HOA Fees Explained: What Buyers Should Check Before Closing

By Ahmad Dogar
FitCreeper Finance · Published October 2026 · Educational only — not personalized financial, legal, or tax advice

How this article was made: Drafted with AI assistance, then checked line by line against the primary sources listed at the end of this page (the CFPB's Ask CFPB answers on HOA dues, home affordability, mortgage costs, and total monthly payments, its Loan Estimate and Closing Disclosure explainers, its guide to requesting multiple Loan Estimates, and its mortgage closing checklist, Fannie Mae's Selling Guide section on the full review of condo projects, and IRS Publication 530), fetched on October 13, 2026. Worked examples use simple illustrative numbers, not real accounts. Rules and company policies change, so re-check the linked sources before you act.

If you're looking at a condo, a townhouse, or a house in a planned community, there's probably a homeowners association (HOA) and a monthly or yearly fee attached. HOA dues pay for shared costs like common-area upkeep, amenities, and, in many condos, parts of the building itself. They also come with rules, budgets, and sometimes surprise bills called special assessments.

Buyers often treat the HOA fee as a small line on the listing. It isn't small in your budget, and the association's finances can affect your costs for years. This guide explains how HOA dues are paid, how they change what you can afford, what special assessments and reserves are, which documents to review before closing, and what lenders look at. It's based on Consumer Financial Protection Bureau (CFPB) guidance, Fannie Mae's Selling Guide standards for condo projects, and IRS Publication 530. Examples use illustrative numbers.

What HOA fees are

Five facts about HOA fees from the CFPB and related sources: condos, co-ops, and some neighborhoods require you to join a homeowners association and pay dues, dues usually go directly to the HOA rather than your mortgage servicer, the CFPB says they range from a few hundred to more than one thousand dollars a month, they count in your housing budget, and they are not tax-deductible for a personal home.

The CFPB explains that condominiums, co-ops, and some neighborhoods may require you to join the local homeowners association and pay dues. Membership usually comes with the property; you can't opt out because you won't use the pool.

What dues pay for depends on the community. In a single-family neighborhood, they might cover landscaping of common areas, private roads, or a clubhouse. In a condo, they often cover exterior maintenance, shared systems, common-area utilities, the association's insurance on shared parts of the building, management, and savings for future repairs. The governing documents and the budget spell out exactly what's included, which is why reading them matters.

How much? The CFPB says HOA dues can range from a few hundred dollars a month to more than one thousand dollars a month.

Condo HOA vs neighborhood HOA

The same three letters can mean very different things. In a condo, the association often owns and maintains the building's structure, roof, and shared systems, so its budget is large and its decisions directly affect the value of your unit. In a neighborhood of detached houses, the HOA may only handle a park, an entrance, and rule enforcement, while you maintain your own roof and exterior. That difference shapes what you should worry about. For a condo, focus hard on reserves, the master insurance policy, and building repairs. For a single-family HOA, focus on the rules, the fee trend, and what happens if you want to change your own property. Either way, the governing documents decide who is responsible for what.

How HOA dues are paid

Illustrative monthly housing cost: 1,750 dollars principal and interest, 350 dollars taxes and insurance escrow, and 350 dollars HOA dues, for a total of 2,450 dollars a month.

HOA dues are usually not part of your mortgage payment. The CFPB says condo, co-op, and HOA dues are usually paid directly to the association rather than included in the payment to your mortgage servicer. Although not common, a servicer may be willing to include HOA dues in escrow on request.

The CFPB's Closing Disclosure explainer makes the same point: HOA fees are often not included in the escrow account. So your housing cost has two separate bills: the mortgage payment (often with taxes and insurance in escrow) and the HOA payment.

Here's an illustrative example:

Monthly cost	Amount	Paid to
Principal and interest	$1,750	Mortgage servicer
Property tax and insurance (escrow)	$350	Mortgage servicer
HOA dues	$350	HOA
Total housing cost	$2,450

If you're new to how the mortgage part breaks down, see how mortgages work.

