Buying your first home comes with a long list of new vocabulary terms: escrow, earnest money, PMI, and—for many buyers—HOA. A homeowners association (HOA) is a community organization that manages shared spaces, enforces property standards, and collects fees to maintain neighborhood amenities.

Depending on who you ask, HOAs are either a blessing for keeping neighborhoods tidy or a headache replete with red tape and fees. The truth usually falls somewhere in between. If your only impression of HOAs comes from sitcoms or social-media horror stories, it’s worth taking a closer look. This article discusses what HOAs actually do, associated fees, and what to watch for before buying a home attached to one.

What is an HOA, and what does it do?

An HOA is a group that manages a residential community (whether a condo complex, gated neighborhood, townhouse development, or apartment complex), funded by resident fees and typically run by a volunteer resident board that oversee budgets, creates and enforces neighborhood rules, and manages shared amenities. In this way, an HOA is essentially a “local government” for your community with respect to maintenance and harmony.

How do HOAs work, and what power do they have?

Unless you live in a voluntary HOA (more on that later), property owners are required to pay HOA fees. HOAs themselves, meanwhile, are governed by bylaws and a set of rules known as “covenants, conditions, and restrictions” (CC&Rs, for short). Some HOAs are fairly hands off. Others? Not so much, meaning you might need board approval to repaint your house, replace a fence, purchase a particular dog breed, or rent out your home, for example. Some even regulate landscaping choices, décor, mailbox height, or plants in residents’ yards.

When residents don’t follow the rules or fall behind on payments, the board can take action. Depending on the specific CC&R, that might take shape as a warning letter, fine, or temporary loss of access to shared amenities. In more serious cases, HOAs can place a lien on the property. Some states even allow them to pursue foreclosure if fees or fines continue to go unpaid. HOA authority isn’t unlimited, however, with powers coming from both the community’s governing documents and state law. While they can enforce neighborhood standards, HOAs must still comply with local and federal protections (including the Fair Housing Act and the Americans with Disabilities Act) to ensure rules are applied fairly and without discrimination.

How much do HOA fees cost?

When you buy into an HOA community, you’ll pay a regular fee to help keep shared spaces running smoothly—with dues varying widely depending on where you live, your property type, and your neighborhood amenities. On average, homeowners pay $200 to $300 per month in HOA fees. In luxury or high-end communities with concierge services and top-tier amenities, however, fees can climb into the upper hundreds (or even thousands!) each month.

Generally, the more your HOA provides (e.g., pools, gyms, security patrols, or landscaping), the higher the cost. A simple subdivision with one shared playground, for example, will likely charge far less than a gated development with tennis courts and full-time maintenance staff.

What do HOA fees cover?

HOA dues typically extend to…

Landscaping and lawn care for shared areas
Trash and recycling services
Pest control and snow removal
Lighting and utilities in common spaces
Sidewalk, fence, and elevator maintenance and repairs
Security services or cameras
Insurance for community property (beyond one’s personal home)

Depending on the community, dues might also cover things such as internet for shared areas, gate maintenance, clubhouse upkeep, pool staffing, or other neighborhood-specific services.

Reserve funds and assessments

A portion of dues paid goes into a reserve fund that essentially acts as the community’s emergency savings account to cover big projects (e.g., road repaving) without disrupting the regular budget. Sometimes, though, unexpected costs pop up related to things like storm damage, broken elevators, or other unplanned repairs; the HOA can issue a special assessment in this case if the research fund falls short, a one-time fee divided among homeowners to cover the extra expense.

Budgeting for HOA fees

When budgeting for a home, remember: HOA fees count toward your overall housing costs just like your mortgage, insurance, and property taxes. Financial experts say these should generally represent no more than about 25% of your monthly take-home pay combined in order to leave room in your budget for savings and other goals. If HOA fees push you over this limit, it’s perhaps worth looking at a less expensive community or home without an HOA altogether.

Types of HOAs

Voluntary HOAs

Communities with voluntary HOAs make joining completely optional, and members pay fees to help maintain shared amenities while enjoying access to those same facilities. In this case, you won’t be charged dues if you choose not to join yet you also won’t have access to those perks. Voluntary HOAs typically can’t dictate things like your landscaping style and lack the legal authority to fine nonmembers or require contributions for maintenance. Some homeowners prefer this setup given more personal freedom and fewer restrictions.

