How much should an HOA have in reserves?

Reserves are savings for big repairs you know are coming: roofs, paving, siding, elevators. Without enough saved, the board has to ask owners for a special assessment or take a loan.

Percent funded, in plain words

Take each big item. Figure how much of its life is used up, and multiply by today's cost to replace it. Add those up: that's your fully funded balance. Divide what you have saved by that number. That's your percent funded.

Many reserve specialists treat under 30% as high risk and 70% or more as strong. There's no single right number for every association.

Figure your monthly savings

• List each big item, its cost to replace today, how long it lasts, and how many years it has left.
• For each item, take what you still need to save and divide by the years left.
• Add them up and divide by 12 for the monthly amount.

Tip: Our free reserve fund calculator does this math for you and shows your percent funded.

Get a reserve study

A professional reserve study looks at every component and builds a 30-year plan. Some states require one on a schedule, and many governing documents do too. Our free compliance checklist shows what your state's rules say.

Keep reserves separate

Keep reserve money in its own bank account and move the monthly amount on a schedule. Using reserve money for everyday bills is a common way associations get into trouble.