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HOA loan vs. mortgage: Get clarity and make informed decisions. Explore the differences in this guide from HOA Loan Services.
Written by
Larry Kirschner
Published on
13
Mar
2023
Link has been copied to clipboard.
Community Association board members come from all walks of life. You might be a teacher, a veteran, a retired welder, or a truck driver. If your board is one of the lucky ones, you might have a member that has a background in finance. But even in those cases, getting an HOA loan for a capital improvement project, or an emergency repair or even to help your community stay operational is often far enough out of every board member's experience that it can be daunting.
However, there is one thing all HOA and Condo board members have in common - they are homeowners. And as such, all board members either have, or have had in the past, a home mortgage. For many homeowners, the mortgage is the biggest loan they have experience with, and so it makes perfect sense when seeking an HOA loan that you might compare it to your mortgage to help you make sense of it.
An HOA loan shares some similarities with a mortgage. Like a mortgage, an HOA loan is a debt the community takes on. It carries interest over a term, and the HOA will need to be prepared to pay it back. However, if you equate your HOA loan to your mortgage, you are likely going to miss out on some key differentiators:
As with any decision your board makes, you need to start by reading the governing documents. Most community associations have provisions laid out for seeking outside funding. Usually, you will need member approval, or at least notify members prior to taking on a community association loan. Don’t wait until your need for the funds is desperate, as it may take time to get member approval!
While HOA loan is a catch-all term that has been adapted to encompass several types of HOA financing, there are several different types of HOA financing available to associations.
Unlike a mortgage, where the property itself is the guarantee for your loan, in an HOA loan, the future income of the community (monthly assessments) are what is typically used for collateral on your loan. That means the lender could collect assessments directly from your homeowners if your association fails to pay.
Unlike a special assessment, where the association charges a lump sum to an owner, an HOA loan is paid back over the term of the loan. This means that even if an existing owner sells their home and a new owner takes over the payment of the monthly assessments, the new owner still has to pay the additional amount to cover the loan payments.
HOA and condo association loans are not as easy to secure, typically because they don't have a credit history or scoring system. However, lenders still consider certain factors when making these types of loans.
If your association is seeking financing, don’t make the mistake of treating an HOA loan like a mortgage. HOA Loan Services specializes in helping community associations procure loans. As an HOA loan broker, we can help your board of directors navigate the intricacies of securing financing to ensure the financial health of your community. Contact us today to get started.
Our team is here to help. Reach out to one of our specialists today and we will be happy to help you walk through the process of obtaining an HOA loan for your community.
Get StartedHOA loan rates in August 2026 sit in the 6.40 to 7.05 percent range, driven by a 10-Year Treasury holding between 4.20 and 4.35 percent and lender spreads of 220 to 270 basis points. The July FOMC held rates steady, and Jackson Hole speeches later in August could reshape the yield curve. This rate watch covers the specific numbers, the context that matters for HOA lending (not the Fed narrative), and three scenarios for boards at different stages.
HOA loan rates July 2026 sit modestly below where they did in June. The 10-Year Treasury anchored near 4.30%, lender spreads held in the 220 to 270 basis-point range, and implied HOA loan rates landed at 6.50% to 7.00%. The June FOMC held steady. The July Treasury refunding announcement signaled longer-end issuance on the lighter side. This post translates those movements into board-level scenarios: planning a Q4 project, holding a loan above 8.25%, and weighing a five-year balloon refinance.
Larry Kirschner on what 17 years of HOA lending revealed about reserve studies. The strongest reserve studies are not the most expensive ones. They are the ones whose assumptions match reality.
HOA loan rates in June 2026 are neutral-to-favorable for new applications with a refinance window opening for loans originated above 8.50%. The 10-Year Treasury sits near 4.35%, down roughly 15 bps from May, with typical lender spreads of 225 to 275 basis points.
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