Buying a condo should feel exciting, not stressful. Yet many buyers discover late in the process that condo loans live or die by HOA documents, reserve strength, and new California requirements like SB 326. If you understand what lenders look for, you can move faster, negotiate smarter, and avoid surprises.
This guide breaks down the must-have HOA documents, how reserves and special assessments affect underwriting, and what SB 326 means for condos in the Sherman Oaks area of San Jose. You’ll also get a practical checklist and timeline you can use right now. Let’s dive in.
Why condo projects drive approval
When you buy a condo, the lender approves both you and the project. Even with strong personal finances, a project-level issue can slow or block a loan program. That is why lenders review the building’s budget, reserves, insurance, litigation, and rules before giving a green light.
For many programs, including Fannie Mae, Freddie Mac, FHA, and VA, project eligibility is a gating factor. If a project does not meet the guide, you may need a different program or a portfolio/jumbo option with stricter terms. Expect more scrutiny if there are pending repairs, large assessments, or litigation.
The HOA documents lenders expect
Gathering the right documents early is the fastest way to keep your loan on track. Most lenders ask for:
- CC&Rs, bylaws, articles of incorporation, and recorded amendments
- Recorded condo plan or plat map
- Current operating budget and year-to-date financials
- Current balance sheet showing operating and reserve account balances
- Most recent reserve study and any funding plan
- Three years of financial statements (CPA-prepared or internal)
- Assessment schedule and any notices of special assessments
- Delinquency report (amount and percent delinquent)
- Master insurance declarations, plus fidelity and directors/officers coverage
- Estoppel certificate (current)
- HOA questionnaire (lender-specific)
- Minutes from the past 12–24 months of board meetings
- Litigation disclosure or attorney letter
- Owner-occupancy roster and any single-entity ownership detail
Budgets, reserves, and assessments
Lenders want to see that the association can handle routine upkeep and big-ticket repairs. They review reserves, the current budget, and any planned projects. A recent, credible reserve study strengthens the file because it shows what the HOA expects to replace and how it plans to fund it.
Special assessments are a common friction point. If an assessment is large or just approved, a lender may require it to be paid before closing or documented in a binding plan. High delinquency rates, often flagged when more than roughly 10 to 15 percent of assessments are delinquent, can also trigger conditions. When in doubt, assume the underwriter will ask for more detail.
SB 326 in California: what to know
California’s SB 326 focuses on reserve planning, inspections, and transparency for condo associations. The practical effect for buyers and lenders is better information about building components, reserve adequacy, and near-term capital needs.
If an SB 326-related inspection or reserve report identifies deferred maintenance or urgent work without a funding source, expect follow-up from underwriting. In some cases, a lender may ask for escrows at closing, additional documentation, or a different loan program. If a project’s documentation is current and clear, approvals often move faster and with less friction.
Note: SB 326 implementation details, unit-count triggers, and timing are set by California statute and related civil code. Always rely on the current statutory text and program guides when making final decisions.
Local factors in Sherman Oaks (San Jose)
Many Santa Clara County condo communities were built between the 1960s and 1980s. Life-cycle work such as roofs, siding, decks, plumbing, and elevators can lead to significant projects and special assessments. In the Bay Area, construction and labor costs are high, so older reserve studies may understate today’s bids.
Seismic considerations and local permitting also matter. City-required repairs, soft-story work, or open permits can add cost and time, and lenders will want anything material documented. Ask the HOA and management company about active city notices, upcoming projects, and how reserves will support the work.
How to streamline your loan approval
- Start early. Request the HOA package the day your offer is accepted. Do not wait for the lender to ask.
- Send a clean packet. Include the full reserve study, budget, balance sheet, insurance declarations, minutes, and any assessment notices.
- Flag SB 326 items. If inspection or reserve reports exist, put them at the top of the file.
- Clarify projects and funding. If major work is planned, add board resolutions, bids, and the funding plan.
- Coordinate with escrow. Confirm whether any assessments must be paid at closing and how they will be handled.
