Skip to main content

HOA Fees vs. Mortgage Rates: Which Is Actually Driving the 2026 Affordability Crisis?

It’s getting harder for homebuyers to find properties outside a homeowners association. About 44% of homes for sale last year had HOA fees attached to them, according to a recent report from Realtor.com. Meanwhile, a 2025 report from the Foundation for Community Association Research found 66% of newly completed homes are in community associations.

That isn’t necessarily a bad thing, according to David Diestel, CEO of FirstService Residential, a property management firm that oversees 9,000 communities in the U.S. and Canada.

“These are wonderful places,” Diestel says. Depending on the type of community, HOA fees may cover amenities, maintenance of common areas and future upgrades. “Developers are building what people want.”

That said, HOA fees can pose a challenge to affordability. They can be a hidden cost to homeownership, one that buyers don’t realize can grow uncapped year after year. And as HOA costs rise, they threaten to wipe out any savings buyers may see as a result of reduced mortgage rates.

Interest Rates Rebound, HOA Fees Rise

Rates for a 30-year mortgage averaged just above 7% in January 2025, according to data from Freddie Mac. At the start of March 2026, the average rate had dipped to about 6% before spiking again at the start of the Iran war.

Meanwhile, the median HOA fee increased to $135 per month last year, Realtor.com says. The median fee was $125 in 2024 and $108 in 2019. Those increases aren’t enough to wipe out the savings from reduced mortgage rates in early 2026, but not everyone has HOA fees that low. About 3 million homes paid more than $500 a month in 2024, according to estimates from the Census Bureau’s 2024 American Community Survey.

HOA fees can increase every year, and there is usually no limit on the size of those increases.

“People are getting payment shocks when they move in, and in three months, the assessment doubles or they get hit with a special assessment,” says H. Jack Miller, a strategic advisor for the real estate platform Real Estate Bees and president of Gelt Financial, a commercial and investment real estate lender in Boca Raton, Florida.

The problem is especially acute in Florida, where legislation to ensure the integrity of older condos was passed in the wake of the partial collapse of a 12-story building in Surfside, Florida, in 2021.

“Older condos now must have an engineer study, fix issues, (have their) books examined and have proper reserves,” writes Jeff Lichtenstein, CEO and broker with Echo Fine Properties in Palm Beach Gardens, Florida, in an email. “It’s good legislation … but this also threw an incredible amount of increases in HOA costs onto the consumer.”

In the Miami metro area, HOA fees make up more than a quarter of mortgage payments, Realtor.com finds. The median HOA fee there is $617 per month. Panama City, Naples and Cape Coral are other communities where HOA fees comprise approximately 20% of mortgage payments.

[Read: Best Mortgage Lenders]

Associations Squeezed by Insurance, Aging Facilities

It isn’t just Florida that has older buildings in need of updates.

“I’m seeing a lot of older buildings with deferred maintenance,” says Albert Babayan, a broker with JohnHart Real Estate in Glendale, California. That may be because communities are reluctant to raise fees for residents, but “The cost of the repairs is not going to go away.”

Maintenance for older buildings is only one issue facing community associations. Fees are also increasing due to climbing insurance premiums, particularly in coastal areas that are subject to extreme weather, according to Howard Jacobson, chief operating officer at Stronglast Builders.

“HOA directors also face intense pressure from fellow homeowners to keep HOA fees as low as possible, not only to ease financial stress on owners but also to avoid deterring potential homebuyers who dislike, of course, high HOA dues,” writes Jacobson in an email.

However, repairs can only be deferred for so long, and insurance increases can’t always be avoided. At that point, if a community hasn’t been collecting enough in HOA fees to maintain a healthy reserve, residents could find themselves facing shockingly high fee increases.

[Read: Best Mortgage Refinance Lenders.]

HOAs: Saving Homeowners Maintenance Costs

While HOA fees may add to homeowner costs, Diestel says there is an upside. “It does help with affordability because there is a cost-sharing.”

Community association fees can pay for upkeep that homeowners may otherwise have to cover themselves. In communities of single-family homes, HOA fees may pay for private street maintenance, winter snowplowing in northern climates, landscaping and shared amenities such as pools and pickleball courts. In multifamily buildings, the HOA fee can also pay for roof and building repairs, common areas and parking spaces.

