Financing Homes With HOAs

When you purchase a home that includes a homeowners association, the integrity of the HOA has to be confirmed as part of your loan underwriting process.  This requires getting all of the HOA documentation from the management company including:

• Articles of Incorporation
• Bylaws
• Recent financial information including an up-to-date Reserve Study
• Minutes of recent HOA board meetings
• Evidence of insurance

We also have to get a certification from the management company regarding the number of homes that are owner-occupied (no more than 50% of the units can be occupied by renters), the number of HOA members that are more than 30 days late on paying dues (no more than 15% of the units can be 30 days late), pending litigation, the current HOA dues, and several other key items. 

If you are financing the home with an FHA loan the entire project must be FHA-approved.  Many HOAs are NOT FHA-approved and it is not possible to do an FHA "spot approval" for an individual unit (you can do spot approval for a conventional loan).  

You can confirm project is FHA-approved at https://entp.hud.gov/idapp/html/condlook.cfm.

The key point to keep in mind is underwriting home loans where there is an HOA can take longer.  It is a good idea to get the HOA contact information as soon as possible so that we can order the required documentation as soon as possible.  If you have any questions about financing condo / town home purchases, just give me a call (562) 696-3200.