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. Unlike conventional loans, which are based on the borrower's credit and income, hard money loans are based primarily on the value of the collateral property. This makes them faster to obtain but more expensive than traditional financing. Hard money loans are typically used by real estate investors for fix-and-flip projects, bridge financing, or properties that don't qualify for conventional loans.

Question 2

What LTV do hard money lenders offer?

Accepted Answer

Hard money lenders typically offer 65 to 75% LTV (loan-to-value) for residential investment properties and 60 to 70% LTV for commercial properties. The LTV is based on the current property value or the purchase price, whichever is lower. Some lenders may use ARV (after-repair value) for fix-and-flip projects, capping the loan at 70% of ARV.

Question 3

What credit score is needed for a hard money loan?

Accepted Answer

Most hard money lenders require a minimum credit score of 550 to 620, though some have no minimum credit score requirement. Because hard money loans are asset-based, the credit score is less important than the property value, the borrower's equity, and the exit strategy. However, a higher credit score may result in better rates and terms.

Question 4

How fast can a hard money loan close?

Accepted Answer

Hard money loans can close in as little as 3 to 7 days. Because the underwriting focuses on the property value rather than the borrower's income documentation, the process is much faster than conventional financing. The main factors affecting closing speed are the property inspection and title work.

Question 5

What are typical interest rates and fees for hard money loans?

Accepted Answer

Hard money loan interest rates typically range from 10% to 15%, with origination fees of 1 to 3 points (1 to 3% of the loan amount). Some lenders also charge processing fees, draw fees, or prepayment penalties. While these costs are higher than conventional financing, hard money loans provide speed and flexibility that conventional lenders cannot match.

Question 6

Can I get a hard money loan with bad credit or a past bankruptcy?

Accepted Answer

Yes. Many hard money lenders will work with borrowers who have bad credit, past bankruptcies, or foreclosures, as long as the property has sufficient equity and the borrower has a clear exit strategy. The property is the primary collateral, so the borrower's credit history is less critical than in conventional lending.

Hard Money Loans

Typical Loan Parameters

Why Choose Hard Money?

Close in 5 to 10 Days

Asset-Based Underwriting

Minimal Documentation

Flexible Exit Strategies

Works for Unusual Properties

Bridge to Better Financing

Frequently Asked Questions

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