Row of homes in neighborhood

A Beginner’s Guide To HOA Fees

6-minute read

There’s no doubt about it – you’ve got lots of question-asking to do when you buy a home. Do the homes you’re looking at require you to join a homeowners association? We’re going to take a look at what it means to buy a home with an HOA – and learn about the costs involved.

What Is A Homeowners Association (HOA)?

A homeowners association (HOA) is a nonprofit organization created by the developer of a community. The primary reason for creating an HOA is to uphold and enrich property values. HOAs accomplish this by enforcing the community’s covenants and maintain common areas like pools or clubhouses. An HOA may also complete maintenance services and safety projects.

HOAs can also set rules about what you can and can’t do with the exterior of your home. You may not be able to put up certain decorations, change your home’s paint color or add things like pools or fencing to your yard.

In exchange for the services they provide, HOAs charge fees. These fees are usually paid on a monthly basis. If you buy a home in an HOA development, you’re usually required to join the HOA, pay their fees and follow the HOA rules. In some communities, you may be able to skip paying HOA fees, but you won’t get access to common areas or maintenance services. If HOA fees are mandatory and you don’t pay them, the HOA can take action against you.

What Are HOA Fees For?

It’s important to estimate your total monthly costs before you buy a home – and know what type of services your HOA fees cover. The specific services you can get will depend on where you live.

City Services

You don’t have to pay for things like trash disposal, sewer control and water fees if your HOA fees include city services. Most homeowners pay these through their property taxes or monthly bills, so letting your HOA handle them could save you money.

Lawn Care

Lawn care, like mowing, weeding, gardening and trimming, is usually covered under HOA fees. You get to enjoy a neat lawn without having to care for it or hire a gardening service. This can be especially beneficial if you have a disability that makes gardening difficult or if you simply don’t have time to manage your own lawn.

Insurance

HOA fees may include insurance for the exterior of your property. This means that if something like your roof or siding gets damaged, the HOA will handle repairs. Note that this insurance only extends to the part of your property that’s managed by the HOA – it doesn’t cover your interior.

Common Areas

Your HOA is responsible for taking care of and financing any common areas your neighborhood has. Common areas can include everything from pools to clubhouses and even golf courses.

Pest Control

Many HOAs schedule monthly pest inspections for both homes and common areas. This curtails infestations and pest damage problems quickly before they infect the rest of the community.

Maintenance And Repairs

Because the HOA is responsible for taking care of the exterior of your home, it will also cover damage to the outside of your house. Damage to your paint, fencing, pavement, roofing and siding is usually done at the HOA’s expense.

The benefits you get from your HOA fees depend on the community you join. When you view a home, ask the seller for a copy of the covenants, conditions and restrictions (CC&Rs) of the neighborhood. The CC&R will cover everything from HOA fees to what you get in exchange for joining the HOA. It will also tell you if HOA membership is mandatory. If it is, you’ll need to join and pay fees when you buy your home.

How Much Do HOA Fees Usually Cost?

HOA fees depend on many factors, ranging from the size of your home to the type of amenities your HOA offers. You can usually expect to pay between $200 – $300 per month in HOA fees if you own an average single-family home. However, your HOA fee might be lower or much higher, depending on where you live.

Are HOA Fees Tax Deductible?

You can’t deduct HOA fees from your taxes if you pay HOA fees on your primary residence. But the IRS will allow you to deduct HOA fees if you purchase or use the property as a rental property. Note that you can only deduct a portion of HOA fees from your tax return if you use the rental property for personal use for a portion of the year.

Find out what you can afford.

Use Rocket Mortgage® to see your maximum home price and get an instant online approval decision.

Benefits And Drawbacks Of An HOA

Benefits Of An HOA

A few benefits of an HOA include common area management, dispute mediation as well as maintenance and repairs.

Manage And Finance Common Areas

HOAs offer affordable and convenient amenities like tennis courts and swimming pools at a fraction of the price that it would cost to add these amenities to your home.

Mediate Disputes

HOAs often mediate disputes between homeowners. For example, your association may contact neighbors about loud parties or unleashed dogs. HOAs also have much more leveraging power than you do, so you’re more likely to see a solution.

Schedule Maintenance And Repairs

HOAs manage and coordinate services and exterior repairs that homeowners usually do themselves. For example, you don’t need to worry about researching, hiring and supervising lawn care workers – your HOA will handle it for you.

Drawbacks Of An HOA

Buying a home with an HOA can give you access to some great benefits, but we’ve also outlined several drawbacks that could make their way onto your cons list.

Fees Can Be Expensive

HOA fees might be extremely expensive in high-cost living areas. Factor in the cost of HOA fees when you consider buying a home. If you can’t afford to fit HOA fees into your monthly budget, the HOA can take action against you.

Fees Can Change

Your mortgage lender will tell you exactly how much you pay each month when you buy a home. There are limits to how much your rate can increase even if you have a variable interest rate on your loan. On the other hand, HOA fees can change drastically and without warning. In these cases, your only recourse is to run for a spot on the HOA committee, win and propose lower fees.

Exterior Design Restrictions

HOAs value uniformity, cleanliness and an overall look for the community. The HOA may put restrictions on what the exterior of your property can look like, including the decor and paint colors you can use. Your HOA can also stop you from adding things like pools, swing sets or fencing to your yard.  

Rental Restrictions

HOA rules often state that homeowners can’t rent out their property. Even if renting isn’t against the rules, you may have a limit on the number of tenants you can rent to. If you get caught renting your home against HOA rules, your HOA can fine you.

Additional Fines

HOAs can fine you for more than just renting out your property. Your HOA has the power to fine you for any type of rule violation, ranging from painting your home a forbidden color to installing a satellite dish that the HOA doesn’t allow. Even if you pay off your mortgage and own your home, you’re still required to follow the HOA rules.

Pet Restrictions

Some HOAs have breed and weight restrictions on pets. If you have a pet that doesn’t meet HOA guidelines and you get caught, the HOA can continue to fine you until you rehouse the animal.

Foreclosure Can Occur

Residents who rack up too many unpaid HOA fees and fines can lose their homes. Though this is a worst-case scenario, HOAs are usually serious about getting their money on time and past-due payment penalties can be steep.

Summary

An HOA is an organization that creates rules for certain communities. HOAs are responsible for providing amenities, handling exterior maintenance and controlling pests. 

In exchange for services, HOAs charge every homeowner a monthly HOA fee. Fees are usually between $200 – $300 per month, but can be higher or lower depending on where you live. HOA fees aren’t tax deductible on personal properties but may be partially deductible if you have a rental property. 

Homeowners must follow HOA rules and restrictions or face heavy fines. In extreme cases, enough HOA violations can even trigger a foreclosure. Ask the seller for the neighborhood’s covenants, conditions and restrictions (CC&Rs) before you close if you’re thinking about buying a home with an HOA fee. 

Buying a home with an HOA can be a lifesaver if you’re able to build the fees into your budget and you value what an HOA can do for you. But if you want to save money and can handle quite a bit of your own maintenance, you might want to look for a home without an HOA. Remember to ask about HOA amenities and fees whenever you view a home.

Get approved to buy a home.

Rocket Mortgage® lets you get to house hunting sooner.

In This Article