Common red flags for lenders
- No current reserve study or one calling for major immediate spend with no funding plan
- Very low reserve balances relative to recommendations
- Active construction-defect litigation or other suits that threaten financial stability
- High assessment delinquencies, often flagged when rates are above roughly 10 to 15 percent
- Large or recent special assessments without a clear collection plan
- Inadequate master insurance or large deductibles/coverage gaps
- Low owner-occupancy or high investor concentration, subject to program rules
- Significant commercial or transient rental components within the project
Workarounds when the HOA has issues
If the project has deficiencies, some lenders or programs may consider remedies:
- Escrow holdbacks or repair escrows at closing
- Paying off known assessments at or before closing
- Binding repayment plans for assessments
- Supplemental reserve funding requirements in rare cases
- Lender or agency exceptions or direct project approvals, which can be time-consuming
- Portfolio or jumbo financing when agency programs will not accept the project
Quick condo loan checklist
Use this list to organize your approval packet for a Sherman Oaks (San Jose) condo:
- CC&Rs, bylaws, and all amendments
- Recorded condo plan or legal description
- Current budget and year-to-date financials
- Balance sheet with operating and reserve balances
- Most recent reserve study and funding plan; prior reserve studies if available
- Master insurance declarations; fidelity and D&O coverage
- Estoppel certificate (current)
- HOA contact and management company details
- Lender-specific HOA questionnaire
- Minutes from the last 12 months (or up to 24 months)
- Litigation disclosure or attorney’s letter
- Owner-occupancy roster; note any single-entity ownership
- Delinquency report and aging schedule
- Notices of any proposed or approved special assessments
- Contracts or bids for capital projects
- Any SB 326 inspection or reserve disclosure documents
- Local permit or code compliance records for active projects
Suggested timeline
- Week 0 to 1: Request full HOA package and authorization for the lender to contact management. Upload core docs as they arrive.
- Week 1 to 2: Deliver reserve study, budget, insurance, estoppel, minutes, and litigation statement. Flag any assessments.
- Week 2 to 3: Lender conducts project review and issues conditions. Respond quickly with clarifications and missing items.
- Week 3 to 6: Resolve remaining conditions. If there are project-level issues, coordinate attorney letters, funding plans, or escrow arrangements.
The bottom line for buyers
Strong HOA documentation and a clear reserve picture give you leverage and peace of mind. In the Sherman Oaks area of San Jose, where many associations face aging components and higher construction costs, having a current reserve study and SB 326-related reports can make all the difference.
If you want a focused, low-drama path to approval, align your offer timeline with the condo review process. Get the documents early, anticipate lender questions, and keep communication open between your agent, lender, and HOA.
Ready to talk strategy for your specific condo search and loan plan? Let’s schedule a calm, confidential consult with Unknown Company.
FAQs
What condo HOA documents do lenders need for a loan in San Jose?
- Most lenders ask for CC&Rs, bylaws, budget, balance sheet, reserve study, insurance declarations, minutes, estoppel, litigation disclosure, a lender-specific questionnaire, and occupancy data.
How do special assessments affect my condo loan approval?
- Large or recent assessments often must be paid at or before closing or documented in a binding plan; they can change your debt picture and underwriting conditions.
Why does the reserve study matter so much for condo underwriting?
- A current reserve study shows forecasted repairs and funding; it helps lenders judge if the HOA can handle near-term work without destabilizing the budget.
What is SB 326 and why should buyers care?
- SB 326 is a California framework for inspection and reserve transparency in condo associations; it can surface deferred maintenance that impacts loan approvals and buyer confidence.
Are FHA and VA loans possible for Sherman Oaks (San Jose) condos?
- Yes, but the condo project must meet each agency’s approval rules; unresolved litigation, weak reserves, or other issues can block program eligibility.
What local risks should I expect in Santa Clara County condo projects?
- Many communities face aging building components, higher Bay Area construction costs, seismic considerations, and potential city-driven repairs, all of which lenders review closely.
