Question 1

What is a hard money loan?

Accepted Answer

A hard money loan is a short-term, asset-based loan secured by real estate. These loans are approved based on the property's value rather than the borrower's creditworthiness, making them ideal for fix-and-flip projects, bridge financing, and time-sensitive deals.

Question 2

How fast can I get a hard money loan?

Accepted Answer

Hard money loans can close in as little as 3-7 business days. This speed makes them perfect for competitive real estate markets where quick closings give you an advantage over other buyers.

Question 3

What are typical hard money loan rates?

Accepted Answer

Hard money loan rates typically range from 9-14% depending on the deal structure, LTV ratio, borrower experience, and property type. While higher than traditional loans, the fast approval and flexible terms often make them worthwhile for short-term projects.

Question 4

What LTV can I get with hard money?

Accepted Answer

Hard money loans typically offer up to 90% LTV (loan-to-value) for purchases and up to 75% LTV for cash-out refinances. Some lenders also offer up to 100% of purchase plus rehab costs for experienced flippers.

Question 5

What is the typical origination fee for hard money loans?

Accepted Answer

Origination fees (points) typically range from 1.5-4 points depending on the lender, loan amount, and deal complexity. For example, 2 points on a $200,000 loan would be $4,000 due at closing.

Question 6

Can I get hard money for a property with title issues?

Accepted Answer

Potentially, but it depends on the type of issue. Some hard money lenders work with properties that have minor title clouds that can be cleared. Major issues like tax liens or judgments typically need to be resolved before closing.

Question 7

Do hard money lenders require appraisals?

Accepted Answer

Most hard money lenders require either a full appraisal or a BPO (Broker Price Opinion). Some lenders for smaller loans may use desktop valuations or drive-by appraisals to speed up the process.

Question 8

Can I use hard money for commercial properties?

Accepted Answer

Yes! Hard money loans are available for retail, office, industrial, mixed-use, and other commercial properties. Commercial hard money typically requires slightly higher down payments and may have different term structures.

Question 9

What happens if I cannot pay off my hard money loan on time?

Accepted Answer

Most hard money lenders offer extension options (typically 3-6 months at a time) for an additional fee (usually 1-2 points). It's important to communicate with your lender early if you anticipate needing an extension.

Question 10

What credit score do I need for hard money?

Accepted Answer

Hard money lenders are more flexible than banks, with many accepting scores as low as 550-600. The property value and your equity position matter more than your credit score. Some lenders may not check credit at all.

Question 11

When should I use hard money instead of a bank loan?

Accepted Answer

Use hard money when: you need to close quickly (under 30 days), the property doesn't qualify for bank financing (needs repairs), you're doing a fix and flip, or you cannot document income traditionally. Banks are better for long-term holds with stable properties.

Question 12

Are hard money loans interest-only?

Accepted Answer

Most hard money loans are interest-only with a balloon payment at the end of the term. This keeps monthly payments lower during your project. Some lenders offer deferred interest where payments are added to the loan balance.

Hard Money Loans FAQ

Frequently Asked Questions

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Hard Money Loans FAQ

Frequently Asked Questions

1What is a hard money loan?

2How fast can I get a hard money loan?

3What are typical hard money loan rates?

4What LTV can I get with hard money?

5What is the typical origination fee for hard money loans?

6Can I get hard money for a property with title issues?

7Do hard money lenders require appraisals?

8Can I use hard money for commercial properties?

9What happens if I cannot pay off my hard money loan on time?

10What credit score do I need for hard money?

11When should I use hard money instead of a bank loan?

12Are hard money loans interest-only?

Still Have Questions?

Related Financing Programs

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