Are HOA Fees Included In Escrow? | What Lenders Usually Do

No, monthly HOA dues usually sit outside escrow accounts, though a few lenders may agree to collect them with your mortgage payment.

Homebuyers often expect one fixed monthly bill that covers everything: loan payment, property taxes, insurance, and fees owed to the homeowners association. Then the first invoices arrive, and you discover a separate HOA bill on top of the mortgage draft that already includes money for an escrow account.

The basic pattern is simple. Escrow almost always handles property taxes and homeowners insurance, sometimes mortgage insurance, and in limited cases HOA assessments. Knowing where your own dues sit is more than trivia, because missed HOA payments can trigger late fees, collection costs, or even a lien on your home.

Why HOA Fees And Escrow Get Mixed Up

Confusion usually starts with the loan estimate and closing disclosure. Those forms group many housing costs together: principal and interest, taxes, insurance, and monthly association dues. It looks like one tidy payment, so it is easy to assume the mortgage company will always route money to every line on that sheet.

After closing, your payment splits in two. Part of each payment pays down principal and interest. The rest flows into an escrow account, which your servicer holds in your name to pay certain bills on schedule. Consumer guides from the Consumer Financial Protection Bureau explain that these accounts mainly pay property taxes and homeowners insurance, and sometimes flood or mortgage insurance.

HOA dues sit in a different bucket. They go to a private association that manages common areas, amenities, and shared systems in the community. Resources from Investopedia describe those dues as the lifeblood that pays for landscaping, pool upkeep, reserve savings, and shared insurance for buildings or grounds owned by the association.

Are HOA Fees Included In Escrow? Rules By Lender And Loan Type

For most owners, the answer for their specific home is no. The Consumer Financial Protection Bureau notes that condo, co-op, and homeowners association dues are usually paid directly to the association and are not included in the standard mortgage payment that feeds your escrow account.

That word “usually” matters. There is no single federal rule that bans HOA dues from escrow. Instead, the choice depends on loan program guidelines, state law, and your lender’s policies. Some servicers prefer to keep association charges separate, while others allow or even require dues to flow through escrow for certain borrowers.

What Escrow Normally Handles

To see why HOA bills are often left out, it helps to think about the core purpose of escrow. Fannie Mae’s guidance on escrow accounts describes them as a way for lenders to collect funds for bills that can threaten the property or the mortgage lien if they go unpaid, mainly property taxes, homeowners insurance bills, flood insurance, and sometimes mortgage insurance bills.

Those expenses share two traits. They attach directly to the real estate, and nonpayment can quickly harm both you and the lender. An unpaid tax bill can lead to a tax sale. A lapsed insurance policy leaves the structure exposed to fire, storms, and liability claims. From the lender’s point of view, these are the bills that must never slip through the cracks.

HOA charges do create risk, but the path is more indirect. Legal resources from Nolo and Lawyers.com point out that association covenants and state laws give HOAs strong collection rights, yet the timing and process vary widely across states and communities. That patchwork makes a one-size-fits-all escrow rule harder to apply.

When A Lender Might Add HOA Dues To Escrow

Some borrowers do have HOA assessments collected with the mortgage payment. In those cases, the servicer treats dues as just another escrow item, adds them to the annual escrow budget, and sends scheduled payments to the association on the owner’s behalf.

A lender is more likely to set things up this way when:

• Your budget is tight: The bank wants proof that every housing bill is paid on time, so it pulls more items into escrow.
• The loan program requires it: Certain portfolio or specialty loans ask servicers to manage a wider list of recurring property charges.
• Local risk runs high: In areas where HOA foreclosures move quickly, lenders sometimes watch association payments more closely.
• You request the setup: Some borrowers ask the lender to handle dues for convenience and accept the higher escrow portion.

When this happens, your monthly mortgage draft may feel a bit larger, but your separate HOA bill shrinks or disappears because the servicer is sending payments directly to the association from your escrow account.

How Escrow Fits With HOA Fees And Other Housing Costs

It helps to step back and group your housing bills by who receives the money. One group flows through escrow to tax collectors and insurers. Another group goes straight from you to service providers or the association. Laying those side by side makes it easier to see why your own HOA payment may or may not live in escrow.

During The Home Purchase

During a purchase, escrow often handles one-time HOA items. The settlement agent may use closing funds to clear any unpaid dues from the seller or to pay transfer charges owed to the association. In some communities, the buyer prepays a month or two of dues so the association starts with a clean slate.

Those closing entries show up on your settlement statement, but they do not decide how ongoing dues will be handled. Once you take title, the regular billing cycle begins, and the question shifts from “who paid past balances” to “who pays the next invoice.”

After You Move In

Once the dust from closing settles, your monthly payment usually follows the PITI pattern: principal, interest, taxes, and insurance. Taxes and insurance feed escrow. Principal and interest go directly toward the loan. Any HOA bill that does not sit in escrow comes as a separate statement from the association or its management company.

Association dues might be billed monthly, quarterly, or once a year. The schedule is set in the covenants and bylaws that govern your community. If your lender does not handle those charges through escrow, you are responsible for sending each payment to the correct address by the stated due date.

The table below compares how common housing costs are usually handled so you can see where HOA assessments sit next to taxes, insurance, and other recurring bills.

