HOA Fees Guide: What Homeowners Association Fees Cover
Understand HOA fees for condos and townhomes in Bergen County NJ. Learn what is covered, typical costs, how HOA fees affect mortgage approval, and red flags to watch for when evaluating associations.
What Are HOA Fees?
HOA fees (Homeowners Association fees) are monthly or annual payments that property owners in condominiums, townhomes, and planned communities pay to their homeowners association. These mandatory fees fund the maintenance, management, and improvement of shared spaces and amenities in the community.
When you purchase a condo or townhome in Bergen County, you automatically become a member of the HOA and are legally obligated to pay these fees. The HOA is a governing body run by elected board members (fellow homeowners) who establish rules, manage budgets, maintain common areas, and enforce community standards.
HOA fees vary significantly based on property type, building age, amenities offered, and location. In Bergen County, monthly HOA fees typically range from $200 for basic townhome communities to $800+ for luxury high-rise condos with extensive amenities. Age-restricted communities and buildings requiring elevator maintenance or doorman service often have higher fees.
Understanding HOA vs Condo Fees
The terms HOA fees and condo fees are often used interchangeably, but there are subtle differences:
- HOA Fees: Apply to any community with a homeowners association (condos, townhomes, single-family homes in planned communities)
- Condo Fees: Specific to condominium ownership, typically higher because they include building exterior maintenance and insurance
- Townhome HOA Fees: Usually lower than condos because owners often maintain their own roofs and exterior walls
- Single-Family HOA Fees: Lowest tier, typically covering only landscaping, common areas, and neighborhood amenities
Bergen County HOA Fee Ranges by Property Type
Note: Fees vary based on unit size, amenities, building age, and reserve fund status. Always request current HOA financial statements before purchasing.
What Do HOA Fees Cover?
HOA fees fund a wide range of services and maintenance activities that benefit all residents. Understanding exactly what your fees cover helps you evaluate whether a property offers good value and what additional expenses you will need to budget for separately.
1. Building Exterior Maintenance
For condos and many townhomes, HOA fees cover all exterior building maintenance and repairs:
- • Roof repairs and replacement (typically every 15-25 years)
- • Siding, brick, or facade maintenance and painting
- • Windows and door maintenance (common areas)
- • Balcony and deck repairs
- • Foundation and structural repairs
- • Chimney maintenance (if applicable)
Owner Responsibility: You still own and maintain the interior of your unit, including appliances, flooring, interior walls, and interior plumbing/electrical.
2. Common Area Maintenance
Shared spaces and amenities require ongoing upkeep:
- • Hallway and lobby cleaning
- • Elevator maintenance and inspections (major expense in high-rises)
- • Stairwell lighting and cleaning
- • Parking lot/garage maintenance, striping, and repairs
- • Pool maintenance, chemicals, and seasonal opening/closing
- • Fitness center equipment and cleaning
- • Clubhouse maintenance and utilities
3. Landscaping & Grounds
Professional landscaping services keep the community attractive:
- • Lawn mowing, edging, and fertilization
- • Seasonal flowers and plantings
- • Tree and shrub trimming
- • Mulch and ground cover
- • Snow removal from sidewalks, driveways, and parking lots
- • De-icing and salt application in winter
- • Irrigation system maintenance
4. Utilities for Common Areas
HOA fees pay for utilities in shared spaces:
- • Electricity for hallways, lobbies, parking areas, and exterior lighting
- • Water and sewer for common area bathrooms, irrigation, and pool
- • Heating and cooling for common spaces (lobbies, gyms, clubhouses)
- • Gas for building heating systems (in some buildings)
- • Trash and recycling collection and disposal
Note: Your individual unit utilities (electric, gas, water) are typically billed separately unless specifically stated as included in HOA fees.
5. Insurance
HOA fees include master insurance policy covering:
- • Building exterior and structure (walls, roof, foundation)
- • Common areas and amenities
- • Liability insurance for HOA and common areas
- • Directors and officers insurance (protects board members)
Important: You still need your own HO-6 condo insurance policy to cover your personal belongings, interior improvements, and personal liability. Master policy does not cover contents of your unit.
