How to Get a Hard Money Loan

Hard money loans are the fastest way to finance real estate. Learn how to get approved in days, not weeks.

How to Get a Hard Money Loan: Fast Approval Guide

What is a Hard Money Loan?

Hard money loans are short-term, asset-based financing provided by private lenders. Unlike traditional loans that focus on borrower qualifications, hard money loans are approved primarily based on the property's value and potential.

Key characteristics:

• Speed: Close in 5-10 days (vs. 30-60 days conventional)
• Asset-based: Property value matters more than credit
• Short-term: Typically 6-18 month terms
• Higher cost: 10-14%+ interest rates, 2-4 points origination
• Flexible: Fund deals that banks won't touch

Complete guide to hard money loans →

Step 1: Understand the Requirements

Hard money lenders focus on the deal, not the borrower. Requirements are more flexible than traditional loans:

Property Requirements (Most Important)

• Property types: Single-family, 2-4 units, commercial, land
• Condition: Any condition (that's often the point)
• Equity/LTV: Maximum 60-70% of current value or 70-75% of ARV
• Exit strategy: Clear plan to sell or refinance

Borrower Requirements (Flexible)

• Credit score: 600+ (some lenders go lower)
• Experience: First-time investors often OK
• Income documentation: Usually not required
• Down payment: 15-30% of purchase + rehab
• Reserves: Some liquidity preferred

Deal Requirements

• Clear title: Property can't have title issues
• Exit strategy: How will you repay within 6-18 months?
• Profit margin: Deal should make sense financially

Step 2: Prepare Your Deal Package

Hard money lenders make fast decisions because they need limited documentation. Have these ready:

Essential Documents

• Purchase contract or property address
• Property photos (exterior and interior if possible)
• Renovation scope and budget (for fix-and-flip)
• ARV estimate with comparable sales
• Proof of down payment funds
• Government ID

Helpful but Not Required

• Track record of previous projects
• Contractor bids for renovation
• Entity documents (if closing in LLC)

What You DON'T Need

• No tax returns
• No W-2s or pay stubs
• No employment verification
• No extensive financial documentation

Step 3: Find the Right Hard Money Lender

Not all hard money lenders are the same. Consider these factors:

Types of Hard Money Lenders

• Individual investors: Often most flexible, may have limited capital
• Small funds: Balance of flexibility and capacity
• National hard money lenders: More standardized, higher volume

What to Look For

• Speed: Can they actually close in your timeline?
• Experience in your property type: Do they understand your deal?
• Transparency: Clear fee structure, no hidden costs
• Reputation: Check reviews and references
• Draw process: How do they handle renovation disbursements?

Questions to Ask

• What are your current rates and points?
• What's your fastest closing time?
• Do you require an appraisal or use in-house valuation?
• How do renovation draws work?
• What are extension fees if I need more time?
• Is there a prepayment penalty?

Step 4: Submit Your Application

The hard money application process is streamlined for speed:

1. Initial Contact (Day 1): Share basic deal details— property address, purchase price, rehab budget, ARV
2. Term Sheet (Days 1-2): Lender provides terms and conditions
3. Application (Days 2-3): Submit documentation and pay application/appraisal fee
4. Property Valuation (Days 3-5): Lender verifies value (may use drive-by or BPO instead of full appraisal)
5. Title Work (Days 3-7): Title search and insurance
6. Underwriting (Days 5-7): Final review and approval
7. Closing (Days 7-10): Sign documents and fund

Speed tip: Many hard money lenders can close in 5-7 days if title is clear and you have all documents ready.

Step 5: Understand the Costs

Hard money is expensive compared to conventional financing. Make sure the deal works with these costs:

Example: $200,000 Hard Money Loan (12 months)

Step 6: Plan Your Exit Strategy

Hard money lenders will ask how you plan to repay. Common exits include:

Flip/Sale

Renovate and sell the property before the loan matures. Most common for fix-and-flip projects.

Refinance

Refinance into permanent financing after renovation/stabilization:

• DSCR loan — Qualify based on rental income (no income docs)
• Conventional loan — Lower rates if you can document income
• Bridge loan — If property needs more seasoning

Learn about the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) →

Extension

If your project runs long, most hard money lenders offer extensions for a fee (typically 0.5-1% of the loan amount per extension).

Hard Money Loan Checklist

Ready to Apply for a Hard Money Loan?

Clear House Lending connects you with reputable hard money lenders who can close quickly on your deal. Share your project details and get competitive quotes.