What Is HOA?: First Time Home Buyers Guide to HOA

Whether you’re a first-time buyer or you’ve purchased a home before, you’ve likely heard of a homeowner’s association. In fact, an in-depth study has shown that 58% of all homeowners live in HOA communities.

A homeowner’s association refers to an organized group within certain neighborhoods and communities, like planned unit developments, subdivisions, or condominiums. HOAs are made up of a board of directors that local homeowners elect to maintain a framework of regulations and rules in a community. Let’s compare the pros and cons of a homeowner’s association!

Do you know what the differences between an HOA, POA, and COA are? We wrote a whole blog about them, read it here!

What Are the Pros & Cons of HOA?

An HOA comes with many benefits, as well as a few drawbacks. Let’s take a closer look at the pros and cons of an HOA. We hope this makes it easier for you to decide whether you want to purchase a property that is part of a homeowner’s association or not.

HOA Pros

A well-run homeowner’s association will offer several perks. In fact, according to in-depth research, being a member of an HOA can boost the value of your property by 4.2%, which is incredible. This increase in property value is the direct result of the amenities and enhanced aesthetic of an HOA, both of which often create greater appeal when selling your home.

An HOA also creates excellent curb appeal by providing well-maintained community spaces. All of these features can help you market your property for sale because they enhance your home’s attractiveness. In addition, potential buyers can enjoy the financial benefits that an HOA can offer them if they purchased a home within an HOA.

Another great benefit of HOAs is that these organizations can set community rules and regulations. While these rules are often thought to be a con rather than a pro of an HOA, these regulations can actually benefit residents very well.

For instance, people living in popular tourist destinations can enjoy quiet hours as set forth by the HOA. In the same fashion, rules and regulations about speed limits and parking can make your neighborhood safer and easier to navigate. Rules aren’t always a bad thing, especially when it comes to rules formed by a homeowner’s association.

Don't live in an HOA property, but still want to improve the value of your home? Read our blog with DIY ideas for increasing the value of your home here.

HOA Cons

At the same time, HOAs present several downsides to property owners. For instance, some residents may find it inconvenient and costly to have to pay HOA dues every month or quarter.

In addition, an investor purchasing an HOA property that they plan to rent out for additional income may experience lower cash flow than if they purchased a non-HOA property because there aren’t any fees associated with non-HOA homes. In the event that people decide to shift the cost on to their potential tenants by charging their tenants more money to cover the HOA fees, they could end up risking their ability to market the property in the future.

All in all, first-time homebuyers seeking a property within an HOA community may find HOA fees cause their monthly costs to be higher than they are comfortable with. Sometimes, HOA fees can cause costs to exceed people’s budgets.

Some HOAs charge a lot of fees, but what are you paying for? Read our blog all about HOA fees here!

What Are Common HOA Rules?

Once you purchase a home that’s part of a community association, you need to follow all its rules and regulations. These rules primarily focus on protecting your investment, as well as providing neighbors a common framework. Let’s explore some of the most common HOA rules!


The HOA is responsible for ensuring that a community is appealing and looks beautiful. As a result, most HOAs require that individuals maintain a certain level of curb appeal. HOA maintenance requirements typically include walkways, driveways, lawns, facade, and other visible or public areas.

Rental Fees

A common homeowner’s association rule that you need to keep in mind is the policy on rentals. The fact is that not every HOA allows you to rent out your property. Thus, you must verify all the rules regarding rentals to avoid fines.

Additionally, individuals living in an HOA community are expected to pay a monthly or quarterly fee. These fees are put towards amenities and other items that improve the community as a whole.

Noise Restrictions

Some HOAs also implement restrictions on noise pollution. Apart from limiting the time you’re allowed to use power tools and host parties, a lot of HOAs also have set hours where you can’t make a lot of noise. These are known as quiet hours.

Pet Regulations

Most HOAs have rules regarding pets, including the number of animals you can have, the type of breed, pet-related clean-up rules, whether you can walk your pet or not, noise levels, and leash laws.

Respecting Your Neighborhood

HOAs mainly focus on ensuring a family-friendly and happy environment. This means that the focus of their rules and regulations are the overall safety and wellness of everyone who lives in the HOA.

Reduce Trash & Clutter

HOA strives to improve the aesthetic and overall appeal of the neighborhood. So, apart from maintenance rules, they also limit the clutter you can put on display. Your HOA will also require you to abide by rules regarding what you can dispose of in the community's garbage and recycle bins.

Ways HOA Dues Can Affect Your Finances

Before you purchase a home with an HOA, you must learn about the different ways that HOA dues can affect your finances. So, let’s discuss the top 3 ways HOA dues impact your finances!

HOA Dues May Change

With time, it’s possible that your HOA dues will either decrease or increase. In the event that they increase rapidly, you may have trouble paying your home loan if you’re not prepared for this possibility.

HOA fees often increase if and when a certain HOA project requires funding. Fees may increase as a result of inflation as well. To avoid being subjected to sudden increases, read about the HOA’s history in your desired area and inquire about any upcoming projects.

The Dues Won’t Cover Everything

Here’s the thing. Your HOA dues cover planned and routine costs only. So, if there are any large projects on the horizon or emergency repairs that require immediate funding, you may have to pay for the additional special assessment as part of your next round of HOA fees. The total cost of these assessments can vary from hundreds to thousands of dollars.

HOAs Can Affect Your Credit

Purchasing a home in an HOA community means you’re agreeing to pay regular HOA dues. If you don’t pay them, you’ll start to fall behind on your financial responsibilities and jeopardize your ability to still be part of the HOA.

An HOA can take out a lien on your property if you don’t pay your HOA fees, which can lead to foreclosure in some instances. Worst of all, collection accounts and public records can appear on your credit reports, too. All of these possible scenarios can make it harder for you to qualify for other loans to purchase another house in the future.

Our Mortgage Learning Center features blogs on a wide range of mortgage and refinancing topics.

It Comes Down to You

Depending on your interests and preferences, there are some regulations that you may find overly restrictive while other rules might not seem strict enough for you. So, taking a look at the rules and regulations of the HOA that the home you want to buy is part of will help you decide if that’s where you want to live after all.


First Time Buying a Home? Let's Get Started!


All material is presented for informational and educational purposes only and should not be construed as individual financial, investment, or legal advice or instruction. ZeroMortgage does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by ZeroMortgage. ZeroMortgage, its affiliates, and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action. ZeroMortgage does not provide tax advice. Please contact your tax adviser for any tax related questions.

This page last updated: November 1, 2022