Hoa Financing Basics The Board Level Guide To Funding Big Repairs

Most boards don’t get stuck because they can’t find money. They get stuck because the money shows up as conflict.

A roof replacement turns into a fight about fairness. A spalling concrete repair turns into a debate about timing. An elevator modernization turns into a question nobody wants to answer: “How much will this add per unit, and for how long?”

That’s why hoa financing is less about “getting a loan” and more about building a funding plan owners can understand, support, and live with—without draining reserves to zero or triggering a wave of delinquencies that makes everything harder.

Key Takeaways

• Start with a clear funding gap: scope, timing, and the per-unit impact in plain numbers.
• Compare options using the same yardstick: cash now, monthly cost, and risk to collections and resale.
• Lenders (and buyers’ lenders) care about reserves and delinquencies—good documentation matters.
• Treat the vote and owner messaging like part of the project plan, not an afterthought.

Map the Funding Gap Before You Talk About Financing

Before anyone mentions rates or terms, do one simple thing: translate the project into a board-ready funding gap.

That means tightening four inputs: (1) scope (what’s included and excluded), (2) schedule (when deposits and milestones hit), (3) existing funds (reserves and operating cash that can be used without breaking future plans), and (4) owner impact (how the cost lands per unit). If you don’t have all four, every meeting turns into “maybe” and every bid looks “too expensive.” One practical trick is to build two numbers side by side: the one-time per-unit hit (special assessment math) and the monthly per-unit hit (financing math). Boards often find that owners react better to a monthly number, even when the total cost is higher, because it fits household cash flow.

Reserve funding also has a second job: protecting resale and refinance. Many mortgage and project standards look for evidence that reserves are being funded, often around a 10% budget allocation benchmark. HUD guidance for condominium project approval, for example, references replacement reserve funding at a level representing at least 10% of the budget. That doesn’t mean 10% is always “enough,” but it does mean buyers’ financing can get tighter when reserves are neglected. If you want a quick way to model the monthly impact for owners using the same inputs every time, a simple association payment calculator helps you convert a seven-figure project into a per-unit number you can actually discuss.

Pick the Right Funding Path (And Know Where Each One Breaks)

Boards usually have four realistic paths. The right answer is often a mix, but the order matters.

1) Reserves + gradual dues increases. Lowest borrowing cost, lowest paperwork, and it’s the cleanest story for long-term planning. Where it breaks: urgent life-safety items, major envelope failures, or situations where delaying work increases risk (or increases pricing). It also breaks when “using reserves” really means “emptying reserves,” which often creates the next crisis.

2) Special assessment. Works when the per-unit number is genuinely payable and your owner base can absorb it. Where it breaks: five-figure assessments due quickly, repeat assessments every year, or communities with high fixed-income ownership. This is also where collections and community politics get ugly fast—because a special assessment doesn’t just raise money; it creates a short-term credit event for owners who can’t pay. If you want language and framing that helps boards compare “big check now” versus “smaller payment over time,” this guide on funding projects without large special assessments is useful as a discussion reference in working sessions (not as a pitch deck).

3) Association term loan or line of credit. This is the core of most hoa financing conversations: the association borrows as a corporate entity and repays through future assessments. Where it breaks: weak documentation, high delinquency, unclear project scope, or unrealistic repayment plans that the board won’t actually enforce. Also note the “secondary effect” here: condo projects often get evaluated for buyer mortgage eligibility based on delinquency and reserve behavior. Fannie Mae’s condo review guidance, for instance, calls out reserve funding and delinquency thresholds as items lenders must review in many cases. Even if your association isn’t trying to satisfy every buyer’s lender requirement, protecting unit marketability is a real board responsibility—and financing decisions can either support or strain that.

The board-level test is simple: choose the path that funds the job on schedule while keeping monthly payments collectible. If the repayment plan depends on perfect behavior from every owner, it’s not a plan—it’s a hope.

Run Approval, Underwriting, and Owner Communication Like One Process

Good HOA financing outcomes are boring. They feel boring because the board did the work upfront and the vote wasn’t a surprise.

Start by building a lender-ready package before you solicit terms: current year budget, prior year actuals, balance sheet, reserve study or reserve schedule, delinquency report, insurance summary, governing documents, and a clean project description (scope + timeline + contractor payment schedule). Then add the board’s internal controls: a written resolution authorizing borrowing, clear signing authority, and a plan for how the payment will be collected (regular assessments, a new line item, or a temporary surcharge). When you put this in order early, you avoid the “we’re rushing because the contractor needs a deposit” scramble that leads to bad decisions and bad optics.

Now treat owners as stakeholders, not an obstacle. The goal isn’t to win an argument; it’s to make the decision legible. A useful format is a two-page “owner summary” that answers: what’s failing, what happens if we do nothing, total project cost, the options considered, and the recommended plan with a per-unit monthly number. If you have vocal opposition, don’t debate interest rates in the abstract—bring it back to outcomes: monthly cost, term length, and what happens to reserves if you pay cash. And if you’re in a state with tightening building-safety or reserve requirements, name that reality plainly. Florida’s SB 4-D, for example, created building safety requirements that include inspections and structural reserve study concepts for certain condo buildings. Even boards outside Florida are seeing the ripple effects: more scrutiny, more urgency, and less tolerance for long deferrals.

When owners ask “what does this mean for me?” you want one place that answers common questions without inflaming fears. A straightforward FAQ can reduce meeting time spent on myths and worst-case assumptions; you can point residents to common questions about association financing so board meetings stay focused on your community’s numbers, not generic arguments.

Conclusion

If you can explain the project in one page and the per-unit impact in one sentence, you’re most of the way there—because owners don’t approve financing, they approve a payment plan they believe is fair and realistic.

FAQs

What is HOA financing in plain terms?

HOA financing means the association borrows money to pay for a shared project, then repays it over time through assessments. It’s typically used for large repairs like roofs, concrete, elevators, plumbing, or major code work. The key is that repayment is tied to the association’s budget and collections process—not individual personal loans.

Is a special assessment always cheaper than financing?

Not always. A special assessment can cost less in total interest, but it can cost more in delinquencies, collections, and community disruption if owners can’t pay on schedule. Many boards choose financing when the “cheaper” option is not realistically collectible.

How do boards decide between a loan and a line of credit?

A term loan fits projects with defined scope and a known payment schedule, especially when you want predictable payments. A line of credit can work for phased projects or uncertain timing, but it can invite scope creep if controls aren’t tight. The deciding factor should be how certain the board is about cost, schedule, and cash flow needs.

What documents should we expect to provide to a lender?

Most lenders will ask for budgets, financial statements, delinquency reports, insurance details, governing documents, and a reserve study or reserve plan. They’ll also want the project scope, vendor contract or proposal, and a board resolution authorizing borrowing. Having these ready makes it easier to compare offers without delaying the project.

How should we present the monthly impact to owners?

Show the monthly amount per unit alongside the one-time special assessment equivalent, using the same project cost and unit count. Owners make better decisions when they can compare “$X due in 90 days” versus “$Y per month for Z years.” Keep the math simple, and explain what happens to reserves under each option.

Can an HOA borrow if some owners are delinquent?

Often yes, but the pricing and approval odds depend on how many owners are behind and how long they’ve been behind. High delinquency can force higher payments on the remaining owners, which increases risk further. Boards that tighten collections and update policies before borrowing usually get cleaner terms and fewer surprises.