Homeowners Association (HOA)
A homeowners association (HOA) is an organization that manages and enforces rules in a community of condominiums, townhomes, or planned developments. HOA fees pay for shared amenity maintenance, landscaping, and administration. Monthly fees typically range from $100 to $600+ and are counted in your debt-to-income ratio when qualifying for a mortgage.
When you buy in an HOA community, you automatically become a member and agree to pay dues and abide by the CC&Rs (Covenants, Conditions, and Restrictions). These rules may govern exterior paint colors, parking, pets, rentals, and landscaping. Violations can result in fines; unpaid HOA dues can lead to liens on your property — in some states, HOAs can even foreclose for unpaid assessments.
Lenders scrutinize HOAs closely, especially for condos. For conventional loans, the condo project must be 'warrantable' — meaning no single entity owns more than 10% of units, the HOA is adequately funded, and the building isn't in a litigation dispute. FHA and VA have additional project approval requirements. Buying in a non-warrantable condo limits your loan options and typically requires a higher rate.
Before buying in an HOA community, request the meeting minutes, budget, reserve study, and rules. A healthy HOA has reserves covering 10%+ of total budget needs and no major deferred maintenance. A poorly funded HOA may levy special assessments — one-time charges for major repairs — that can run thousands of dollars on top of monthly dues.
Key Takeaway
A homeowners association (HOA) is an organization that manages and enforces rules in a community of condominiums, townhomes, or planned developments. HOA fees pay for shared amenity maintenance, landscaping, and administration. Monthly fees typically range from $100 to $600+ and are counted in your debt-to-income ratio when qualifying for a mortgage.
Related Terms
Frequently Asked Questions
No. HOA fees are separate from your mortgage payment. However, lenders include them in your debt-to-income ratio calculation when determining how much you can borrow.
The HOA can charge late fees, place a lien on your property, and in many states, initiate foreclosure proceedings to collect unpaid assessments.
Yes. Many HOAs restrict rentals through their CC&Rs. Review the rental restrictions before buying if you plan to rent the property at any point.
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