Mandatory HOAs

Pretty much everything discussed so far—rules, fees, and board meetings—applies to mandatory HOAs, by far the most common type whereby membership isn’t optional. If you buy a home in this type of community, you’ll automatically join the association and sign documents at closing agreeing to follow HOA rules and pay any associated dues, fines, or assessments. Mandatory HOAs usually have broader responsibilities; beyond maintaining shared spaces, they often enforce property appearance standards to keep the neighborhood uniform with rules designed for the sake of curb appeal and property value.

Before you buy: questions to ask the HOA

Buying a home in an HOA community means you’re also buying into a system of rules and shared responsibilities. While some HOAs are well-organized and transparent, others are poorly managed or even financially unstable. Doing a little homework upfront can help you spot the difference. Here are a few specific things to look into before signing on the dotted line:

1. How healthy are the HOA’s finances?

Ask to review the HOA’s most recent financial statements and reserve fund balance, knowing a well-funded reserve suggests the community is prepared for repairs and emergencies. If the account is running low or frequently tapped into, however, this could signal future special assessments or sudden fee increases.

2. What are the fees, and how often do they change?

Learn how much you’ll owe each month (or quarter), what those payments cover, and whether the HOA has a history of raising dues. Also check for late-payment penalties or hidden costs. Most importantly, make sure fees align with your budget and lifestyle.

3. Are there any current issues or disputes?

Before you buy, do a little detective work. Read recent board meeting minutes, browse local community pages, or talk to a few residents and ask for their honest opinions. Ongoing conflicts or frequent turnover on the board can signal deeper management problems.

4. What are the rules, and can you live with them?

Every HOA has a rulebook (the aforementioned CC&Rs). Read this closely and ask yourself: Do these rules fit how I want to live day to day? If the answer is no, it might not be the right community for you.

HOA advantages

Several benefits of living in an HOA include…

Well-kept neighborhoods

One of the biggest perks of HOAs is curb appeal given that shared areas are regularly maintained, lawns stay tidy, and houses follow a consistent look: making the community feel more enjoyable and secure given this sense of order and pride of place.

Convenient amenities

HOA fees often fund features you’d otherwise pay extra for like pools, gyms, walking trails, or snow removal. If you’ll actually use said amenities, the convenience can justify the cost.

Property value protection (sometimes)

Many advocates say HOAs help preserve or even increase property values by keeping the neighborhood uniform and well-maintained. Research is mixed, though, as not every HOA delivers this benefit equally. It really depends on management quality and how happy residents are overall.

HOA disadvantages

Potential drawbacks associated with HOAs include…

Extra monthly costs

HOA fees can be a major addition to housing expenses, with boards raising dues as needed. These recurring costs can sting if you’re already near your budget limit, especially if increases happen suddenly without much notice.

Special assessments

When big projects or unexpected repairs pop up, the HOA might issue a one-time “special assessment” to cover the cost. That could mean hundreds or even thousands of dollars in extra fees you weren’t expecting.

Rules and restrictions

Living in an HOA community means agreeing to play by the rules (even ones you don’t love). You might need approval for renovations and paint colors or face restrictions on pets, rentals, or how you decorate for the holidays, for example.

Potential for conflict

Every HOA has its own fair share of personalities, sometimes translating to a board member or neighbor who’s a bit too enthusiastic about enforcing the rules. Tension between residents can quickly make an otherwise pleasant community feel much less welcoming.

Serious consequences for HOA nonpayment

If you fall behind on fees or ignore repeated violations, your HOA can impose fines, place a lien on your property, or (in some states) seek foreclosure proceedings. It’s rare, but it does happen.

**Is an HOA right for you?**

At the end of the day, an HOA isn’t inherently either “good” or “bad.” It all just depends on the type of homeowner you want to be. If you like structure, shared amenities, and a picture-perfect neighborhood, an HOA community is perhaps a great fit. If you’d rather do things your own way (and avoid the extra bill!), you’re probably better off elsewhere. The key is knowing what exactly you’re signing up for before you buy.

Have questions about the home-buying process? Check out our first-time home buyers guide or schedule a FREE discovery call with one of our CFP® professionals so we can help!

About the author
The content in this post was developed by our team of writers and reviewed by our team of CFP® professionals here at Vision Retirement.

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What Is an HOA? A First-Time Homebuyer’s Guide