Condo insurance overlap

In many condos, the association's master policy covers parts of the building, and you buy your own policy for the rest. Ask the HOA for its insurance summary so you know what your own policy needs to cover.

How HOA fees change what you can afford

Illustrative housing ratio for a household earning 7,000 dollars a month: 2,100 dollars of mortgage payment alone is 30 percent of income, while adding 350 dollars of HOA dues makes 2,450 dollars, or 35 percent of income.

The CFPB tells buyers to include HOA fees, along with taxes, insurance, and any mortgage insurance, when calculating what they can afford. Lenders count them too. On the Loan Estimate, HOA dues show up in the Estimated Taxes, Insurance & Assessments line, and the CFPB's explainer notes that items not in escrow must be paid directly, so make sure you can afford them.

Here's how $350 of dues changes the picture for an illustrative household earning $7,000 a month before taxes:

Scenario	Monthly housing cost	Share of gross income
Mortgage payment only	$2,100	30%
Mortgage payment plus $350 HOA	$2,450	35%

That five-point jump can push you past a lender's limit or your own comfort zone. Our guides to debt-to-income ratio and how much house you can afford show how to run these numbers with your own income and debts.

Two more cost notes from the CFPB: when you request Loan Estimates, share the property taxes and condo or HOA dues for the home with each lender so the estimates are accurate. And lenders can charge slightly more for loans on some property types, including condos.

Special assessments

Regular dues fund the normal budget. When the association faces a big cost it hasn't saved enough for, such as a roof replacement, structural repairs, or storm damage, it may levy a special assessment: a one-time or temporary extra charge to each owner.

Special assessments can be large. An illustrative $6,000 assessment works out to $500 a month if you have to pay it over a year, on top of regular dues. That's why checking for planned or likely assessments before you buy is one of the most important HOA steps.

Ask directly:

Are any special assessments approved or under discussion?
Has the HOA levied assessments in recent years, and for what?
Who pays an assessment approved before closing, buyer or seller? Your contract may address this; if it doesn't, ask your agent or attorney.

Reserves and the association's finances

Two condo project financial checks from Fannie Mae's Selling Guide full review that buyers can borrow as red flags: the HOA budget should fund replacement reserves of at least 10 percent of the budget, and no more than 15 percent of units should be 60 days or more past due on HOA fees.

A well-run association saves money every year in reserves for predictable big-ticket replacements. Underfunded reserves make special assessments and fee jumps more likely.

You don't have to guess what "underfunded" looks like. For condo loans it buys, Fannie Mae's Selling Guide requires lenders doing a full review of a condo project to check, among other things, that:

The HOA budget is adequate and funds replacement reserves for capital expenditures and deferred maintenance of at least 10% of the budget (or that an acceptable reserve study shows adequate funding).
No more than 15% of units are 60 days or more past due on HOA fees, and no more than 15% are 60 or more days behind on any special assessment.

These are lender standards, not a guarantee about any building, but they're useful red flags for buyers. A budget with little going to reserves, or many neighbors behind on dues, means the remaining owners may end up carrying more of the cost. A project that doesn't meet a lender's standards can also limit your financing options, now and when you sell.

Documents to review before closing

Ask for these as early as possible, ideally before your inspection or other contingency deadlines pass. Many states require sellers or associations to provide a package of HOA documents to buyers, and your contract may give you a review period.

Current budget and reserve information. How much goes to reserves each year? Is there a recent reserve study?
Financial statements and fee history. How have dues changed over the last several years? Is the association running deficits?
Board meeting minutes. Minutes often reveal planned projects, disputes, insurance problems, or assessments before they're announced.
Governing documents and rules. Look for restrictions on renting, pets, parking, exterior changes, and home businesses.
Insurance, assessments, and lawsuits. Ask what the master policy covers, whether any special assessments are pending, and whether the association is involved in litigation.

Also ask about one-time charges at sale, such as transfer or document fees, and how dues will be prorated at closing.

