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If you have been on the hunt for a good loan option as an HOA, you may have heard about HOA financing before. To many, this is a vague option that is often skimmed over because it is either not applicable to their situation or doesn’t register as a choice. However, if you or someone you know are a part of an HOA or condo association, HOA loans may be a viable option. According to, there are over 370,000 homeowner associations in the United States, so there are many different credit lines for them to choose from.

What is an HOA loan?

There are loan types for nearly every circumstance and you can find something to fit nearly every requirement. In this case, an HOA loan can help the organization complete projects that would otherwise go uncompleted or may not even happen in the first place. The lines of credit are given to the group as a whole, but the HOA board members are the ones that apply for the loan. Ideally, the organization uses its members’ dues to pay for daily expenses and other projects, but sometimes a loan is needed. In the long run, the association will end up paying back more than was borrowed in the first place due to interest rates much like any other loan.

What to know before applying for an HOA loan

Every HOA is different and has different requirements, meaning that their loan needs are also individualistic. Before applying for this type of loan, there are a couple of different things to know.

An HOA loan is similar to most kinds of business loans. This will help you wrap your mind around the concept. Just as with a personal financing option, banks will need to evaluate the association’s credit risk. Here are some things that financial institutions consider before granting an HOA loan:

  1. The number of defaults the borrower has.
  2. The number of units that are a part of the HOA.
  3. Quantity of units currently occupied.
  4. The terms of paying the loans back.
  5. General experience of the association’s capital planning experience.
  6. Location of the houses or units.

Other important components of an HOA or condo association loan

As with most loans, there are benefits and potential drawbacks depending on the circumstances. An HOA loan can be advantageous because it allows for quicker progress to be made. For instance, if the association is looking to upgrade the units’ recreation area, a loan can make this happen at a quicker rate.

In a time of financial strain, a simple financing option can make all the difference. However, it’s important to keep an eye on the general loan market because it can inform whether now is a good time to ask for a line of credit. Be sure to have an open conversation with your loan officer about the possibilities and ask for a loan at the right time.

It is important to know that, depending on the interest rate of the loan, your HOA members may end up having to pay higher association fees. The average HOA fee, which depends on location, is about $250 according to If the board uses the money wisely, the members will find the higher payment justified. Be open and honest with the people who live in the units throughout the loan process.

Check out The Federal Savings Bank to learn more about your options today.

Subject to credit approval. Terms and conditions may apply. Property insurance is required on all loans secured by property.

This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.