1. Asset-Based Approval
Approval is based on the property’s value, often its after-repair value (ARV).
Credit score and income matter less than in traditional loans.
2. Short-Term Loan
Typically 6 to 24 months.
Designed for fix-and-flip, bridge financing, or short-term holds.
3. High Interest Rates
Rates are higher because lenders take on more risk and offer fast approvals.
Typical range: 8%–15% (varies by market and lender).
4. Higher Fees
Expect origination points, underwriting fees, and other lender charges.
Points typically range 1–4+ depending on the deal.
5. Fast Funding
Many hard money lenders can close in 3–10 days, much faster than banks.
6. Lower Documentation Requirements
Less emphasis on tax returns, W-2s, or employment history.
The deal must make financial sense.
Speed
When competing with cash buyers or distressed sellers, fast closing is crucial.
Property Condition Doesn’t Matter
Hard money lenders often fund properties that:
Need major repairs
Have code issues
Would not qualify for conventional or FHA financing
Leverage for Flips
Investors can finance:
Purchase price
Renovation costs (construction draw funds)
Sometimes a portion of closing costs
Flexible Terms
Private lenders can structure deals around:
ARV-based lending
Cross-collateralization
Interest-only payments
Loan-To-Value (LTV)
Usually 70%–90% of purchase price, or
65%–75% of After-Repair Value (ARV)
Repayment
Often interest-only monthly payments, with balloon payment at the end.
Exit Strategy Needed
Investors must show a plan such as:
Fix-and-flip sale
Cash-out refinance
Rental stabilization then refinance
Extremely fast approval and closing
Accepts distressed properties
Flexible underwriting
Often allows funding of rehab costs
Useful for short-term investment strategies
Higher interest rates and fees
Short payback period
Requires strong exit strategy
Not ideal for long-term holds unless refinancing
Whether you’re buying your first home or upgrading to your next chapter, I’m here to guide you every step of the way.
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