How to build an HOA budget

The budget sets your dues for the year. Build it from what you actually spend, not from last year's budget.

Step 1: list your costs

Pull 12 months of actual spending from the bank or books. Group it: insurance, landscaping and snow, utilities, repairs, management or software, legal and accounting.

Step 2: adjust for next year

Ask vendors about price changes. Insurance renewals are often the biggest surprise, so get a quote early.

Step 3: add reserves

Add your yearly reserve savings, from your reserve study or a reserve calculator.

Step 4: add a cushion

A small cushion covers late payers and surprises.

Step 5: turn it into dues

Subtract other income. Divide the rest by your units (or by each unit's share if your declaration says so), then by 12.

Step 6: notice and adoption

Many states and governing documents require notice to owners before a new budget or a dues increase. Our free compliance checklist shows your state's rules.

Tip: Show owners why dues are changing in two or three plain sentences. It heads off most complaints.