What Are Homeowners Association (HOA) Fees?

What Is an HOA Fee?

An HOA aims to ensure that a community's rules and bylaws are being followed. They're also tasked with maintaining shared living areas and keeping the neighborhood clean and cared for, which can help preserve or increase home values. HOAs are common within gated communities, townhomes and single-family-home developments. Over one-third of U.S. homes are located within community associations, according to the Foundation for Community Association Research.

HOA fees, also called HOA dues, are often paid monthly by homeowners who live within the community. In exchange, homeowners typically receive access to shared amenities—and the benefit of living in a well-maintained neighborhood.

How Much Are HOA Fees?

Monthly HOA fees cost $243 on average, according to 2023 data from the U.S. Census Bureau. How much you pay will depend on where you live, the size of your community and the amenities the HOA offers to homeowners. Most HOA boards have the ability to increase the fee as needed, up to a certain point. State laws may regulate how much your dues can increase, or require homeowner approval if a rate increase exceeds a certain amount.

Having said that, your HOA fee may increase if:

• The general cost of living has gone up
• The HOA's insurance premiums have increased
• There's a need to replenish the HOA's cash reserves
• The board is anticipating a large future expense

HOA boards may also charge one-time fees to cover unexpected costs—like major damage after a hurricane. These are called special assessments.

What Do HOA Fees Cover?

Every HOA is different. Some may offer minimal services, while others provide access to community amenities like a pool or fitness center. Below are some of the things your HOA fees may cover:

• Community upkeep: This might include lawn care, trash pickup, exterminator services and certain utilities.
• Security: If you live in a gated community, a portion of your HOA fees may go toward security features and personnel.
• Insurance: Chances are your HOA will carry liability insurance, which is separate from your homeowners insurance policy.
• Amenity maintenance: Your HOA will likely be in charge of maintaining shared amenities, such as a community pool or clubhouse.
• Special events: Some HOAs offer additional perks like seasonal celebrations and community block parties.
• Building the HOA's reserve fund: This is a pool of cash the HOA can draw on to cover surprise expenses that aren't in the regular budget.

What Do HOA Fees Not Cover?

Of course, your HOA won't cover everything. The following costs are typically excluded from your HOA fees:

• Your individual property tax bill
• Your homeowners insurance premiums
• One-time costs that are too large for the HOA's reserve fund to cover
• Your mortgage payments

What Happens if You Can't Pay HOA Fees?

It may be tempting to brush off your HOA fees, especially if you're charged a fine for violating one of the community rules. But doing so could come back to bite you. Failing to pay your HOA fees will likely lead to a late fee. If the account goes unpaid for long enough, your HOA might:

• Send the account to a third-party collection agency, which can impact your credit
• Pursue legal action against you
• Put a lien on your property
• Repossess your home

If you're having trouble keeping up with your HOA fees, it's best to contact your HOA board sooner rather than later. They might be willing to offer a payment plan or waive your late fees if you're experiencing financial hardship.

How to Lower Your HOA Fees

Every HOA has its own rules and procedures, but here are some simple steps that could reduce your fees:

• Stay involved with your HOA board. That might mean joining the board or simply attending meetings and staying in the know. When it comes time to vote in new members, do your research and go with candidates you feel will represent your best interests.
• Know where your money is going. Review your HOA's budget and make sure you understand their expenses. You might have valuable cash-saving suggestions, like switching to new vendors or using HOA funds in more efficient ways.
• Recommend leveraging cash reserves. If your HOA has more than enough in savings, you could suggest using some of that cash to cover regular expenses—which could bring down everyone's HOA fees.
• Move to a new neighborhood. If your HOA fees are stretching your budget, you might consider moving to a community with lower costs—or no HOA at all.

Frequently Asked Questions

The Bottom Line

HOA fees go hand in hand with living in a community that has a homeowners association. But the amount you pay can vary from one community to the next. If you do opt into an HOA, you'll be expected to be a good neighbor who complies with the rules set forth in the bylaws. Staying on top of your HOA fees can also prevent unwanted financial stress.