HOA Fees: What You Need to Know Before Buying a Home

Homeowners’ Association Fees (HOA fees) are charged in many communities, yet they cover a wide range of costs.

Homeowners association Fees (HOA fees) are charged in many communities, yet they are not a uniform type of expense. Monthly dues charged by homeowners associations cover a wide range of different expenses, which varies from community to community. If you are curious about the homeowners association in a particular community, ask your real estate agent if the home is part of an association. If the home belongs to an association, you may want to inquire about what services the association provides for the community and how much is charged on a monthly or annual basis.

Types of Fees Assessed by Homeowners Associations

Initially, some HOAs require a one-time capital contribution at settlement. In this situation, the contribution should be factored into the total amount you are willing to spend. Capital contributions typically help to build a reserve of cash for future improvements to a neighborhood. In addition, monthly and annual fees pay for ongoing maintenance items, such as common-area landscaping. Finally, special assessments are sometimes required by the homeowners association for large, one-time repairs or maintenance items not covered by monthly fees or capital reserves. Researching the past frequency of special assessments may sometimes, but not always, give an indication of future payments of this kind.

Expenses Covered by Monthly Fees

The types of expenses covered by monthly HOA fees vary greatly from community to community. Some HOA fees include trash pick-up and landscaping of individual lots. In condominium associations, utilities expenses such as water and sewer may even be a part of monthly fees. These differences make it difficult to make a straight comparison between different communities’ HOA fees. Even though fees associated with one home may be higher, for example, those fees may cover more household expenses — that means the total household expenditure is actually cheaper than other houses.

Another factor to consider for comparison purposes is whether or not your community is dedicated to the township. If your neighborhood has been dedicated, the local municipality will use your tax dollars to fund snow removal and ongoing street maintenance. Some communities are not dedicated to the townships in which they reside, and therefore must cover additional costs through HOA fees or special assessments. Common-area expenses, such as signage and lighting, are also costs typically shared among homeowners.

Capital Improvements Maintain the Community’s Appearance

Large, long-term projects may also be covered by HOA fees. For townhouses or condos, association fees may cover all or a portion of exterior maintenance, including roof and siding replacement. This ensures a uniform look throughout the community, and homeowners benefit from favorable pricing from contractors looking to do bigger jobs.

Overall, individuals buy homes in a community with a homeowners association to ensure that the neighborhood looks a certain way and is properly maintained. This, in turn, increases homeowner satisfaction and helps future resale values. If you’re house-hunting, be sure to compare the pros and cons of these associations before buying in.

Read more home buying tips and resources.


Jennifer DiGiovanni is a freelance writer and a partner in a real estate investment firm focusing on residential properties. She previously worked in the financial services industry and has earned an MBA from Villanova University. Jennifer enjoys writing about real estate, home improvement and small business.

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