How much money should a HOA have in reserve?

Unfortunately, many associations’ reserve accounts are underfunded, which puts them at a high risk for special assessments, which unfairly penalizes current homeowners with charges to cover the underfunded reserve expenditures. Ideally, an association should have a “Fully Funded Balance” (FBB), which is a calculated accumulative total cost to maintain, repair, and replace the reserve components.

Every association has its own unique list of reserve components, so it is impossible to provide a specific dollar amount that would suite every association’s reserve fund. However, most associations should be contributing between 15% - 40% of their assessments towards their reserve fund. It is important to remember, though, that this number varies widely from association to association.