In July 2023, a homeowners meeting in South Florida over a dues increase was cut short. Afterward one resident told the local CBS station that "a lot of things on the new budget don't make sense." Her example: owners were still paying auto insurance on the security cars, though security now rode around in golf carts.
Lines like that are rarely invented. More often they are carried forward from last year's budget without a bill behind them, and owners pay for them every month.
To calculate what your HOA costs per home each month, add up last year's actual bills in four lines (fixed obligations, the reserve contribution, administration, and an allowance for dues that will go unpaid), then divide the total by the number of homes, or by the shares your documents set, and by twelve. It takes one evening.
The short answer
- Build each line from last year's bills and next year's quotes, never from last year's budget.
- Add the four lines, divide by homes (or shares) and by twelve: that is what one home costs per month.
- Set it beside today's dues and find the line that makes the gap. In the example, it is the reserve.
The example: 100 homes at $70 a month
Every figure here is an example, chosen to make the arithmetic easy. Swap in your own.
The example community has 100 homes, a pool, a pond and landscaped entrances. Dues are $70 a month, so it billed $84,000 last year.
Line one: Fixed obligations, from the bills
These arrive every year whether or not anyone budgets for them. Take each from last year's bills; for a contract that renews, use next year's quote.
| Fixed obligation (example) | Yearly total | Where the number comes from |
|---|---|---|
| Landscaping contract | $29,400 | 12 monthly invoices of $2,450 |
| Pool service and chemicals | $8,600 | The season's invoices |
| Insurance: liability, directors and officers, clubhouse | $7,400 | Next year's renewal quote |
| Common-area electric and water | $6,200 | 12 utility bills |
| Pond inspection and treatment | $2,400 | The vendor's contract |
| Total | $54,000 |
Per home per month: $54,000 ÷ 100 ÷ 12 = $45.00.
Insurance is the line that resident questioned. A policy is a fact you can check against its declarations page. If the thing it insures is gone, the line should go with it.
Line two: The reserve contribution, from the study
This is the yearly set-aside for the big replacements: the pool surface, the pond's outfall, the entrance walls. Take it from your reserve study's recommended contribution. The example's study says $30,000.
Per home per month: $30,000 ÷ 100 ÷ 12 = $25.00.
With no study, list each big item's cost today over the years it has left: a $48,000 pool resurfacing due in 12 years is $4,000 a year. It is a rough starting point, not a study: it leaves out rising costs and money already set aside.
Line three: Administration, including the small bills
Each of these is small. Together they are not.
- Bookkeeping help and the tax return: $2,400
- Legal review (collection letters, a documents question): $1,800
- Fidelity bond (protects the association if someone who handles its money steals it): $900
- Mailing, printing and the meeting room: $1,500
- The annual state filing and registered agent: $600
Total $7,200. Per home per month: $7,200 ÷ 100 ÷ 12 = $6.00.
So far: $45.00 + $25.00 + $6.00 = $76.00 per home per month.
Line four: The collection allowance, from last year's unpaid share
Last year the example community billed $84,000 and never collected $4,200 of it: 5%.
Divide by the share that pays: $76.00 ÷ 0.95 = $80.00. Collect 95% of $80.00 and the community has exactly $76.00.
$80.00 per home per month is what the example community costs to run, against dues of $70.00. — The worked example above (illustrative figures)
The gap: Find the line that makes it
$80.00 against $70.00 is a $10.00 gap, about 14%. The total tells you how big. The lines tell you why.
Go back to last year's bank statements. The example community moved $18,600 into reserves last year: $15.50 per home per month. Its study calls for $25.00. Run last year the same way and it ties out: $45.00 + $15.50 + $6.00 = $66.50, and $66.50 ÷ 0.95 = $70.00, exactly today's dues.
The example community · Illustrative
$10.00
- $9.50 more to reserves: $15.50 last year against the $25.00 the study calls for
- $0.50 allowance on that $9.50, because the same 5% will not pay it either
- $0.00 from fixed obligations and administration: $51.00 last year and next
The fixed bills were never the problem. The whole gap is the reserve the dues were not funding: a sentence a treasurer can say at a meeting, and owners can check line by line.
Five places the arithmetic goes wrong
- Copying the budget instead of the bills. A budget line can outlive what it pays for, like insurance on cars that are gone.
- Last year's price on a contract that renews higher. Use the renewal quote, or the contract's own increase clause.
- A one-time repair counted as a yearly cost. Last year's emergency pump repair is not a fixed obligation. It belongs on the reserve list, or nowhere.
- Dividing by homes when your documents set shares. Some declarations set different shares by home type, for example a smaller share for a townhome. Where yours do, divide by total shares, not homes.
- Hoping the unpaid share away. A budget written as if every home pays starts short by exactly that share.
On the fourth: say the example had 70 single-family homes and 30 townhomes at 0.75 of a share. That is 70 + 22.5 = 92.5 shares. The yearly total is $96,000 ($80.00 × 100 × 12), so $96,000 ÷ 92.5 ÷ 12 = $86.49 for a single-family home, and 0.75 of that, $64.86, for a townhome. Your governing documents decide what the shares are.
To check your own total, the free HOA dues calculator divides a yearly budget by equal or weighted shares and shows every step. Enter the total with the collection allowance already in it ($96,000 in the example): the calculator does not add one.
Download the free Bill-Behind-Every-Line Check: one page that matches each line of last year's budget to the bill or quote behind it before you divide anything.
What Percentage Should Your HOA Reserve Fund Be Funded At?
Frequently asked questions
Should we use last year's budget or last year's actuals? Actuals. A budget is what the board expected; the bills are what happened.
What if we have no reserve study? Divide each big item's cost today by the years it has left, and add them up. It is a rough starting point, not a study, and a reserve study should replace it.
How do we handle homes that pay different shares? Divide the yearly total by the total shares your governing documents set, then multiply by each home type's share.
Is the result what our dues must be? It is what one home costs to run. Whether dues can change, and by how much, depends on your governing documents and your state's law; your documents and your attorney decide.
This article is general information, not legal or accounting advice. Every figure in the example is illustrative.