diff --git a/homeassistant/components/elkm1/__init__.py b/homeassistant/components/elkm1/__init__.py
index 146a9a21fb8..28c75f9c2ea 100644
--- a/homeassistant/components/elkm1/__init__.py
+++ b/homeassistant/components/elkm1/__init__.py
@@ -249,18 +249,11 @@ async def async_setup_entry(hass: HomeAssistant, entry: ConfigEntry):
     for keypad in elk.keypads:  # pylint: disable=no-member
         keypad.add_callback(_element_changed)
 
-    if not await async_wait_for_elk_to_sync(elk, SYNC_TIMEOUT):
-        _LOGGER.error(
-            "Timed out after %d seconds while trying to sync with ElkM1 at %s",
-            SYNC_TIMEOUT,
-            conf[CONF_HOST],
-        )
-        elk.disconnect()
-        raise ConfigEntryNotReady
-
-    if elk.invalid_auth:
-        _LOGGER.error("Authentication failed for ElkM1")
-        return False
+    try:
+        if not await async_wait_for_elk_to_sync(elk, SYNC_TIMEOUT, conf[CONF_HOST]):
+            return False
+    except asyncio.TimeoutError as exc:
+        raise ConfigEntryNotReady from exc
 
     hass.data[DOMAIN][entry.entry_id] = {
         "elk": elk,
@@ -312,16 +305,40 @@ async def async_unload_entry(hass: HomeAssistant, entry: ConfigEntry):
     return unload_ok
 
 
-async def async_wait_for_elk_to_sync(elk, timeout):
-    """Wait until the elk system has finished sync."""
+async def async_wait_for_elk_to_sync(elk, timeout, conf_host):
+    """Wait until the elk has finished sync. Can fail login or timeout."""
+
+    def login_status(succeeded):
+        nonlocal success
+
+        success = succeeded
+        if succeeded:
+            _LOGGER.info("ElkM1 login succeeded.")
+        else:
+            elk.disconnect()
+            _LOGGER.error("ElkM1 login failed; invalid username or password.")
+            event.set()
+
+    def sync_complete():
+        event.set()
+
+    success = True
+    event = asyncio.Event()
+    elk.add_handler("login", login_status)
+    elk.add_handler("sync_complete", sync_complete)
     try:
         with async_timeout.timeout(timeout):
-            await elk.sync_complete()
-            return True
+            await event.wait()
     except asyncio.TimeoutError:
+        _LOGGER.error(
+            "Timed out after %d seconds while trying to sync with ElkM1 at %s",
+            SYNC_TIMEOUT,
+            conf_host,
+        )
         elk.disconnect()
+        raise
 
-    return False
+    return success
 
 
 def _create_elk_services(hass):
diff --git a/homeassistant/components/elkm1/config_flow.py b/homeassistant/components/elkm1/config_flow.py
index 419e4df7552..0248025795b 100644
--- a/homeassistant/components/elkm1/config_flow.py
+++ b/homeassistant/components/elkm1/config_flow.py
@@ -1,4 +1,5 @@
 """Config flow for Elk-M1 Control integration."""
+import asyncio
 import logging
 from urllib.parse import urlparse
 
@@ -65,20 +66,7 @@ async def validate_input(data):
     )
     elk.connect()
 
-    timed_out = False
-    if not await async_wait_for_elk_to_sync(elk, VALIDATE_TIMEOUT):
-        _LOGGER.error(
-            "Timed out after %d seconds while trying to sync with ElkM1 at %s",
-            VALIDATE_TIMEOUT,
-            url,
-        )
-        timed_out = True
-
-    elk.disconnect()
-
-    if timed_out:
-        raise CannotConnect
-    if elk.invalid_auth:
+    if not await async_wait_for_elk_to_sync(elk, VALIDATE_TIMEOUT, url):
         raise InvalidAuth
 
     device_name = data[CONF_PREFIX] if data[CONF_PREFIX] else "ElkM1"
@@ -116,7 +104,7 @@ class ConfigFlow(config_entries.ConfigFlow, domain=DOMAIN):
             try:
                 info = await validate_input(user_input)
 
-            except CannotConnect:
+            except asyncio.TimeoutError:
                 errors["base"] = "cannot_connect"
             except InvalidAuth:
                 errors["base"] = "invalid_auth"
@@ -161,9 +149,5 @@ class ConfigFlow(config_entries.ConfigFlow, domain=DOMAIN):
         return urlparse(url).hostname in existing_hosts
 
 
-class CannotConnect(exceptions.HomeAssistantError):
-    """Error to indicate we cannot connect."""
-
-
 class InvalidAuth(exceptions.HomeAssistantError):
     """Error to indicate there is invalid auth."""
diff --git a/homeassistant/components/elkm1/manifest.json b/homeassistant/components/elkm1/manifest.json
index 0e6fdcfa40c..d7e7e226ea0 100644
--- a/homeassistant/components/elkm1/manifest.json
+++ b/homeassistant/components/elkm1/manifest.json
@@ -2,7 +2,7 @@
   "domain": "elkm1",
   "name": "Elk-M1 Control",
   "documentation": "https://www.home-assistant.io/integrations/elkm1",
-  "requirements": ["elkm1-lib==0.8.4"],
+  "requirements": ["elkm1-lib==0.8.5"],
   "codeowners": ["@gwww", "@bdraco"],
   "config_flow": true
 }
diff --git a/requirements_all.txt b/requirements_all.txt
index 9ed9c4f83f5..49b249edf3f 100644
--- a/requirements_all.txt
+++ b/requirements_all.txt
@@ -535,7 +535,7 @@ elgato==0.2.0
 eliqonline==1.2.2
 
