March 3, 2026 | Uncategorized

How HOA or Condo Fees Affect Long Term Affordability

When buyers calculate what they can afford, they typically focus on the mortgage payment, property taxes, and insurance. But for condo buyers and homeowners in planned communities, there’s a fourth expense that can significantly reshape the affordability equation: monthly HOA or condo fees.

These fees are often glossed over in the excitement of finding the right unit — but over a 10 or 20-year ownership period, they can easily amount to six figures. Understanding exactly what you’re paying for, how fees can change over time, and what to watch out for before you buy can save you from a costly surprise.

What Are HOA and Condo Fees?

HOA (Homeowners Association) fees and condo maintenance fees are monthly charges paid by property owners in shared communities or buildings. They fund the ongoing operation, maintenance, and management of shared spaces and building systems.

In a condo building, fees typically cover: building insurance, property management, common area cleaning and maintenance, elevator servicing, landscaping, amenities (gym, pool, concierge), utilities for common areas, and contributions to the reserve fund. In a townhouse or planned community with an HOA, fees cover shared exterior maintenance, community amenities, and governance.

The Real Cost Over Time: It Adds Up Fast

Here’s a reality check on just how significant condo fees are over a long ownership period. Consider a condo with a $600/month maintenance fee:

Over 5 years: $36,000
Over 10 years: $72,000
Over 20 years: $144,000

And that’s before fee increases, which happen in virtually every building over time. At a modest 3% annual increase — not uncommon — that $600/month fee becomes $806/month by year 10, and $1,082/month by year 20. The total paid over 20 years at that escalation rate would exceed $175,000.

This money doesn’t build equity. It’s a carrying cost — similar to rent in that respect. Understanding this helps contextualize the true cost of condo ownership versus alternatives.

How Fees Impact Your Buying Power

Lenders factor monthly condo fees into your total debt service (TDS) ratio when qualifying you for a mortgage. This directly reduces the mortgage amount you qualify for. Here’s a simplified example:

If you qualify for a mortgage based on a maximum monthly housing payment of $3,500, and the condo has $700/month in fees, your effective mortgage budget is only $2,800/month — not the full $3,500. At current rates, that difference could reduce your maximum purchase price by $80,000–$120,000 compared to buying a property without fees.

This is why comparing a condo with fees to a freehold property without fees isn’t as straightforward as comparing purchase prices. The total monthly cost is what matters.

What’s Included vs. What Isn’t

Fee amounts vary dramatically between buildings and communities — and so does what’s covered. Before you buy, get a clear breakdown of exactly what the fee includes. Specifically ask:

Are utilities (heat, hydro, water) included? This is a major variable — some older buildings include heat and water, which significantly offsets the fee.
Is parking included, or is it a separate monthly charge?
Is the building insured, and what does the master policy cover vs. what you need your own condo insurance for?
Are there amenities (gym, pool, concierge) that you’re paying for but won’t use?

A $700/month fee that includes heat, water, and parking may actually represent better value than a $450/month fee that covers nothing beyond building insurance and basic maintenance.

The Reserve Fund: The Most Important Number

Every condo building is required to maintain a reserve fund — money set aside for major repairs and replacements: the roof, elevators, parking structure, windows, and other capital items. A healthy reserve fund is one of the most important indicators of a well-run building.

An underfunded reserve is a serious red flag. When a building doesn’t have enough money in its reserve fund to cover necessary repairs, the board has two options: raise monthly fees dramatically, or issue a special assessment — a one-time charge to all owners that can range from a few thousand to tens of thousands of dollars per unit.

Before buying any condo, request the most recent Status Certificate and have a lawyer review it. It will include the reserve fund balance, a reserve fund study (projecting future needs), any known deficiencies, and details on pending special assessments. This document is essential due diligence.

Red Flags to Watch for in Fee Structures

Fees that are unusually low: A fee that seems surprisingly affordable may indicate the reserve fund is being underfunded — creating a future problem that will manifest as a dramatic fee increase or special assessment.

Recent fee increases larger than 10–15%: This suggests the building has been underfunded and is now catching up, which may continue for several years.

Pending litigation against the developer or board: This will appear in the Status Certificate and can signal significant future financial risk.

A reserve fund below 70–80% of the recommended balance: This is the threshold many experts cite as a concern threshold for future financial stress in the building.

How to Compare Properties Fairly

When comparing a condo to a freehold home, calculate the true monthly cost of each option. Add together the mortgage payment, property taxes, insurance, and for condos, the monthly fee. Then factor in an estimated monthly maintenance reserve (for the freehold home, since you’ll be funding repairs yourself).

This apples-to-apples comparison often reveals that two properties with similar purchase prices have meaningfully different true monthly costs — sometimes by $500–$1,000/month or more.

The Bottom Line

HOA and condo fees are not a minor line item — they are a core component of your ownership cost and long-term affordability. A beautiful condo with a high fee in an underfunded building is a very different financial proposition than a well-run building with a strong reserve and predictable fees.

At Team Rajpal, we help condo buyers dig into the numbers that matter — beyond the listing price. Contact us today to get expert guidance on evaluating any condo purchase with your long-term finances in mind.