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The Ultimate HOA Home Buying Guide

If you’re shopping for a new home, then you’ve probably heard someone mention homeowners' associations or HOAs for short. While HOAs have become common across North America, many people are still unfamiliar with what they are or how they function. If you have some unanswered HOA questions, then we are here to help with some essential HOA home buying tips.

What Does HOA Mean When Buying a House?

An HOA is a non-profit association that’s set up like a business or corporation to help manage and maintain a community. For homebuyers, a property that belongs to an HOA often means some extra costs and responsibilities. Anyone who purchases a home that is part of an HOA is required to pay yearly or monthly dues that allow the HOA to maintain their shared property like clubhouses and parks. They are also required follow all HOA rules and regulations that usually include specific upkeep and maintenance of their home and yard.

Guide for Buying a Home with an HOA

With these additional costs and responsibilities, you should do your due diligence to educate yourself and prepare for HOA living. Below are five things everyone should do when buying a home with an HOA.

1. Ask to see the governing documents.

When you become a member of an HOA, there should be no surprises. That’s because all HOA rules, powers, and obligations are written down in their governing documents. These documents include Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, Articles of Incorporation, and other rules and regulations made by the community. Before buying, read through these relevant papers and make sure you’re willing and able to live by them. Your real estate agent should be able to get you a copy, or you can contact the association directly to request them.

2. Research your monthly fees and what they cover.

HOAs that offer amenities and common areas like pools, fitness centers, and parks can be very attractive to homebuyers. However, these things are not free. Every homeowner in an HOA community will need to pay monthly fees to manage and maintain these amenities. Do your research and find out what these fees will be. Monthly HOA fees can vary, so be sure to ask precisely what those fees do and do not cover.

3. Double-check the HOA's finances.

While you’re crunching the numbers for yourself, be sure to investigate the HOA's finances, too. Well-run associations will have a thorough budget, along with some robust savings. Ask to see your potential HOA's reserve study. This study will break down future expenses and current savings. These financial details are essential because when an HOA isn’t prepared for unexpected costs, then homeowners may be on the hook to pay the bill. Likewise, some mortgage providers will require an HOA to have a current reserve study and proper reserve funds before approving a home loan.

4. Get to know the community.

Members of the community are what makes an HOA unique. If you’re considering purchasing an HOA home, then get to know the community first. You can attend meetings, ask to review past HOA meeting notes, attend a community event, or get out talk to some neighbors. Because community volunteers run HOAs, the people you meet will ultimately help shape your experience with the HOA.

5. If you do buy into an HOA, get involved.

If you decide to buy, don't wait to get involved with your HOA. There will likely be countless opportunities to volunteer as a board member or committee member to help make your community and neighborhood a great place to live.

Facts About HOAs

While doing your HOA research, remember that not every HOA is the same. Here are some other important facts you should keep in mind:

  • HOA fees can vary.
  • HOA fees may affect how much you can borrow.
  • HOA fees may be required at closing.
  • Community amenities vary by community.
  • HOA rules can vary.
  • HOA rules are legally binding to members.
  • HOA rules can change.

Benefits of an HOA

For many people, their home is their most significant investment. As such, many people want to protect the value of their home. HOAs help maintain home values by helping ensure no single home can go unmaintained--potentially dragging down the home prices of an entire neighborhood. Other benefits of living in an HOA include:

  • Shared ownership of the community
  • Recreational and other amenities
  • A greater sense of community
  • Stable property values
  • Consistent appearance in a neighborhood

HOA vs. No HOA

Even with the additional benefits, choosing between a home with an HOA and one without can be a difficult decision. While HOAs provide added financial and legal protection for your personal property, they do require you to follow some rules and pay extra money each month. Purchasing a home with no HOA may cost less and give you greater flexibility, but no HOA also means no guarantees that your neighbors will adequately maintain the exterior of their homes.

HOA Neighborhoods

Whether you’re looking to become part of an HOA or trying to avoid them, you won’t be able to tell which neighborhoods have an HOA just by looking at them. Today, all types of communities, buildings, and homes can be part of an HOA, including:

  • Single-family home neighborhoods
  • Gated communities
  • Master-planned communities
  • Condominiums
  • High-rises
  • Townhomes

Final Thoughts

HOA living isn’t for everyone. However, doing your research and getting to know an HOA before you buy will help you proceed confidently no matter what you choose. Want to learn more about HOAs? Check out our other post, "7 Answers to the Most Frequently Asked HOA Questions."