6. Management & Administrative Costs
Professional management keeps the HOA running smoothly:
- • Property management company fees (10-25% of total budget)
- • On-site building manager or superintendent salary
- • Accounting and bookkeeping services
- • Legal fees for contract review and enforcement
- • HOA website and communication systems
- • Board meeting expenses and administrative supplies
7. Security Services
Some HOAs provide security features:
- • 24/7 doorman or concierge service (luxury buildings)
- • Security patrol or overnight security
- • Video surveillance systems and monitoring
- • Gate access control systems
- • Intercom and buzzer systems
8. Reserve Fund Contributions
A critical component of HOA fees is the reserve fund (capital improvement fund):
- • Savings for major future expenses (roof replacement, parking lot repaving)
- • Building system replacements (HVAC, elevators, boilers)
- • Emergency repairs not covered by insurance
- • Facade restoration or major renovations
Red Flag: HOAs with underfunded reserves (<25% funded) may need to levy special assessments to cover major repairs. Always request reserve study before purchasing.
How HOA Fees Affect Mortgage Approval
HOA fees have a significant impact on how much you can borrow for a mortgage. Lenders include monthly HOA fees in your debt-to-income (DTI) ratio calculation, which directly affects your maximum loan amount and purchasing power.
HOA Fees in DTI Calculation
Your total housing payment includes PITI + HOA fees:
- • P = Principal (loan amount repayment)
- • I = Interest (loan interest)
- • T = Property Taxes
- • I = Homeowners Insurance
- • + HOA Fees = Monthly association dues
Most conventional loans require total housing costs (including HOA) to be less than 28% of gross monthly income. Total debt (housing + car loans + credit cards + student loans) must be less than 43% of income.
Example: How $500/Month HOA Fee Reduces Buying Power
Buyer Profile:
- • Annual Income: $120,000 ($10,000/month)
- • Down Payment: 20% ($150,000 cash available)
- • Interest Rate: 6.5%
- • Maximum DTI: 43%
- • Other Debts: $500/month (car loan)
Scenario A: Single-Family Home (No HOA)
- • Max Total Debt: $4,300/month (43% of $10K)
- • Minus Car Loan: -$500
- • Available for Housing: $3,800/month
- • Max Home Price: ~$650,000
Scenario B: Condo with $500/Month HOA
- • Max Total Debt: $4,300/month (43% of $10K)
- • Minus Car Loan: -$500
- • Minus HOA Fee: -$500
- • Available for Housing: $3,300/month
- • Max Home Price: ~$565,000
Impact: $85,000 Reduction in Buying Power
The $500/month HOA fee reduces maximum purchase price by approximately $85,000 because that $500 could otherwise go toward a larger mortgage payment.
Lender Requirements for HOA Documentation
Mortgage lenders require extensive HOA documentation during approval:
- 1. HOA Budget: Current year operating budget showing income and expenses
- 2. Reserve Study: Analysis of reserve fund adequacy (must be 10%+ funded)
- 3. Financial Statements: Recent balance sheet and income statement
- 4. Delinquency Rate: Percentage of owners behind on fees (must be <15%)
- 5. Insurance Coverage: Master policy with adequate coverage limits
- 6. Special Assessments: Disclosure of any pending or planned assessments
- 7. Litigation: Any lawsuits involving HOA (can cause loan denial)
FHA/VA Loans: These programs have stricter HOA requirements. Buildings must be FHA/VA approved, with owner-occupancy ratio greater than 50% and commercial space less than 25% of total area.
Red Flags & Special Assessments
Not all HOAs are created equal. Before purchasing a condo or townhome, carefully evaluate the HOA financial health and management to avoid costly surprises. Here are critical warning signs and what special assessments mean for your finances.
🚩 Major Red Flags to Watch For
1. Underfunded Reserves (<25% Funded)
A healthy HOA should have reserves equal to 25-50% of annual budget. Under 25% means major repairs may require special assessments. Under 10% is critical - expect large assessments soon.
2. High Delinquency Rate (>15%)
If more than 15% of owners are behind on HOA fees, the association may lack funds for maintenance. Can also prevent FHA/VA loan approval.
