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What Are Hard Money Lenders?
A hard money loan is typically used for real estate investments or to finance the maintenance and sale of an investment property. Hard money loans are also typically referred to as short-term bridging loans for a real estate transaction.
But unlike traditional personal loans, you can't go to a typical lender for a hard money loan.
You have to get these from hard money lenders that specialize in hard money loans. These loans are different in that the funding time is shorter and the fact that they are given by individuals, not banks.
Hard money lenders consider the value of the property rather than your creditworthiness, making these loans riskier.
Requirements for Hard Money Loans
Most hard money lenders have their own requirements but there are a few things that they typically require:
They need to know about your specific property and the project. This may include an appraisal as well as your specific plans with the property.
Some hard money lenders may also ask about your property flipping experience. Lenders do work with first-time flippers but there are lenders that only work with experienced property rehabilitation experts.
In terms of finances, some hard money lenders have income requirements or liquid asset requirements. Most lenders will check your credit although there isn't a specific credit score requirement.
Finally, some lenders may require you to have a business (typically an LLC) to be funded as they don't fund individual buyers. This means you may also need a business bank account.
Our Top Hard Money Lenders
Kiavi
Kiavi offers very competitive rates starting at just 9%. It does not require borrowers to be experienced flippers and funds can be made available in as little as 10 days.
| Interest rates | 9% |
| Loan amount | Up to $2 million |
| Loan term | 12 - 24 months |
| Down payment | None |
| Repayment method | Interest only, with balloon |
| Loan-to-Value (LTV), Loan-to-Cost (LTC) & After Repair Value (ARV) | 90% LTV, 75% ARV |
| Fees | 1.5% - 2% of the loan amount |
| Time to funding | 10 days |
| Minimum credit score | 660 |
| Experience required | A past mortgage |
| Property types | Single-family homes, attached and detached PUDs, 2-4 unit rentals |
With Kiavi you can borrow up to $2 million with up to 24 months of repayments. They offer up to 90% LTV and 75% ARV.
Flip Funding
Flip Funding offers borrowers up to $50 million and interest rates start at 9.99%. No prior flipping experience is required and repayments are available for up to 36 months.
| Interest rates | From 9.99% |
| Loan amount | Up to $50 million |
| Loan term | 12 - 36 months |
| Down payment | 10% |
| Repayment method | Interest only, with balloon |
| Loan-to-Value (LTV), Loan-to-Cost (LTC) & After Repair Value (ARV) | Up to 90% LTV, 70% ARV, 85% LTC |
| Fees | 2% - 5% of the loan amount |
| Time to funding | 10 days |
| Minimum credit score | 650 |
| Experience required | None |
| Property types | Single-family, multi-family, mixed-use |
Funding is available within 10 days and they offer multiple loan types, including multifamily loans, fix and flip loans, and bridge loans.
Groundfloor
Groundfloor has low interest rates starting at 6.5%. They offer 80 to 100% of LTC and 75% of ARV but require a minimum credit score of 600. There is no prepayment penalty.
| Interest rates | From 6.5% |
| Loan amount | Up to $1 million |
| Loan term | 12 months |
| Down payment | N/A |
| Repayment method | Interest only, with balloon |
| Loan-to-Value (LTV), Loan-to-Cost (LTC) & After Repair Value (ARV) | Up to 100% LTV, 75% ARV |
| Fees | 1.5% - 2% of the loan amount |
| Time to funding | 15 days |
| Minimum credit score | 660 |
| Experience required | None |
| Property types | New construction, condo, townhome, single-family, multi-units up to 4 |
The maximum loan amount is $1 million and they offer loans for various property types: new construction, condo, townhome, single-family, multi-units up to 4.
