Hard Money Loan FAQs
Get answers to the most common questions about hard money loans, DSCR financing, fix & flip loans, and real estate investment financing in Florida.
General Hard Money Loan Questions
What is a hard money loan?
A hard money loan is a short-term, asset-based loan secured by real estate. Unlike traditional bank loans that focus heavily on borrower income and credit, hard money loans are primarily based on the value and potential of the property being purchased or refinanced.
How quickly can I get approved and funded?
Our typical timeline is 7-14 days from application to funding. For urgent situations, we can often close in as little as 5-7 days. This speed is possible because we focus on the property value rather than extensive borrower documentation.
What types of properties do you finance?
We finance single-family homes, condos, townhomes, multi-family properties (2-4 units), and some commercial properties in Florida. This includes fix-and-flip projects, rental properties, and bridge financing situations.
Do I need perfect credit to qualify?
No, we work with borrowers who have credit scores as low as 580. While credit is a factor, we focus more on the deal itself, your experience, and your exit strategy. Strong deals can overcome credit challenges.
How much can I borrow?
Loan amounts typically range from $75,000 to $5,000,000. The exact amount depends on the property value, your down payment, and the specific loan program. Most loans are 70-80% of the property value or after-repair value (ARV).
DSCR Loans
What is a DSCR loan and how is it different?
DSCR (Debt Service Coverage Ratio) loans qualify you based on the rental income the property generates, not your personal income. This is perfect for investors who want to grow their portfolio without income limitations or extensive documentation.
What DSCR ratio do I need to qualify?
We can approve loans with DSCR ratios as low as 1.0, though ratios of 1.25 or higher get the best rates and terms. A DSCR of 1.0 means the rental income exactly covers the debt service (principal, interest, taxes, insurance, association fees).
Can I use projected rents for DSCR calculations?
Yes, for fix-and-flip projects or properties needing renovation, we can use projected market rents based on an appraisal or rent survey. This allows you to qualify based on the property's income potential after improvements.
Are DSCR loans available for first-time investors?
Yes, DSCR loans are available for first-time investors. While we prefer some real estate experience, strong deals with good DSCR ratios can qualify even newer investors.
Fix & Flip Loans
How do fix and flip loans work?
Fix and flip loans provide both the purchase price and renovation funds. We fund the purchase at closing, then release renovation funds in draws as work is completed. This allows you to buy and renovate with minimal cash upfront.
What's the typical loan term for fix and flip projects?
Most fix and flip loans have 12-month terms, with options to extend for additional months if needed. This gives you time to complete renovations and find the right buyer for maximum profit.
How do renovation draws work?
After closing, renovation funds are held in a control account. As you complete work phases (demo, electrical, plumbing, etc.), we inspect and release funds. This protects both you and the lender while ensuring work progresses.
Do you fund the renovation costs upfront?
We fund renovation costs as work is completed and verified. Some lenders require you to pay contractors first, but we can work with qualified borrowers to structure draws that work with your cash flow needs.
What if my project takes longer than expected?
We offer extension options if you need more time. Extensions typically cost 1-2% of the loan amount plus any additional interest. It's always better to communicate early if you anticipate needing more time.
Rates and Terms
What are typical interest rates for hard money loans?
Interest rates typically range from 10-15% depending on the loan type, borrower experience, property type, and loan-to-value ratio. DSCR loans often have lower rates than fix-and-flip loans due to lower risk.
Are there prepayment penalties?
Most of our loans have no prepayment penalties, allowing you to pay off the loan early without additional fees. This is especially important for fix-and-flip projects where you want to sell as soon as possible.
What fees should I expect?
Typical fees include origination fees (2-4% of loan amount), appraisal fees ($400-$600), and inspection fees for renovation projects. We provide a detailed fee breakdown before you commit to the loan.
Do you offer interest-only payments?
Yes, most of our loans offer interest-only monthly payments, which improves cash flow during the loan term. This is especially beneficial for fix-and-flip projects where you're not generating rental income.
Application and Requirements
What documents do I need to apply?
Required documents typically include: photo ID, proof of funds for down payment, bank statements, property purchase contract (if applicable), and basic financial information. DSCR loans require less documentation than traditional loans.
How much money do I need for a down payment?
Down payments typically range from 20-30% depending on the loan type and your experience level. Experienced investors may qualify for lower down payments, while newer investors may need higher down payments.
Do you lend to LLCs or only individuals?
We lend to both individuals and LLCs. Many investors prefer to hold properties in LLCs for liability protection. We can structure loans to accommodate your preferred ownership structure.
Can I get pre-approved?
Yes, we offer pre-approval letters that help you make competitive offers. Pre-approval involves reviewing your financial capacity and confirming loan programs you qualify for, subject to property approval.
What if I'm buying at auction?
We can provide auction financing with faster closing timelines. Auction purchases often require quick closings (5-10 days), which our streamlined process can accommodate for qualified borrowers.
Still Have Questions?
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Don't let questions hold you back from your next investment opportunity. Our experienced team is here to guide you through the process and find the right financing solution for your needs.
Quick Reference Guide
📋 Typical Requirements
- • Minimum credit score: 580+
- • Down payment: 20-30%
- • Proof of funds for down payment
- • Basic financial documentation
- • Property purchase contract (if applicable)
⏱️ Timeline Expectations
- • Application: Same day
- • Initial approval: 24-48 hours
- • Appraisal: 2-3 business days
- • Final approval: 5-7 days
- • Closing: 7-14 days total
💰 Cost Structure
- • Interest rates: 10-15%
- • Origination fees: 2-4%
- • Appraisal: $400-$600
- • No prepayment penalties
- • Interest-only payments available
🏠 Property Types
- • Single-family homes
- • Condos and townhomes
- • Multi-family (2-4 units)
- • Fix-and-flip projects
- • Rental properties