 # homeassistant.components.elkm1
-elkm1-lib==0.8.4
+elkm1-lib==0.8.5
 
 # homeassistant.components.mobile_app
 emoji==0.5.4
diff --git a/requirements_test_all.txt b/requirements_test_all.txt
index fcfb3166f02..163ca96cfa7 100644
--- a/requirements_test_all.txt
+++ b/requirements_test_all.txt
@@ -278,7 +278,7 @@ eebrightbox==0.0.4
 elgato==0.2.0
 
 # homeassistant.components.elkm1
-elkm1-lib==0.8.4
+elkm1-lib==0.8.5
 
 # homeassistant.components.mobile_app
 emoji==0.5.4
diff --git a/tests/components/elkm1/test_config_flow.py b/tests/components/elkm1/test_config_flow.py
index ba58d8cb68c..fdb4c63499c 100644
--- a/tests/components/elkm1/test_config_flow.py
+++ b/tests/components/elkm1/test_config_flow.py
@@ -3,14 +3,24 @@
 from homeassistant import config_entries, setup
 from homeassistant.components.elkm1.const import DOMAIN
 
-from tests.async_mock import AsyncMock, MagicMock, PropertyMock, patch
+from tests.async_mock import MagicMock, patch
 
 
 def mock_elk(invalid_auth=None, sync_complete=None):
     """Mock m1lib Elk."""
+
+    def handler_callbacks(type_, callback):
+        nonlocal invalid_auth, sync_complete
+
+        if type_ == "login":
+            if invalid_auth is not None:
+                callback(not invalid_auth)
+        elif type_ == "sync_complete":
+            if sync_complete:
+                callback()
+
     mocked_elk = MagicMock()
-    type(mocked_elk).invalid_auth = PropertyMock(return_value=invalid_auth)
-    type(mocked_elk).sync_complete = AsyncMock()
+    mocked_elk.add_handler.side_effect = handler_callbacks
     return mocked_elk
 
 
@@ -23,7 +33,7 @@ async def test_form_user_with_secure_elk(hass):
     assert result["type"] == "form"
     assert result["errors"] == {}
 
-    mocked_elk = mock_elk(invalid_auth=False)
+    mocked_elk = mock_elk(invalid_auth=False, sync_complete=True)
 
     with patch(
         "homeassistant.components.elkm1.config_flow.elkm1.Elk",
@@ -70,7 +80,7 @@ async def test_form_user_with_non_secure_elk(hass):
     assert result["type"] == "form"
     assert result["errors"] == {}
 
-    mocked_elk = mock_elk(invalid_auth=False)
+    mocked_elk = mock_elk(invalid_auth=None, sync_complete=True)
 
     with patch(
         "homeassistant.components.elkm1.config_flow.elkm1.Elk",
@@ -115,7 +125,7 @@ async def test_form_user_with_serial_elk(hass):
     assert result["type"] == "form"
     assert result["errors"] == {}
 
-    mocked_elk = mock_elk(invalid_auth=False)
+    mocked_elk = mock_elk(invalid_auth=None, sync_complete=True)
 
     with patch(
         "homeassistant.components.elkm1.config_flow.elkm1.Elk",
@@ -153,19 +163,21 @@ async def test_form_user_with_serial_elk(hass):
 
 async def test_form_cannot_connect(hass):
     """Test we handle cannot connect error."""
+    from asyncio import TimeoutError
+
     result = await hass.config_entries.flow.async_init(
         DOMAIN, context={"source": config_entries.SOURCE_USER}
     )
 
-    mocked_elk = mock_elk(invalid_auth=False)
+    mocked_elk = mock_elk(invalid_auth=None, sync_complete=None)
 
     with patch(
         "homeassistant.components.elkm1.config_flow.elkm1.Elk",
         return_value=mocked_elk,
     ), patch(
-        "homeassistant.components.elkm1.config_flow.async_wait_for_elk_to_sync",
-        return_value=False,
-    ):  # async_wait_for_elk_to_sync is being patched to avoid making the test wait 45s
+        "homeassistant.components.elkm1.async_timeout.timeout",
+        side_effect=TimeoutError,
+    ):
         result2 = await hass.config_entries.flow.async_configure(
             result["flow_id"],
             {
@@ -188,7 +200,7 @@ async def test_form_invalid_auth(hass):
         DOMAIN, context={"source": config_entries.SOURCE_USER}
     )
 
-    mocked_elk = mock_elk(invalid_auth=True)
+    mocked_elk = mock_elk(invalid_auth=True, sync_complete=True)
 
     with patch(
         "homeassistant.components.elkm1.config_flow.elkm1.Elk",
@@ -214,7 +226,7 @@ async def test_form_import(hass):
     """Test we get the form with import source."""
     await setup.async_setup_component(hass, "persistent_notification", {})
 
-    mocked_elk = mock_elk(invalid_auth=False)
+    mocked_elk = mock_elk(invalid_auth=False, sync_complete=True)
     with patch(
         "homeassistant.components.elkm1.config_flow.elkm1.Elk",
         return_value=mocked_elk,