Definition
The annual financial plan showing income from fees and expenses for operations, maintenance, insurance, and reserves. A well-managed budget prevents special assessments and keeps fees stable.
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Find my pathAbout this term
HOA budgets are adopted annually and show whether income covers expenses. Well-managed budgets include adequate reserves (20-30% of operating budget). Underfunded budgets lead to special assessments. Reviewing budgets reveals HOA financial health and potential fee increases.
Pro Tip
Review 3 years of budgets before buying. Look for trends in fees, expenses, and reserves to assess financial health.
Example
An HOA budget might show $50,000 annual income from 100 units at $500 fee, with expenses for management, insurance, maintenance, and reserves