Housing Cost	Paid From Escrow?	Typical Recipient
Property taxes	Usually yes	Local tax authority or county treasurer.
Homeowners insurance	Usually yes	Your home insurance company.
Mortgage insurance	Often	Mortgage insurance provider named in your loan.
Flood insurance	Often in flood zones	Flood insurer or National Flood Insurance Program.
Regular HOA dues	Usually no	Homeowners association or its management firm.
Special HOA assessments	Rarely	Association, often for major repairs or upgrades.
Utilities	No	Utility providers, unless charges sit inside HOA dues.

Pros And Cons Of Escrowing HOA Dues

Rolling HOA charges into escrow can simplify life, yet it is not the right move for every owner. A quick review of the tradeoffs helps you decide whether to keep dues separate or ask your lender about folding them into the mortgage payment.

Upsides For Owners

The biggest upside is convenience. One monthly payment includes both the loan and regular association charges, so you are less likely to lose track of a quarterly bill during a hectic season.

This setup can also make it easier to compare homes in different communities. When taxes, insurance, and dues all show up inside one payment, you can weigh a townhome with moderate dues against a detached house with no association but higher tax rates without juggling separate invoices.

Another benefit is the paper trail. Federal law under RESPA gives you the right to regular escrow statements, and any dues routed through escrow will appear on those notices. That helps with budgeting and with recordkeeping for later sales or refinancing.

Downsides To Watch For

On the flip side, putting more items in escrow means your minimum monthly payment rises. When the HOA approves a dues increase, your servicer will update the escrow budget and may collect an extra amount over the next year to fill any shortage, which can squeeze a tight budget.

There is also less direct control. When you pay the association yourself, you know exactly when the payment posts and can see your balance in the HOA portal. With escrow in the middle, you rely on the servicer to send funds on time and to alert you when dues change.

Some owners simply like to keep certain bills in their own hands. They prefer to treat taxes and insurance as fixed items in escrow and handle dues, utilities, and other living costs through separate bank drafts or calendar reminders.

How To Check Whether Your HOA Fees Are In Escrow

Because practices differ by lender and loan type, the only way to know for sure is to follow the paperwork. A few small steps usually give you a clear answer.

Read Your Closing And Escrow Documents

Start with the closing disclosure you received at settlement. Look for the section that lists items paid from your escrow account. If HOA dues are included, they should appear there with an estimated annual total alongside taxes and insurance.

Next, check the escrow account statement or addendum in your loan package. It spells out which bills the servicer will pay from escrow and how much they expect to collect each month. If that section only mentions taxes and insurance, association dues almost certainly sit outside escrow.

Review Your Mortgage Statement

Your monthly statement or online dashboard usually breaks down the escrow portion of your payment. You may see separate lines for taxes, homeowners insurance, flood insurance, mortgage insurance, and sometimes “other assessments.”

If you spot a labeled line for HOA dues or a description that clearly refers to association charges, the servicer is likely paying them for you. If all you see are taxes and insurance, then the HOA expects payment from you directly through its own billing system.

Confirm With Your Servicer And HOA

Paperwork sometimes leaves details a bit hazy, so it helps to ask both sides. Reach out to your mortgage servicer and ask whether any part of your current payment funds HOA assessments. Then contact the association or management company to confirm how your account receives payments.

Consumer agencies such as the Consumer Financial Protection Bureau publish clear guides on escrow basics and on the limits lenders must follow when setting escrow payments, so those resources are a good companion as you compare your statements with what the rules allow.

Practical Tips For Staying Current On HOA And Escrow Bills

Whether your HOA charges run through escrow or not, a few habits can keep everything current and lower the stress around housing bills.

Set Up Simple Systems

If you pay the HOA directly, enroll in automatic payments when that option is available, and store login details for the portal or app somewhere easy to reach. Many associations also send email or text reminders near each due date, which can help you catch a bill before it slips past.

Even when the servicer handles dues, set your own reminders for main dates such as the annual escrow review or the month when the HOA usually sends a budget letter. That small step makes it easier to spot changes early and adjust your budget instead of getting surprised by a new payment amount.

Watch For Changes And Ask Questions Early

Once a year, sit down with your escrow statement, HOA budget notice, and insurance renewal. Look for tax increases, higher charges, or rising dues. Guides from the Consumer Financial Protection Bureau and Fannie Mae explain how servicers recalculate escrow after changes and how shortages or surpluses flow into your payment.

If something on your statement does not match what the HOA or tax office has announced, reach out sooner rather than later. A short call or secure message can clear up whether the servicer has updated its figures and whether any adjustment will hit your payment in the next cycle.

Question To Ask	Who To Ask	Why It Helps
Which items are paid from my escrow account right now?	Mortgage servicer	Shows whether HOA assessments are inside your mortgage payment.
Can you add or remove HOA dues from escrow?	Mortgage servicer	Reveals whether your lender even offers that option.
How often do you review and adjust escrow payments?	Mortgage servicer	Helps you plan for changes in taxes, insurance, or dues.
What is my current HOA balance and payment history?	HOA management	Confirms that every assessment has posted on time.
How and when do you notify owners about dues changes?	HOA management	Gives you time to prepare for higher payments.