A condo can look like the affordable way into a neighborhood where single-family homes cost considerably more. The purchase price may fit your budget, exterior maintenance may be handled by the association, and amenities such as a pool, fitness center, security or landscaping can make the property especially appealing.
But in 2026, condo buyers need to evaluate more than the unit. You are also buying into the financial condition of the condominium association.
That means the monthly HOA fee is only the beginning. Reserve funding, insurance coverage, deferred maintenance, special assessments and the overall financial health of the project can affect your monthly costs, your ability to obtain a mortgage and eventually your ability to resell the property.
The Foundation for Community Association Research estimates that there were about 373,000 community associations in the United States at the end of 2025, containing 29.6 million housing units and 78.1 million residents. Community associations—including HOAs, condominium communities and cooperatives—represented 35.2% of U.S. housing. The Foundation projects the total could reach as many as 377,000 associations in 2026.
| U.S. Community Associations | Figure |
|---|---|
| Community associations (end of 2025) | About 373,000 |
| Housing units | 29.6 million |
| Residents | 78.1 million |
| Share of U.S. housing | 35.2% |
| Projected associations in 2026 | As many as 377,000 |
For prospective condo buyers, the lesson is simple: evaluate the association with the same seriousness you evaluate the kitchen, floor plan and location.
Why Condo Due Diligence Matters More in 2026
A condo purchase involves two layers of risk. The first is the individual unit: its condition, price, location and suitability for your needs. The second is the shared property and organization surrounding it.
The association may be responsible for roofs, elevators, exterior walls, common plumbing, parking structures, pools, landscaping, hallways and other expensive components. If those assets require major work and the association has not saved enough money, owners may have to fund the difference.
Insurance adds another layer. A condo building normally has a master insurance policy maintained by the association, while individual owners typically need their own unit-level coverage. Gaps or problems with the master policy can affect financing.
Mortgage agencies have also increased attention on condo project safety, repairs, insurance and financial condition. Fannie Mae, for example, identifies certain projects with unresolved critical repairs as ineligible. Its project standards specifically address deferred maintenance, inspections and special assessments.
This means a beautiful unit in a financially troubled building may be much harder to finance than a buyer expects.
1. Look Beyond the Monthly HOA Fee
Buyers naturally compare HOA fees. A condo charging $300 per month may appear more affordable than a similar unit charging $550. But the lower fee is not automatically the better deal.
An association must collect enough money to operate the property and prepare for future capital expenses. A very low fee can be positive if the community has limited shared infrastructure and strong finances. It can also mean the association has postponed necessary increases or has not been saving enough for future repairs.
Instead of asking only how much the HOA fee is, ask how often it has increased, whether another increase is being discussed, how much of the budget goes toward reserves, what services are included, whether major repairs are expected and whether owners are currently paying a special assessment.
A higher but adequately funded fee can sometimes be financially safer than a low fee followed by a large unexpected assessment.
2. Examine the HOA Reserve Fund
A reserve fund is money the association sets aside for major future repairs and replacements. Think of it as the community’s long-term maintenance savings account.
The Foundation for Community Association Research reports that U.S. community associations collected about $124.2 billion in assessments in 2025, with approximately $31.1 billion going toward reserve funds.
For an individual buyer, national totals matter far less than the finances of the specific property. Ask for the association’s current reserve balance and, when available, its reserve study.
What Is a Reserve Study?
A reserve study evaluates major common components, estimates their remaining useful lives and replacement costs, and helps the association plan how much money should be saved over time.
For example, a condo building may know that its roof is expected to require replacement in several years. A reserve plan allows the association to accumulate money gradually rather than asking every owner for a large one-time payment when the work becomes unavoidable.
Do not judge reserve health by the account balance alone. A $1 million reserve may sound substantial, but it could be inadequate for a large high-rise facing elevator modernization, facade work and roof replacement. The better question is whether reserves are appropriate for the community’s expected obligations.
3. Investigate Special Assessments
A special assessment is an additional charge imposed on owners beyond regular HOA dues, typically to fund a major expense or address a financial shortfall.
Fannie Mae requires lenders reviewing applicable condo projects to examine special assessments, including their purpose, original amount, remaining amount and expected payoff date. If a special assessment is connected to unresolved critical repairs, project eligibility can be affected.