When you consider the rule of thumb that people should be saving 2% of their home’s value each year for maintenance, Diestel says HOA fees aren’t unreasonable and may, in fact, make homeownership more affordable. Rather than paying for amenities and maintenance themselves, homeowners pool their money with other community members to cover these costs.

Tips for Homebuyers Considering a HOA Property

Despite the added cost, HOAs are popular with many homebuyers. The key is to understand what you are getting for the cost and whether large fee increases could be coming in the future.

“As condo experts, we always strategically advise our buyers to steer clear from low HOA fees as they could potentially mean that the HOA may not have healthy reserves for repairs,” Babayan says.

Potential homebuyers should ask to see the bylaws and meeting minutes from HOA board meetings to understand how the association is run. They should also ask about the long-term plans for the community. Are major upgrades in the works? Is there a schedule for regular and periodic maintenance?

“A lot of the boards are kicking the can down the road,” according to Miller.

You don’t want to be surprised by large fee increases in the future. Reviewing all this information can help you gauge whether an HOA board is proactively addressing the community’s financial and structural health or avoiding making difficult decisions.

If a building has been deemed nonwarrantable by Fannie Mae and Freddie Mac, that could also be a red flag. A nonwarrantable condo is not eligible for government-backed loans, and it can receive that classification for the following reasons:

— The HOA doesn’t save at least 10% of dues in reserve.

— More than 15% of owners are more than 60 days behind in paying their assessment.

— More than half of units are rentals.

— More than 20% of all units have a single owner.

— The HOA has been sued.

Owners Should Plan for Annual Increases

Homebuyers concerned with affordability

should think about how HOA fees may increase over time as they consider whether a property is right for them. Diestel says he has seen increases of 3% to 15% in communities recently, and he thinks new homebuyers should expect at least inflationary increases each year.

“Homeowners are very excited when they see no increase,” Miller says, but that could simply mean that maintenance has been deferred and big jumps in annual costs are coming.

Properties in community associations are appealing for many reasons. They can come with nice amenities, reduced personal home maintenance costs and a built-in sense of community. However, understand the potential costs — both current and future — before making an offer.

More from U.S. News

6 Ways to Finance Your Dream Home Abroad When You Can’t Get a Standard Mortgage

What You Gain From Buying a Home That You Never Plan to Pay Off

How to Refinance a Rental Property

HOA Fees vs. Mortgage Rates: Which Is Actually Driving the 2026 Affordability Crisis? originally appeared on usnews.com

The Trump administration is scrambling for more defense money. Here’s why it may not get it

