How to Reduce HOA Fees

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Homeowners association (HOA) fees can add up, but you may be able to reduce them by trying a few simple strategies. Over a quarter of people in the U.S. live in a community association where they pay HOA fees, according to the Foundation for Community Association Research, and a hundred more are formed every day.

The average HOA fees for a single-family home typically cost between $200 to $300 per month, but fees can vary greatly depending on how old the home is, the amenities and services the fees cover, and where the community is located. Read on to find out more about how you might be able to reduce your fees.

What Are Homeowners Association Fees?

If you bought a condo, townhouse or single-family home in a neighborhood or co-op with shared common areas and amenities (like parking garages, gyms and swimming pools), you probably belong to an HOA.

The HOA's goal is to protect property values. It's usually run by a board of volunteers who live in the community itself. When you buy a house in that community, you automatically become a member of the HOA, although occasionally there are exceptions (like if you already lived in the community before the HOA was created).

Once you become a member, you'll usually be required to pay monthly (or sometimes annual) fees or dues. These fees fund HOA operations and usually cover upkeep of the overall neighborhood including lawn mowing, street maintenance, snow shoveling and gutter cleaning, as well as amenities like parks, clubhouses and fitness centers that all the other homeowners have access to too. Your water bill, garbage collection bill and other bills may also be rolled into your HOA dues.

How Do HOA Fees Work?

Similarly to how your taxes go toward funding government services, HOA fees help pay for amenities and services in your building or neighborhood. HOA fees are usually paid on a monthly basis, but some HOAs collect dues quarterly or annually too. Most HOAs accept multiple forms of payments like a check or credit card, but check with your local HOAs for details.

HOA fees are usually divided into two parts: One part goes toward monthly costs (also known as the operating costs), and the rest of the money gets deposited into a reserve fund. Like a personal emergency fund you might have, the reserve fund acts as a safety net the HOA can use in an emergency, like if a building's elevators break, a roof needs replacing or other large-scale repairs are needed. These types of big repairs are also usually the culprit behind sudden increases in HOA fees. It's important to know that HOA fees aren't necessarily set in stone: In many ways, HOA fees are a type of cost sharing in a community. Ideally, the HOA would have a healthy reserve fund so that it can cover large repairs or unexpected costs without raising HOA dues or fees, but sometimes this isn't the case. When that happens, as the costs go up, so do the homeowner fees.

If you've found yourself in a situation where you can't cover your HOA fees, read on for strategies that might help.

How to Lower Your HOA Fees

Life is unpredictable. Whether you find yourself unable to cover your HOA fees due to the HOA's decision to increase dues or because you've had a financial emergency of your own, there are some ways you might be able to lower your HOA fees.

Before you do anything—including missing a payment—talk to your HOA's board. It's possible you might be able to work something out. It's not unheard of for an HOA board to just tack on a late fee instead of taking drastic action against a homeowner looking for some temporary financial relief.

But what's better than talking to the HOA board? Being on the HOA board. By becoming a member yourself, you'll have more say in the direction and operations of the HOA, including fees. If the main executive board roles (like the president, vice president, secretary and treasurer roles) are full, try to join a committee; it's the next best thing. Once you're on the board, you can advocate for the following moves that could help reduce fees:

  • Reduce reserve funds. If the reserve fund has enough cash, suggest using some of those funds to cover necessary projects. Instead of tapping into the operating fund, the board could use part of the reserve fund money to cover large unexpected fees instead of raising dues.
  • Defer nonessential repairs. Talk to the board about deferring non-essential projects to avoid hiking HOA fees. If the repairs aren't major, consider lobbying the board to extend the timeline for completing these repairs, especially if they're just cosmetic. Along those lines, review the HOA budget and see what things you can cut out to get the lowest HOA fees per household that would still cover expenses and reserves.
  • Check contracts with vendors. Similar to how you might review your own budget for recurring costs, you can review the list of vendors who provide regular services to your HOA, like property management companies or landscaping firms. They might be helping to maintain the community, but are they giving you the best price? Review their contracts and encourage vendors to compete for bids to provide services.

And remember, you don't necessarily have to be a member of the HOA board to make your feelings known. If rising HOA fees are an issue, read your HOA bylaws to understand how, when and where to issue a complaint. As a dues-paying member of the HOA, you can encourage the board to take some of the above measures.

High HOA fees can easily affect your personal finances and make it harder for you to make your bill payments on time. If you're struggling with HOA fees, take the time to review your budget and look for any opportunities to increase your income or reduce your expenses. If rising HOA fees are getting out of control, you may even want to consider selling your home and moving to a neighborhood without an HOA.

How Unpaid HOA Fees Can Affect Your Credit

Many HOAs don't report payment status to the national credit reporting agencies (Experian, TransUnion and Equifax), which means late or missed HOA dues payments won't automatically wind up on your credit report. Unfortunately, that also means that paying your HOA fees on time won't do your credit any good.

Missed HOA payments could result in a negative mark on your credit if they wind up in collections, however. Unpaid dues could also put your home at risk if the HOA puts a lien on it. If you think you might be late or default on your HOA fees, you're not alone: In 2020, about 13% of homeowners were delinquent on their HOA fees, according to the Community Associations Institute.

The Bottom Line

If you find yourself struggling to keep up with HOA payments, you might have more options than you know. That may mean taking action by joining the HOA board and reviewing community expenses or renegotiating contracts. You can also flex your political acumen by advocating for changes to the board members. Make a plan and determine what works best for you now and your future financial self.

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