And there’s much less paperwork than a traditional loan, so the process is faster-sometimes as fast as one week. However, hard-money lenders are generally more willing to accommodate people with lower credit scores (as low as 550). If you’re looking at a $200,000 property, for example, the most you’ll probably be allowed to borrow would be $150,000, meaning you’d have to pay $50,000 upfront. You can expect to receive about 60% to 75% of the property value you intend to purchase. Most hard-money lenders also charge 3 to 6 points upfront, where 1 point equals 1% of the loan.ĭown payment requirements for hard-money loans are also different.
Interest rates are considerably higher, typically ranging from 12% to 21%. Six months to one year is most common, but they can go up to five years. Hard-money loan terms are usually much shorter than traditional mortgages.