(CNN) — In a closed-door briefing earlier this month, key Pentagon officials sat down with House spending leaders from both parties to make an urgent case to quickly deliver more cash to fund the US war in Iran.But when pressed by members of both parties for details, Pentagon officials were unable to offer any meaningful specifics about why they need the money so quickly — frustrating Republicans and Democrats alike, according to two people in the room.Now, with the Pentagon’s reserves further depleted, the administration is unfurling a full-court press on Republican lawmakers in hopes it can clinch tens of billions of dollars that officials are seeking this summer as the US continues its fight against Iran.In the last week, the Pentagon invited dozens of House members for a marathon meeting that included face time with Secretary of Defense Pete Hegseth. Select members – including the head of the chamber’s powerful Appropriations Committee – have also been invited to Camp David and Vice President JD Vance trekked to the basement of the Capitol on Wednesday to sell the plan to GOP rank-and-file, arguing Republican unity is essential.But several GOP members told CNN they still lack critical information about the military’s capacity and needs – and aren’t convinced by what they have heard. Even those Republicans who support the funding push fear that a fraught political gamble in the waning days of summer could lead to a legislative implosion just months before the midterm elections.“It’s a risky proposition,” Majority Leader John Thune told reporters in the Capitol last week, referring to other House GOP efforts to pass a party-line bill for defense and other priorities. “Is the juice worth the squeeze?”Not much time to actThe Defense Department said it has had meaningful engagements with lawmakers.“The Department of War has conducted hundreds of engagements with individual members of Congress, or groups of them, over the last two months,” a Defense Department official said. “This, in addition to the consistent provision of budget rollout briefs, informational requests from committees of jurisdiction, and the regular interactions of the Department and the Hill, represents one of the most productively aggressive and appropriate legislative engagement packages in many years.”For months, defense hawks in Congress have been warning the Pentagon’s munitions and funding have been badly depleted since the beginning of the war in Iran. Lawmakers anticipated they’d need to pass some kind of a supplemental funding package before the end of the fiscal year and congressional leadership has made it clear they want to move swiftly.“Among the defense people, it’s an emergency that needs to get done,” Rep. Mike Simpson of Idaho said. “They’re going to run out of money in mid-August.”Rep. Steve Womack, an appropriator from Arkansas, argued “the Pentagon people I’ve talked to say if we’re still having this conversation in August, that’s not a good thing” and Rep. Ronny Jackson, a member of the Intelligence, Armed Services and Foreign affairs committees told CNN the deadline is “serious.”“We need to get it done as soon as possible,” Jackson said.But the emergency argument isn’t resonating with everyone. Some conservatives have threatened they could vote against the funding because it would simply go on the nation’s credit card. Others argue they aren’t clear why the Pentagon is in such desperate need for money after billions were infused to the Defense Department as part of the last sweeping party-line policy bill.CNN has reached out to the Defense Department for comment.Rep. Brian Fitzpatrick, who said he recently turned down a visit to Camp David because he wasn’t interested in a “sales pitch” on the funding, said he still has a lot of questions.“That’s a lot of money to blow through in a very short period of time, and I’m not saying they didn’t,” Fitzpatrick said, but “they shouldn’t just expect us to go along with whatever they say. I mean, they got to make their case.”One Republican member who spent Tuesday night at the Pentagon argued that even after a nearly four-hour meeting at the defense headquarters, they still weren’t convinced.“To me they didn’t make any compelling argument. The microphones didn’t even work,” the member said. “They are asking for $1.5 trillion and they had chips and dip.”Another member who is undecided on a $95 billion plan from House GOP leaders for defense and other priorities, Rep. Scott Perry of Pennsylvania, told CNN “a lot of us believe there should be pay-fors.”GOP leaders are still moving quickly and have signs for hope.“I think right now having depleted a lot of our nation’s munitions in both Ukraine and Israel that now we have to respond to that emergency whether you are for or against the US involvement in both of those conflicts. I think responsible lawmakers must come together to ensure that our military has a stockpile of munitions to deter the next conflict. Our adversaries need to know that we are well armed, trained and equipped,” Rep. Nick LaLota, a Republican from New York, said.The House budget committee was able to advance the proposal unveiled by GOP leaders last week, which includes $60 billion for the Pentagon and $13 billion for intelligence agencies. And leadership is confident they can try to bring it to the floor for a vote in the week ahead. But even if Speaker Mike Johnson is able to muscle it through his chamber, GOP senators are expected to make significant changes to the legislation, which also includes grants to finance President Donald Trump’s “SAVE America Act” and billions in aid for farmers.In the Senate, aides and members argue that the chamber is likely to push for far more money for the Pentagon than the House bill includes. The $73 billion for defense is just a fraction of the original $350 billion the administration floated previously as part of their $1.5 trillion budget request. The smaller number came after conservative members of the budget committee argued they would only be comfortable with a fraction of the $350 billion if the money was not going to be offset.“In the budget committee we have driven down the excess ask,” Rep. Erin Houchin, a Republican from Indiana, told CNN. “We put some downward pressure on that.”If the funding is increased in the Senate, that could have an impact on the vote total when it ping pongs back to the House.In the wake of the late Sen. Lindsey Graham’s sudden death, all eyes are on the incoming Senate Budget Chairman Sen. Ron Johnson, a budget hawk, who could also push for spending offsets for the defense funding in his own framework. That’s a potential issue for moderates in the House who have argued they don’t want to be taking tough votes on cuts to programs before their re-elections.It is also not clear if provisions related to the President’s “SAVE America Act” will pass muster with the Senate’s parliamentarian, who will have to decide what is germane under Senate rules. If the president’s voting bill isn’t permitted, that too could sink the prospects in the House.“The SAVE America Act needs to be in,” Rep. Chip Roy, a conservative from Texas, warned. “If there is not a mandatory here on ensuring the voter rolls are correct, citizenship is being checked, voter ID is being checked then we have a real problem.”The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
Read Next Story

Related News

The Trump administration is scrambling for more defense money. Here’s why it may not get it

Severely ill prisoners granted early release are left stuck behind bars 71

How the World Cup became the summer party America needed