HOA Capital & Loan Assistance


How Do HOA Loans Work?
HOA Capital

How Do HOA Loans Work?

When it comes to running a homeowners association, the dues collected are dispersed to specific areas of the property that need upgrades and maintenance. When the costs are beginning to outweigh the stream of funds coming in or the community needs significant renovations, there may be a need to seek an outside source for temporary assistance.

If you’re considering HOA loans, you want to have as much information as possible, so HOA Capital is here to help you understand the process.

What Does an HOA Loan Cover?

An HOA loan is traditionally taken out from a lender, which will be a bank in most cases. This form of loan is no different than a traditional one because it needs to be paid back in a certain amount of time with interest. 

In most cases, the association will generally have the funds required to run the corporation, but unforeseen circumstances such as delinquency can strain the budget. Improper practices can also be problematic, so a loan may be required if funds are not set aside for certain expenses.

The loan can be beneficial for much-needed capital improvements or upgrades that can help increase the resident's satisfaction and the property's value.

A few examples that would be approved include:

  • Play and gathering areas for resident children and families
  • Clubhouses that can be utilized for gatherings, workout areas, or an extra source of income by renting them to outside parties
  • Landscaping enhancements that will update the aesthetics of the property
  • Adding in energy-efficient upgrades, including solar panels, energy-efficient appliances, and windows

In addition, because the funds come right away, this can allow any funding that's been reserved to stay available for special circumstances.

What Are the Steps to Apply for an HOA Loan?

To qualify there for an HOA loan, there can be certain documents required, and in some cases, there may be a vote from the other members to approve the decision.

There are a few pieces of information that you will need to have to move forward with an application, and depending on the company you choose, some examples may be:

  • How many housing units are there?
  • How much are the monthly assessments?
  • How many units are occupied?

Once approved, the loan will have a set amount of time to pay back the total, so it is essential to ensure that budgeting is in place for the payments.

HOA Loan Documents

Several loan documents need to be considered, and it is recommended to look over your association's governing documents to help understand specific requirements regarding HOA loans within the community.

These are in place to help with safety, efficiency, and structure to help regulate how the community functions and will help the associate understand their regulations regarding HOA loans.

Any documentation received from the lender will typically have covenants inside them. The covenants outline actions taken if parts of the loan are not fulfilled.

You will also need to be sure that you have any final items for the bank and have a clear statement of where the funds will go after the loan is closed.

How Long Does It Take to Get an HOA Loan?

The loan process will take anywhere from one to six months and is going to be dependent on various factors, including:

  • If the governing documents require membership approval for the loan
  • If a special assessment is needed
  • The lender may also need membership approval


The lender will also have requirements that need to be completed, including understanding specific information about the association, like the cash flow and if there are delinquencies.

Additionally, the financing requested and type of improvement will also affect the timeline because the larger or more elaborate the project, the more details need to be considered in the contract.

HOA Capital: Precision Through Experience

When it comes to applying for an HOA loan, it is imperative that you have a company that understands the logistics of offering HOA lending to create a streamlined process for you.

HOA Capital works hard to offer solutions for our clients that provide an educational experience and HOA loan options to meet our client's needs. We pride ourselves on serving the Eden Prairie area and would love to help you with a free consultation.

If you would like to set up an appointment or have any questions, please give us a call at 952-836-9593, or contact us online today.

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