Residential Capital Partners
With Residential Capital Partners you can benefit from no money down, with 100% financing up to 70% of ARV.
| Interest rates | 10% |
| Loan amount | Up to $1.25 million |
| Loan term | 9 months |
| Down payment | None |
| Repayment method | Interest only, with balloon |
| Loan-to-Value (LTV), Loan-to-Cost (LTC) & After Repair Value (ARV) | 100% LTV, 70% ARV |
| Fees | Up to 3% |
| Time to funding | 14 days |
| Minimum credit score | None |
| Experience required | None |
| Property types |
Loans are available from $75,000 to $1.25 million and an online application takes less than 15 minutes. Approvals are done within two business days and they offer fix and flip loans as well as bridge loans and rental loans.
CoreVest
CoreVest is ideal for borrowers with low credit scores. They offer rates starting at 8% with loans up to $50 million. Their loan terms range from six to 24 months and they offer up to 85% LTC.
| Interest rates | 8% |
| Loan amount | Up to $50 million |
| Loan term | - 24 months |
| Down payment | None |
| Repayment method | Interest only, with balloon |
| Loan-to-Value (LTV), Loan-to-Cost (LTC) & After Repair Value (ARV) | 85% LTC |
| Fees | 2% - 7% of the loan amount |
| Time to funding | 21 days |
| Minimum credit score | 660 |
| Experience required | Some flipping experience |
| Property types | Single-family homes, attached and detached PUDs, 2-4 unit rentals |
With CoreVest you can get funding within 21 days and there is no minimum credit score required. However, some flipping experience is required.
Why Compare Hard Money Lenders with Financer.com
What Fees To Expect
Commercial hard money loans typically come with origination fees which are a percentage of the loan amount. There may also be closing fees to hard money financing like any other real estate loan.
This can include insurance fees, title fees, and appraisal fees.
Some hard money lenders charge an early payment penalty - be careful of these. Hard money loans come with higher interest rates because they are designed to be repaid ASAP after finishing the project.
Finding the Best Hard Money Lender
It's important to find the right hard money lender to suit your specific needs. Look at these factors:
- Loan amount
- Interest rate
- Down payment
- Prepayment penalties
- Minimum time to closing
- Loan-to-value (LTV) and after repair value (ARV) percentages
Pros and Cons of Hard Money Lenders
| Pros | Cons |
|---|---|
| ✅ Fast access to your money - typically within 10 days | ❌ If you default on the loan you lose collateral |
| ✅ Short-term loans available - usually 24 months or less | ❌ High interest rates |
| ✅ Some lenders require no minimum credit score | ❌ Some owner-occupied residences may not qualify for funding |
One of the benefits of a hard money loan is that you may get quick access to funding, which is ideal if you're looking for fast funding to flip a property.
Just keep in mind that some lenders may ask higher interest rates and some will have upfront fees as a requirement.
It's best to compare hard money lenders to make sure you get a loan that works for you.
Alternatives To a Hard Money Loan
The fees for hard money loans tend to be on the high side, which is why it's worth considering a few alternatives to a hard money loan.
Here are a few alternatives you can consider:
- Commercial real estate (CRE) loans: A CRE loan typically offer more competitive fees and interest rates and gives you the chase you need to buy and renovate a property.
- Investment property financing: These loans can be used to buy and sell properties for profit or to buy properties with the aim of renting them out for additional income. It can be more challenging to qualify for investment property financing but the rates are typically lower than hard money loans.
- A business line of credit: You'll only pay interest on the money you use. Lenders like Lendio offer a line of credit to businesses of up to $500,000.
Read more: Where to get small business loans
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Find Your Hard Money Lender at Financer.com
Financer.com helps you compare the best hard money lenders and get the lowest loan rates for hard money loans.
We look for lenders that offer full transparency and have a long track record of successful lending and satisfied customers.
We are always improving our comparisons, and you can use our free loan comparison tool to find the right loan for your needs.
Hard Money Lenders - FAQs
What credit score is needed for a hard money loan?
There is no credit score requirement as borrowers typically look at your collateral and property value.
Is hard money lending a good investment?
Hard money loans are best-suited for wealthy investors who need financing quickly without the red tape of banks.
How do I know if my hard money lender is legit?
Be aware of lenders that offer a very low rate. Hard money lenders typically ask for collateral so if they don't it's a red flag. Unclear terms and errors in application forms can also be reason to take caution.
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