How much should your HOA have in reserves?
It’s the question that keeps treasurers up at night — and the one boards most often get wrong until a roof fails. Here’s the plain-English answer: what reserves are, what “funded percentage” means, and how self-managed boards typically plan so a big repair never becomes a surprise special assessment.
The simple spreadsheet self-managed boards use to track every major component, its useful life, and what to set aside — so the money is there before the roof needs it.
Your reserve fund is your community’s savings account.
Your HOA has two pots of money. Operating funds cover the day-to-day — landscaping, utilities, insurance. Reserve funds are savings for the big, predictable replacements: roofs, roads, pool equipment, painting. Reserves are usually required to be kept separate, and dipping into them to cover operating shortfalls (without the right approvals) is one of the most common — and riskiest — mistakes a self-managed board makes. More on operating vs. reserve →
Forget the magic number. Watch your funded percentage.
There’s no single right dollar amount — it depends on what you’ll replace and when. The real measure is funded percentage: how much you’ve saved versus how much you should have at this point in your components’ life.
The reserve study does the math for you.
A reserve study is a professional plan: it inventories your major components, estimates each one’s useful life and replacement cost, and lays out a funding schedule so the money is there when each needs replacing. Most associations are advised to commission one and refresh it every few years — and many states require it. Between studies, a simple component schedule keeps you oriented.
Want the plain-English reserves walkthrough by email?
BoardPath won’t manage your money — but it tells you what you’re required to fund.
BoardPath reads your governing documents and state law and tells you what your community is actually required to fund and when — cited to the section — and flags when your reserves are running thin against what your study recommends. And Steward, your advisor, can walk a new treasurer through reserves the way an experienced community manager would: how funding plans typically work, what boards usually do about a shortfall, and when to bring in a reserve specialist or a CPA. It’s the seasoned treasurer your volunteer board never had.
Common reserve questions.
How much should an HOA have in reserves?
There is no single magic number — it depends on your major components and their remaining life. The measure that matters is your funded percentage: how much you have saved versus what you should have at this point in your components’ life. Boards generally consider roughly 70%+ funded healthy, 30–70% fair, and under 30% weak (a special-assessment risk). A reserve study calculates this precisely for your community.
What is a reserve study?
A reserve study is a professional plan that inventories your major components (roofs, roads, pool equipment), estimates each one’s useful life and replacement cost, and lays out a funding plan so the money is there when each needs replacing. Most associations are advised to get one and update it every few years.
What’s the difference between operating and reserve funds?
Operating funds cover day-to-day expenses; reserve funds are long-term savings for major repairs and replacements. They are usually required to be kept separate — don’t commingle them or borrow from reserves to cover operating shortfalls without the approvals your documents require.
What happens if our reserves are underfunded?
When a major component fails and the reserve money isn’t there, the board usually has to levy a special assessment — a one-time charge to every owner — or take out a loan. Consistent reserve funding now is how boards avoid that.
Get reserves right before the roof reminds you.
The Self-Managed Board Playbook includes the full money-side setup — fund separation, reserve planning, and the tools that make it manageable for a volunteer board.