Buying a home can be exciting, fun and, at times, stressful. For most people, purchasing a home is an infrequent experience. So, everything from the specifics about the house you want to purchase to things such as appraisals, down payments, private mortgage insurance, title work, realtor’s commissions and so much more may seem almost overwhelming.

Add one more item to the list:  Homeowner associations (HOAs).

What are homeowner associations and what do they do?

homeowner associations

Homeowner associations are generally formed when a community is built. These associations are run by boards of directors made up of community residents. They establish and enforce community rules (usually referred to as a “Declaration of Covenants, Conditions and Restrictions” or simply “covenants”). 

These rules address everything from the length of grass and what landscaping is permitted to whether a homeowner may install a pool, widen a driveway or paint a home a certain color.

These associations are funded by annual fees paid by homeowners in the community.

What are the benefits of living in a community with a homeowner association?

If you’ve ever noticed a community that featured similarly maintained homes and a generally tidy overall appearance, chances are good that the community has an HOA.

Because an HOA enforces standards and ensures community residents maintain their property to specific standards, these communities tend to look orderly and neat. This in turn can positively affect the value of homes in the community as properties are not permitted to fall into disrepair.

Also, many HOAs manage and fund (through annual fees paid by homeowner) repairs and insurance for common property in the community, recreational assets such as pools or tennis/pickleball courts, and even street repair and maintenance.

Potential downsides to homeowner associations

While HOAs can be essential in maintaining communities and protecting property values, these positives also have costs, some of which are more important than others, depending on a prospective homebuyer’s preferences. These can include:

Annual fees

Annual fees can range from a few hundred to several thousand dollars. Property values, whether a community is responsible for its own street repairs and maintenance, swimming pools and a host of amenities that must be funded are in most cases paid for through annual fees. It’s important to know the cost of HOA fees before getting serious about buying a specific property.

Restrictive rules regarding homes in the community

HOA covenants vary from community to community. While many cover only the basics such as rules for maintaining lawns and the structures of homes in the community, others can be comparatively restrictive. Many communities have covenants that strictly dictate whether vehicles may be parked on driveways (rather than inside garages), dates when homes may be decorated for holidays and the types of trees/shrubs that may be planted by homeowners. Some even demand that all mailboxes be identical.

Fines for non-compliance

Some covenants give HOAs the power to levy fines – often, significant amounts – against homeowners who fail to comply with covenants. More than a few homeowners have returned from a vacation and found a notice that they have been fined for allowing their grass to grow too long in their absence.

Before buying any home, whether a single-family residence, a duplex, a townhouse or a condominium, it’s important to know if the community you’re considering has an HOA and if so, how much annual fees are and of course, how restrictive its covenants are. Information on whether a community has an HOA and its annual fees is generally included in the seller’s disclosure.

However, how restrictive those covenants may be will take some research. Never count on adding a swimming pool, a three-season room, a new driveway or any other property improvements until you fully understand the community’s covenants. Your realtor and your lender will be certain to help you.

Consult with a loan officer at

Beginning the steps to purchasing a home? by Guild Mortgage has experienced agents ready to help you with all aspects of the homebuying process. We will help you review your finances and consult with you about what to expect and help you get the right home with the right loan for you.

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.