diff --git a/source/_docs/authentication/providers.markdown b/source/_docs/authentication/providers.markdown
index 728ecb58b2d..8da14db4aaa 100644
--- a/source/_docs/authentication/providers.markdown
+++ b/source/_docs/authentication/providers.markdown
@@ -30,6 +30,10 @@ To make the transition from API password to authentication system easier, we've
 Home Assistant automatically configures the standard auth providers and you **do not** need to specify `auth_providers` in your `configuration.yaml` file. Specifying `auth_providers` in your configuration will disable all auth providers that are not listed and can reduce your security or create difficulties logging in.
 </p>
 
+<p class='note warning'>
+[Issue 16441](https://github.com/home-assistant/home-assistant/issues/16441): the legacy API password auth provider won't be automatically configured if your API password is located in a package. This is because Home Assistant processes the `auth_provider` during the `core` section loading, which is earlier than the `packages` processing.
+</p>
+
 Authentication providers are configured in your `configuration.yaml` under the `homeassistant:` block:
 
 ```yaml