HOA red flags to take seriously

None of these automatically rules out a home, but each deserves a clear answer before your contingency deadlines pass:

Dues that jumped sharply in a single year, or haven't changed in many years despite rising costs.
Little or nothing budgeted for reserves, or no recent reserve study for an older building.
A special assessment that's approved, proposed, or being discussed in the minutes.
Many owners behind on dues, which can strain the budget for everyone else.
Pending lawsuits involving the association.
Trouble getting or keeping insurance for the building.
Rules that conflict with your plans, such as rental limits if you might rent the home later.

If you find one, ask the HOA or its manager to explain it in writing, and talk with your agent or a real estate attorney about your options under the contract.

HOA steps around closing

The CFPB's closing checklist includes a question for closing day: "If I have Homeowners' Association dues, how do I pay?" Get the answer in writing: who to pay, how, how often, and when the first payment is due.

On your Closing Disclosure, the CFPB's explainer suggests checking exactly what's in escrow and what isn't; HOA fees are often not included. If any HOA charges or prorations appear on the form, make sure they match what you expected.

After closing, the checklist's advice is to revise your budget to include HOA fees (and, without escrow, your property taxes and insurance) and to settle into the new budget for a few months before making major purchases.

HOA fees and taxes

For a home you live in, IRS Publication 530 lists homeowners association fees, condominium association fees, and common charges among the items you can't deduct. Rules differ for rental property, which is outside this guide.

Planning for HOA costs

Treat HOA dues like a bill that will rise over time. A few habits help:

Budget for increases. Look at the fee history and assume dues will keep rising.
Keep a cushion for assessments. A dedicated savings account makes a surprise bill less painful; see how to choose a savings account.
Stay involved. Read meeting notices and budgets. Owners vote on boards and sometimes on major spending.
Pay on time. Associations can charge late fees and, depending on state law and the governing documents, may have strong collection tools for unpaid dues. Ask how delinquencies are handled.

FAQ

Are HOA fees included in my mortgage payment?

Usually not. The CFPB says condo, co-op, and HOA dues are usually paid directly to the association, although a servicer may agree to include them in escrow on request.

How much are HOA fees?

It varies widely. The CFPB says dues can range from a few hundred dollars to more than one thousand dollars a month, so get the exact amount and history for the home you're considering.

Do lenders count HOA fees when approving a mortgage?

Yes. HOA dues appear in the Loan Estimate's Estimated Taxes, Insurance & Assessments line, and the CFPB tells buyers to include them when figuring what they can afford and to share them with lenders for accurate estimates.

What is a special assessment?

It's an extra charge an HOA levies for a specific cost, such as a major repair, usually when reserves aren't enough. Check meeting minutes and ask whether any assessments are planned before you close.

How can I tell if an HOA is financially healthy?

Review the budget, reserves, financial statements, and delinquency rate. Fannie Mae's condo full-review standards look for reserves of at least 10% of the budget and no more than 15% of units 60 or more days behind on dues.

Are HOA fees tax-deductible?

Not for a home you live in. IRS Publication 530 lists HOA fees, condo association fees, and common charges among items homeowners can't deduct.

What should I ask the HOA before closing?

Ask for the budget, reserve study, financial statements, fee history, minutes, rules, insurance summary, any pending special assessments or lawsuits, and how and when to pay dues after closing.

Sources

Educational disclaimer: This article is general U.S. consumer-finance education, not financial, legal, tax, or insurance advice, and it is not a recommendation to buy a home or to take out, refinance, or decline any mortgage, loan, or insurance product. FitCreeper Finance does not lend money, broker or service mortgages, sell insurance, or receive pay from companies mentioned here. Mortgage rates, lender pricing, tax rules, and state laws change and vary; confirm details with the official sources linked above, your own Loan Estimate and Closing Disclosure, and, for your situation, a qualified professional such as a HUD-approved housing counselor, a tax professional, or a real estate attorney. Questions or corrections: fryntavo@gmail.com.