each year, while others don't. When you're thinking about buying a home, ask the HOA about any recent changes to fees and any planned increases. The AmeriSave team can help you plan for possible price increases so that you aren't surprised by a fee hike.
A special assessment is a fee that your HOA can charge once when the regular budget and reserve fund can't pay for a big expense, like fixing a roof, doing structural work, or cleaning up after a natural disaster. Depending on the size of the project and how many units share the cost, these assessments can be as low as a few hundred dollars or as high as tens of thousands of dollars. Check the HOA's reserve study and recent meeting minutes to see how likely a special assessment is before you buy. As part of your home buying due diligence, AmeriSave suggests checking the health of your reserve fund.
Not for most people who own homes. The IRS sees HOA fees as a personal expense if the property is your main home. You can, however, deduct the fees as a rental expense on Schedule E if you own a rental property with a HOA. Homeowners who work for themselves and have a qualifying home office can also deduct a part of their fees. If you want to know the rules for rental property, look at IRS Publication 527. If you want to know how to set up a home office, look at Publication 587. AmeriSave helps people who want to buy a home understand all the costs involved, including which ones they can and can't deduct.
If you don't pay your HOA dues on time, you could be charged late fees, lose access to shared amenities, and eventually have a lien placed on your property. If the HOA has a lien on your home, it means they have a legal claim on it that must be settled before you can sell or refinance. In some states, the association can even start the process of foreclosure if you don't pay for a long time. If you're behind on your payments, talk to your HOA board about a payment plan before things get worse. When you apply for a mortgage, AmeriSave makes sure that all of your monthly costs, including HOA dues, are within your budget.
First, talk to your real estate agent. The property disclosure or MLS listing usually has the HOA fees listed. Ask for the HOA's governing documents, most recent budget, and reserve study if you want to know more. These will show you exactly what you're paying for, how the money is handled, and if the association is in good financial shape. AmeriSave tells buyers to look over these papers before closing so that there are no surprises after they move in.
No, HOA fees are set by the board and apply to all members equally. You can't opt out of a HOA if it's required by the community, because membership goes with the property deed. There are a few HOAs that are voluntary, which means you can choose not to join, but you won't be able to use the shared amenities and services. If the fees seem too high, that means you should think about whether the community is right for your budget. AmeriSave can help you find the right home by letting you compare the total costs of different homes.
Yes. One of the most important numbers lenders look at to decide how much you can borrow is your debt-to-income ratio. They include HOA fees in this number. If you have to pay $300 a month for your HOA, that will lower the amount of mortgage you can get by about the same amount. This is why you should find out the HOA fee before you start looking for a house, not after you find one you like. AmeriSave's preapproval process takes HOA fees into account, so you know how much you can afford to buy right away.
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