A residential hard money loan is a short-term, asset-based loan secured by a residential investment property. Investors use it to buy, renovate or reposition single-family and multi-family homes. Approval is based mainly on the property’s value rather than the borrower’s credit history. HardMoney Company never lends on primary residences.
Residential Hard Money Loans at a Glance
| Topic | Answer |
|---|---|
| Best for | Investors buying or renovating residential investment properties |
| Property types | Single-family homes, multi-family residential |
| Loan amount | $150k minimum, no maximum |
| Term | 6–24 months |
| Loan-to-value | Up to 80% |
| Time to close | As little as 7 days |
| Borrowers | Investors and business entities; no owner-occupied homes |
What Are Residential Hard Money Loans?
Residential hard money loans are short-term financing options typically used for real estate investments. These loans are secured by the property itself and are often used by real estate investors looking to purchase, renovate, or flip homes. Unlike traditional mortgages, hard money loans are funded by private lenders or specialized lending companies, like HardMoney Company, not by banks. They offer fast approval and flexible terms, making them a very viable choice for borrowers who need quick financing or who may not qualify for conventional loans due to credit issues or other financial limitations. Read on to see if this style of loan might be a good fit for your investment.
Key Features of Residential Hard Money Loans:
- Collateral-based: The loan is secured by the value of the property, not the borrower’s credit; if your credit score isn’t great, this style of loan still opens up an opportunity for your investment.
- Short-term: Usually ranging from 6 to 24 months.
- Higher interest rates: Due to the increased risk for the lender; something to think about and to discuss w/your HardMoney Company loan company.
- Quick approval: Funding can be available in a matter of days.
Risks and Considerations of Residential Hard Money Loans
- Higher Interest Rates
One of the biggest considerations is the higher interest rates compared to traditional mortgages. Rates for hard money loans typically range from 8% to 15%, making them more expensive over the short term. We help you determine if this consideration is worth the risk. - Short Loan Terms
These loans often have terms of 6 to 24 months, meaning the borrower must repay the loan quickly. If you’re unable to sell or refinance the property within that time, you could face significant financial pressure. We work with you to help you assess your investment options. - High Fees
Hard money loans often come with higher upfront fees, such as origination fees, closing costs, and sometimes even prepayment penalties. These can significantly increase the cost of the loan. - Risk of Foreclosure
Since the loan is secured by the property, failure to make payments or repay the loan within the term can result in foreclosure, with the lender seizing the property as repayment. - Limited to Specific Properties
Hard money loans are typically used for investment properties or distressed properties that need significant repairs. They may not be suitable for those looking to finance a primary residence. - Dependence on Property Value
Lenders focus on the value of the property, so if the real estate market declines or the property’s value does not increase as expected, it could affect your ability to refinance or sell the property at a profit. - Exit Strategy
Before taking a hard money loan, you need a clear exit strategy, such as selling the property, refinancing into a conventional loan, or completing a flip. Without a well-thought-out plan, you could find yourself in a difficult financial position.
When to Use Residential Hard Money Loans
Residential hard money loans are best for:
- Real estate investors looking to flip houses quickly.
- Borrowers needing fast access to cash for urgent property purchases.
- Situations where conventional financing is not an option due to poor credit or property conditions.
However, borrowers should fully understand the costs, risks, and have a solid repayment or exit plan in place to avoid financial pitfalls.
Other Loan Types We Offer
Depending on your plans for the property, one of these loan types may be a better fit:
Helpful Resources
See real loans we have funded on our Recent Deals page, or read what borrowers say in our client testimonials. Want to run the numbers first? Try our hard money loan calculator. Ready to start? Review the steps to pre-qualify or see where we lend.
Related reading:
- Eligibility Requirements for Hard Money Loans
- Hard Money Lending: Understanding the Terms and Conditions
- Common Mistakes to Avoid When Working with a Hard Money Lender
Why HardMoney Company Stands Out
At HardMoney Company, we’re committed to delivering a truly personal experience throughout your entire loan journey. As a family-run business, we focus on cultivating meaningful connections with our clients. Instead of dealing with impersonal, traditional lenders or one-size-fits-all processes, you’ll work directly with knowledgeable professionals who take the time to understand your individual needs and provide clear, step-by-step guidance to aid in making the best decision for your investment. We strive to ensure that the entire experience feels smooth and stress-free.
Our quick, flexible, and transparent financing solutions are tailored for investment properties, making us the experts in the field. From the beginning, we provide full transparency, so there are no surprises when it comes to costs or fees. You’ll always know exactly what to expect, with the support you need to make informed decisions for your real estate ventures.
Contact us today to explore how our residential hard money loans can help you achieve your investment goals. We are your own private banker for real estate backed assets. When the bank says no, we say yes!
Ready to fund your next project? Start your application and a senior member of our team will follow up with next steps.
Frequently Asked Questions (FAQs)
What is a residential hard money loan?
A residential hard money loan is a short-term, asset-based loan secured by a residential investment property. Investors use these loans to buy, renovate or reposition homes they plan to sell or rent. Approval is based mainly on the property’s value and the deal rather than the borrower’s credit history, and loan amounts start at $150,000.
What types of residential properties can I finance?
HardMoney Company finances single-family homes and multi-family residential properties held as investments. Common uses include fix and flip projects, renovations ahead of a rental, and quick purchases that need to close before long-term financing can be arranged. All residential hard money loans are business-purpose only.
Can I use a residential hard money loan to buy a home to live in?
No. HardMoney Company makes business-purpose loans only and never lends on a borrower’s primary residence. Residential hard money loans are for investment properties you plan to renovate, sell or rent. If you’re buying a home to live in, you’d need an owner-occupied mortgage from a consumer lender.
How long are residential hard money loan terms?
Residential hard money loans typically run 6 to 24 months. That gives investors time to complete renovations and then sell the property or refinance into long-term financing. Because the loan is short-term, it helps to plan your exit strategy and project timeline before closing.
How much can I borrow with a residential hard money loan?
HardMoney Company lends up to 80% loan-to-value (LTV), so the loan can cover up to 80% of the property’s value, with the borrower covering the rest through cash or equity. Loan amounts start at $150,000 with no stated maximum. The final amount depends on the property and the overall strength of the transaction.
How fast can a residential hard money loan close?
HardMoney Company can close residential hard money loans in as little as 7 days. That speed helps investors compete with cash buyers and act on time-sensitive listings. Actual timing depends on title work, the property valuation and how quickly the borrower provides documents.