Ask whether there is a current special assessment, how much the unit owes, whether it has been fully paid, who is responsible for any unpaid balance at closing, whether additional assessments are being discussed, what project the assessment funds and whether the underlying repair has been completed.
Also read meeting minutes. A special assessment may not yet be formally approved, but board discussions about an aging roof, structural repairs, insurance shortfalls or major mechanical systems can reveal expenses that could become assessments later.
4. Review the Building’s Insurance Before You Fall in Love With the Unit
Home insurance is becoming a larger affordability issue in many U.S. markets.
Costs vary dramatically by location and risk exposure. Insurance.com’s 2026 analysis estimates an average annual U.S. homeowners premium of $2,872 for its sample policy with $300,000 of dwelling coverage, while state-level averages vary substantially.
Condo insurance works differently because the association generally maintains a master policy covering parts of the building or common property. The buyer typically obtains an HO-6 or similar individual condo policy for coverage applicable to the unit, personal property, liability and certain losses not covered by the master policy.
| Policy | Who Maintains It | What It Generally Covers |
|---|---|---|
| Master policy | The association | Parts of the building or common property |
| HO-6 or similar condo policy | The individual owner | The unit, personal property, liability and certain losses not covered by the master policy |
Before buying, determine what the master policy covers, its deductibles, whether coverage recently changed, whether the association has experienced cancellations or large premium increases, what individual owners must insure and whether a large master-policy deductible could be allocated to owners after a claim.
Review current documentation and discuss the property with your insurer before removing relevant contingencies.
5. Confirm the Condo Can Be Financed
With a condo, the project itself can matter to mortgage approval.
Fannie Mae maintains condo project eligibility standards addressing issues including critical repairs, deferred maintenance, insurance and special assessments. It also offers a Condo Status Finder for associations and authorized representatives to identify certain project conditions that may affect eligibility. Freddie Mac similarly provides project-review tools and requirements.
You can therefore be financially qualified for a mortgage while the condo project creates a financing obstacle.
Ask your lender early whether the project requires review and whether any known eligibility issues exist. Do this before spending heavily on inspections, appraisal and other transaction costs. Buyers considering FHA or VA financing should confirm the applicable project and loan requirements with their lender.
6. Read the HOA Budget and Financial Statements
Review the current operating budget and recent financial statements when available.
Look for total annual assessment income, reserve contributions, insurance expenses, maintenance expenses, management fees, utilities paid by the association, major repair expenses, delinquent owner assessments, association debt and large year-over-year expense changes.
One number rarely tells the whole story. Increasing insurance expense does not necessarily indicate poor management; it may reflect changing market conditions. But repeated budget deficits, weak reserve contributions or substantial unpaid assessments may warrant more questions.
If the financial documents are difficult to interpret, consider having an attorney, accountant or experienced real estate professional help review them.
7. Review Meeting Minutes for Problems That Have Not Reached the Listing
Board and association meeting minutes can reveal discussions about roof leaks, water intrusion, elevator repairs, structural inspections, parking garage deterioration, insurance problems, lawsuits, planned fee increases, special assessments, reserve shortages, contractor disputes and rule changes.
A listing may describe a building as well maintained while meeting minutes show that the board has spent months discussing a costly repair.
That does not automatically mean you should walk away. Buildings require maintenance. The important issue is whether you understand the likely costs before becoming responsible for your share.
8. Understand What the HOA Fee Actually Covers
Comparing HOA fees without comparing included services can be misleading.
One association’s $600 monthly fee may include water, exterior maintenance, landscaping, security, a pool, building insurance and certain utilities. Another may charge $350 but leave owners responsible for more expenses individually.
| Monthly HOA Fee | What It May Include |
|---|---|
| $600 | Water, exterior maintenance, landscaping, security, a pool, building insurance and certain utilities |
| $350 | Fewer services, leaving owners responsible for more expenses individually |
Request an itemized explanation of what the assessment covers.
Also identify amenities you are effectively paying for but may rarely use. Pools, elevators, staffed entrances, fitness centers, clubhouses and extensive landscaping can add lifestyle value, but they also require ongoing maintenance, insurance and eventual replacement.
The goal is not necessarily to find the lowest HOA fee. It is to determine whether the services and financial structure make sense for your budget.
