Who this is for
- Fix-and-flip investors needing fast closings
- Buyers of distressed properties conventional lenders reject
- Auction and foreclosure buyers
- Borrowers bridging to a sale or refinance
Typical Choosing a Hard Money Lender requirements
| Vetting 1 | Proof of recent closings: ask for funded deal references you can call |
|---|---|
| Vetting 2 | Capital source: own balance sheet, credit line, or brokering to someone else? |
| Vetting 3 | NMLS license status where your state requires it |
| Key question 1 | How do draws work: inspection timing, fees per draw, turnaround? |
| Key question 2 | What are extension terms and costs if the project runs long? |
| Key question 3 | What fees are due when: application, commitment, closing? |
| Timeline | Often 7–14 days; the lender’s funding capacity is the real constraint |
Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.
How it works
- Verify the license: check NMLS status and any state-specific private-lender requirements.
- Call two or three borrower references from funded deals in the last year.
- Read the term sheet completely: rate, points, draw fees, extension terms, default interest.
- Confirm draw mechanics before you need them: inspection scheduling, per-draw fees, funding speed.
- Never pay significant upfront fees before a signed term sheet; appraisal and legitimate processing fees excepted.
Try the Fix and Flip Profit Calculator
Pros and cons
Advantages
- Established local lender: fast decisions, flexible on structure, relationship value over time
- National hard money lender: standardized process, larger capital base
Trade-offs
- Unverified lender: the worst outcome is a failed closing on a contracted deal
- Brokered hard money: extra layer of fees and communication
Documents you’ll need
- Have ready when shopping: property details and comps, scope of work and budget, exit strategy, down payment proof, entity documents, track record summary
Choosing a Hard Money Lender FAQ
How do I know a hard money lender is legitimate?
Verifiable funded closings, borrower references you can call, NMLS licensing where required, and a term sheet before any meaningful fee. Legitimate lenders fund deals; scammers collect fees.
Should I worry about upfront fees?
Small appraisal or processing fees are normal. Large upfront “commitment” or “due diligence” fees before a signed term sheet are the classic hard money scam pattern.
What should the term sheet include?
Loan amount, rate, points, term, extension options and costs, draw schedule and fees, prepayment terms, default rate, and every fee itemized.
How fast can hard money really close?
Seven to fourteen days is realistic with a prepared borrower and clear title. Anyone promising 48 hours deserves extra scrutiny.
What happens if my flip runs past the term?
Extension terms decide: some lenders offer 3–6 month extensions for a fee and rate adjustment, others impose steep default interest. Negotiate this before closing, not after.
Red flags when choosing a hard money lender?
Upfront fees before a term sheet, no verifiable closings, pressure to sign quickly, rates or leverage far better than the market with no catch explained, or no physical presence or license.
What do hard money lenders charge compared to banks?
Expect rates roughly 8-12% plus 1-3 points in the current market, versus around 7% on conventional investor loans. The premium buys speed and flexibility, not cheap money. Anyone quoting bank-like rates on hard money is likely baiting you.
Can hard money lenders fund the purchase and rehab?
Yes, that is the standard structure: a purchase amount plus a rehab holdback released in draws. Typical leverage is 65-75% of after-repair value. The draw schedule and inspection fees are where the details matter, read them before signing.
What is a typical hard money term?
Usually 6-18 months, interest-only, with a balloon at the end. The loan is designed to be exited via sale or refinance. Match the term to your realistic project timeline plus buffer; extensions exist but they cost.
How Choosing a Hard Money Lender compares
| Choosing a Hard Money Lender | Hard Money Loans | Fix and Flip Loans | Bridge Loans | |
|---|---|---|---|---|
| Best for | Fix-and-flip investors needing fast closings | Auction, foreclosure and off-market deals that need to close in days | Buying distressed or dated properties to renovate and sell | Buying before a sale or 1031 closes |
| Down payment | , | , | , | , |
| Credit | , | Flexible; the property drives approval | Typically 620–680 | , |
| Income docs | , | , | , | , |
Typical ranges, your Loan Estimate or term sheet confirms actual terms.
Coming soon: a 2-minute walkthrough from our loan team.
Related programs
Hard Money Loans
A hard money loan is a short-term investment-property loan from a private lender that approves mainly on the property’s value and the deal, not your income or credit history.
Fix and Flip Loans
A fix and flip loan is short-term (usually 12–18 months), interest-only financing that covers most of a distressed property’s purchase price and up to 100% of renovation costs, repaid when you sell or refinance.
Bridge Loans
A bridge loan is short-term (usually 6–24 months) investor financing secured by real estate that “bridges” you from a purchase to a sale or long-term refinance.