Budget season is underway for associations on a calendar-year budget, and most of the work comes down to one number: what each unit has to pay every month. The arithmetic looks simple, total expenses divided by the number of units, but budgets built that way tend to come up short. Two items are usually left out: assessments that will never be collected, and income the association earns from other sources.
A Worked Example
The figures below come from a sample 150-unit community with an annual operating budget of $450,000, including a $90,000 reserve contribution.
| Expense category | Annual amount |
|---|---|
| Landscaping and grounds | $96,000 |
| Insurance | $78,000 |
| Utilities (common areas) | $42,000 |
| Maintenance and repairs | $60,000 |
| Management fees | $54,000 |
| Administrative and legal | $18,000 |
| Reserve contribution | $90,000 |
| Other expenses | $12,000 |
| Total | $450,000 |
Divided evenly, after $6,000 of other income is subtracted, the budget works out to $246.67 per unit per month. That figure assumes every owner pays every bill. If 5% of assessments are expected to go uncollected, the association has to bill $259.65 per unit per month to actually receive what it needs.
The difference is $12.98 per unit per month, or about $23,400 a year across the community. Without that adjustment, the shortfall is covered out of operations or by drawing down reserves.
Three Adjustments Most Quick Calculations Skip
- Delinquencies. Budgeting at 0% means every unpaid assessment comes straight out of the operating budget.
- Non-assessment income. Clubhouse rentals, late fees, laundry or vending, and transfer fees all reduce what owners need to be billed.
- The reserve share. In the example, reserves are 20% of the budget. Whether that is enough depends on the association’s components and their remaining life, which is what a reserve study is for.
Running Your Own Numbers
The free HOA Budget Calculator handles all three. A board or manager enters annual expenses by category, the reserve contribution, expected delinquency and other income, and it returns the monthly and annual assessment per unit, total billings, and the share of the budget going to reserves. If current dues are entered, it also shows the gap between what owners pay today and what the new budget requires. No account is needed, and results can be printed or downloaded as a CSV for the budget packet.
The calculator is meant for planning and for explaining an assessment to owners. It does not replace a reserve study or the association’s own financial advisors.
Frequently Asked Questions
How is an HOA monthly assessment per unit calculated?
Annual expenses, including the reserve contribution, minus non-assessment income, are divided by one minus the expected delinquency rate, then divided by the number of units and by 12.
Why should an HOA budget for delinquencies?
If some owners do not pay, an association that billed exactly its expenses collects less than it spends. Building an expected delinquency rate into the assessment covers that gap.
Is the HOA Budget Calculator free?
Yes. It is free to use, no account is required, and results can be printed or downloaded as a CSV file.