9. Check Rules That Could Affect Your Plans
Review the governing documents before purchasing.
Pay particular attention if you plan to rent the unit, operate a short-term rental, keep pets, remodel, replace flooring, install an EV charger, buy as an investment or make exterior modifications.
Rental restrictions deserve special attention for buyers who may convert the property into a rental later. A condo that works perfectly for your current lifestyle may become less flexible if the association restricts leasing.
10. Calculate the Real Monthly Cost of Condo Ownership
Do not compare properties using mortgage principal and interest alone.
Build a complete monthly estimate that includes mortgage principal and interest, property taxes, HOA dues, individual condo insurance, separately billed utilities, parking charges, current special assessments, maintenance inside the unit and an emergency allowance for future expenses.
Then stress-test the budget. What happens if HOA dues rise 10%? What if a $6,000 assessment is approved next year? What if insurance costs increase?
You cannot predict every expense, but testing plausible scenarios can reveal whether the property remains comfortable if costs change.
Condo Due Diligence Can Vary by Location
Geography matters.
California and Florida have some of the largest numbers of community associations in the country, according to the Foundation for Community Association Research. Coastal markets may face hurricane, flood or wind-insurance concerns. Parts of California and the Mountain West may face wildfire-related insurance pressures. Older high-rise markets can have significant structural and reserve considerations.
State laws governing reserves, inspections, disclosures and association operations also differ.
A buyer considering a 30-year-old coastal Florida tower should investigate different risks than someone purchasing a newer low-rise condo in suburban Ohio. Use local professionals who understand the rules and common issues where you are buying.
Questions to Ask Before Making an Offer
Before committing, ask:
- What are the current monthly HOA dues?
- When were dues last increased?
- Is another increase proposed?
- What is the current reserve balance?
- Is there a recent reserve study?
- Are special assessments active, approved or being discussed?
- Are major repairs planned?
- Have recent structural or engineering inspections identified concerns?
- What does the master insurance policy cover?
- Have insurance premiums or deductibles changed significantly?
- Are there pending lawsuits involving the association?
- What percentage of owners are delinquent on assessments?
- Does the association have debt?
- Are there rental restrictions?
- Are there renovation, pet or parking rules relevant to you?
- Has your lender reviewed the project for financing eligibility?
- What expenses are included in the monthly fee?
- Who is responsible for an existing assessment when the unit sells?
Where appropriate, work with your real estate professional or attorney to make the offer subject to satisfactory review of association documents.
Final Thoughts
A condo can still be an excellent path to homeownership in 2026. It may provide access to a desirable location, lower exterior-maintenance responsibilities, shared amenities and a purchase price below nearby single-family homes.
But the unit price is only part of the purchase.
A financially healthy association can make condo ownership more predictable. An underfunded association facing major repairs, rising insurance costs or unresolved project issues can turn an apparently affordable property into an expensive one.
Before buying, look beyond the countertops and balcony view. Read the budget. Review the reserves. Investigate assessments. Understand the insurance. Check the meeting minutes. Confirm financing eligibility. Calculate the full monthly cost.
The best condo purchase is not necessarily the unit with the lowest price or the lowest HOA fee. It is the property where the unit, building and association finances all fit your budget and long-term plans.
Related Reading
- New Construction vs. Resale Homes: Which Should You Choose?
- Is It a Buyer’s Market in 2026? What Homebuyers Can Negotiate Right Now
- How Much Down Payment Do You Really Need to Buy a House in 2026?
- How to Start Investing in Rental Property as a Beginner
Sources
- Foundation for Community Association Research — Statistical Review: Summary of Key Association Data and Information
- Foundation for Community Association Research — 2026 Community Association Growth Outlook
- Fannie Mae — Condo Status Finder
- Fannie Mae Selling Guide — Ineligible Projects / Critical Repairs and Special Assessments
- Fannie Mae — 2026 Updates to Single-Family Project Standards and Property Insurance Requirements
- Freddie Mac Single-Family — Condo Project Advisor
- Insurance.com — Average Homeowners Insurance Rates by State in 2026
Editorial note: Insurance premiums, HOA requirements, lending standards and state laws can change. Readers should verify current costs and requirements for the specific property, loan program and jurisdiction before making a purchase decision.