3. Deferred Maintenance
Visible signs of neglect (peeling paint, cracked parking lots, broken amenities) indicate HOA is not maintaining property. Future special assessments likely.
4. Rapidly Increasing Fees
HOA fees increasing 10%+ annually suggest financial mismanagement or upcoming major expenses. Request 5-year fee history.
5. Pending Litigation
Lawsuits against HOA (construction defects, personal injury, contract disputes) can result in large legal settlements requiring special assessments. May prevent mortgage approval.
6. High Investor Concentration (>50%)
Buildings with more than 50% renters may have maintenance issues and lower property values. FHA/VA loans require majority owner-occupancy.
Understanding Special Assessments
A special assessment is a one-time fee charged to all homeowners to cover unexpected expenses or major capital improvements not adequately funded by reserves. These can range from $1,000 to $50,000+ per unit.
Common Reasons for Special Assessments:
- • Emergency roof replacement due to storm damage
- • Elevator modernization (can cost $200K-$500K per elevator)
- • Facade restoration or tuckpointing
- • Parking lot complete replacement
- • Plumbing system replacement (cast iron pipes)
- • Boiler or HVAC system replacement
- • Litigation settlement costs
- • Code compliance upgrades (fire safety, ADA accessibility)
Example: Bergen County Condo Special Assessment
A 100-unit mid-rise condo in Fort Lee needed emergency roof replacement costing $400,000. With only $100,000 in reserves, the HOA levied a special assessment:
- • Total Cost: $400,000
- • Reserve Funds Available: $100,000
- • Shortfall: $300,000
- • Cost Per Unit: $3,000
- • Payment Terms: $1,000 due immediately, $2,000 over 12 months
Questions to Ask Before Buying
- 1. What is the current reserve fund balance and funding percentage?
- 2. When was the last reserve study conducted? (Should be every 3-5 years)
- 3. Are any special assessments planned or pending?
- 4. What major repairs or replacements are anticipated in the next 5 years?
- 5. What is the HOA delinquency rate?
- 6. Has the HOA been involved in litigation in the past 5 years?
- 7. What is the history of HOA fee increases over the past 5 years?
- 8. Is the building FHA/VA approved? (If you need those loan types)
- 9. What percentage of units are owner-occupied vs rented?
- 10. Can I review the most recent HOA meeting minutes?
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Jimmy Joseph MBA helps Bergen County buyers understand how HOA fees affect mortgage approval and evaluate condo/townhome financial health. Get pre-approved with confidence.
Frequently Asked Questions
What are HOA fees?
HOA fees (Homeowners Association fees) are monthly or annual payments that homeowners in condos, townhomes, or planned communities pay to their association. These fees cover shared amenities, common area maintenance, building insurance, landscaping, snow removal, and reserve funds for major repairs. In Bergen County NJ, HOA fees typically range from $200-$800 per month depending on amenities and building age.
What do HOA fees cover?
HOA fees typically cover: exterior building maintenance and repairs, landscaping and grounds keeping, snow removal and sidewalk maintenance, trash collection, common area utilities, building insurance (exterior and common areas), amenities like pools/gyms/clubhouses, security services, management company fees, and reserve fund contributions for major capital improvements like roof replacement or parking lot repaving.
How do HOA fees affect mortgage approval?
HOA fees are included in your debt-to-income ratio calculation for mortgage approval. Lenders add monthly HOA fees to your proposed mortgage payment (principal, interest, taxes, insurance) when calculating total housing costs. This can reduce how much you qualify to borrow. For example, a $500/month HOA fee may reduce your maximum loan amount by approximately $75,000-$85,000 depending on interest rates and DTI limits.
What are special assessments?
Special assessments are one-time or periodic fees charged by HOAs for major unexpected expenses or capital improvements not covered by reserve funds. Examples include emergency roof repairs, building facade restoration, parking lot replacement, or elevator modernization. These can range from $1,000 to $50,000+ per unit. Lenders may require documentation of special assessments during mortgage approval and may reduce loan amounts if large assessments are pending.
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