Homeowners Association (HOA) Fees: What Are They and How Do They Work?

Homeownership doesn’t look the same for everyone. With the traditional model, you’ll pay all your expenses, including insurance premiums, maintenance fees, and upkeep costs. In communities that have a homeowner’s association, however, some of those expenses might be covered by your Homeowner’s Association (HOA) fees.

In this article, we’ll look at how HOA fees work, what they typically cover, along with the pros and cons of living in an HOA community.

HOAs exist to provide services for the residents of the community. They also help to contribute to a well-maintained, organized community that members can enjoy living in. The benefits of an HOA are neat and tidy neighborhoods, and often, additional amenities that are shared by the entire community. Examples of this are swimming pools, fitness centers, outdoor kitchens, and tennis courts. The annual maintenance and upkeep costs for these amenities are added up and factored into the HOA fee structure.

Homeowner’s association fees are dues that homeowners within planned communities pay to their homeowner’s association. These fees are typically used to assist with maintaining and improving properties.

HOA fees are not typically included in your mortgage payment, but some mortgage services might be willing to add them to the escrow portion and pay them for you.¹

HOA fees may range from $100 per month to $1,000 (or even more) per month, with the average generally ranging between $200 and $300.² This varies in part depending on factors including amenities offered, the size of the homeowner’s association, and the assessed value of the home, condominium, or townhouse that you’re buying. For example, luxury properties that have concierge service, on-site fitness trainers, and valet parking will typically have higher fees.

Each homeowner’s association sets its own fees, so there’s no specific rate you can expect to pay. HOA fees are often described as homeowner “dues” because paying them gives you access to services that only members can take advantage of. That includes maintenance and upkeep along with access to amenities on the property. Here are some examples:

• Landscaping: Some communities allow you to do the landscaping yourself. Others have a service that takes care of it. That expense is covered in your HOA fees. It could also include snow removal if you’re in a colder climate.
• Insurance: Your mortgage insurance is your responsibility, and your mortgage company may require you to have homeowner’s insurance. If the homeowner’s association wants an insurance payment, it’s likely liability insurance.
• Utilities: This portion of your HOA fees is usually for community utilities, like electricity in the laundry room or clubhouse. It could also be for access to cable or internet that’s available in the community.
• Other Amenities: Condo complexes with swimming pools may have HOA fees that include the pool maintenance costs. The same applies to fitness centers and outdoor courts that require lights or electricity.
• Maintenance and repairs: Pooling funds to pay for maintenance and repairs when needed takes some of the burden off the individual homeowners. That includes repairs on homes and common area maintenance.
• Pest control: Bugs and rodents can make life unpleasant. You can expect a portion of your HOA fees to be spent on keeping them under control.

Homeowner’s associations provide homeowners with the services they need without the hassle of having to shop for them. Here are some of the pros of living in an HOA community.

• HOA communities can reduce your responsibilities as a homeowner. They take care of several time-consuming tasks, freeing you up to focus on other priorities.
• Many HOA communities provide amenities like swimming pools and tennis courts. The cost of maintaining those is included in your HOA fees.
• A HOA can help to ensure that the grounds and properties are well-maintained, helping to preserve property values.

The pros are well-documented and easy to see, but there may also be some drawbacks to living in an HOA-managed community. Cost and lack of control are at the top of that list.

• HOA fees can vary widely, and the association can vote to raise them with a simple majority. Check your agreement carefully to see what the policy is on this.
• If you fall behind on your fees, the HOA can take action. Some contracts stipulate that late fees can be charged while others may allow the HOA to foreclosure on the owner’s property.
• The association may prevent you from renting out your home. This could be a financial inconvenience if you have extra space you can’t use.
• The association may be able to impose assessments to cover unexpected costs.