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Do Hard Money Lenders Require Down Payment?

Many real estate investors gravitate toward hard money loans for buying properties. Typically, individuals or investment capital companies offer hard money loans rather than traditional banks.

Hard money loans are secured by assets instead of your personal cash flow and income. The property is collateral for the loan.

Usually, hard money lending is quicker and easier to secure, but that convenience can come with higher fees and interest.

How Do Hard Money Loans Work?

If you need a traditional loan, you go to a bank or mortgage lender, and they check your credit. Your financial history, current income, and how stringent the lender is will determine the loan amount and interest rate.

On the other hand, hard money loans do operate through established banks. Typically, individuals or investment firms lend money to investors buying properties they intend to “fix and flip” or repair and rent out.

Hard money lenders stress the value of the property more than your credit score. It’s common to pay more in interest and fees for a hard money loan. Consequently, if you fail to repay the loan, the lender takes your collateral property and liquidates it.

Investors like hard money loans because they can receive the money within days instead of weeks.

Do Hard Money Lenders Require a Downpayment?

Hard money loan terms are determined by the lender. Some require a down payment, while others do not.

Typically, “fix and flip” investors like to see a 20% to 30% down payment for hard money loans. In other cases, investors can borrow the entire amount.

If you take a loan for the full amount, you should have a high credit score and a history of investments that turn profits. Beware that some lenders offering hard money loans with no down payment charge many hidden fees, expect balloon payments or other unrealistic terms.

As an investor, it is wise to perform due diligence not only on your investment but also on your lender.

Do Hard Money Lenders Require Down Payment?
Do Hard Money Lenders Require Down Payment?

What Terms to Look For In a Hard Money Lender

So, how you find a hard money lender?

When you vet your investment partner, find out their reputation, how easy they are to work with, how much they charge, and if they also loan money for rehabilitation.

Visit with local Real Estate Investment Associations and look for feedback online to learn about your lender’s reputation. Check your state to see if the lender holds a current license. Use your relationships with real estate agents to learn more and consider their advice carefully.

Do plenty of research, establish relationships within the real estate community, and ask around for referrals.

How Much Will I Pay for a Hard Money Loan?

Expect to pay between 8% and 15% of the total loan amount in monthly interest to a hard money lender.

You will be responsible for paying monthly interest until you can repay the loan in full. Carefully consider how long it takes to rehabilitate and sell the property. Then build in some wiggle room in case things do not go as planned. The longer it takes to dispose of the property for a profit, the more you pay in interest and fees.

Hard money lenders may also charge origination or administrative fee up to 10% of the loan.

If the lender requires you to pay a down payment, 20% to 30% is standard. The benefit of a down payment is that it lowers your other costs.

Loans are made or arranged by Wilshire Quinn Income Fund, LLC (the “Fund”) pursuant to California Finance Lenders Law license #603J060.  The information contained above is for informational purposes only and is meant to provide general background information on the Fund and its manager, Wilshire Quinn Capital, Inc.  Any and all information is deemed reliable but is not guaranteed.

  • Funding typically in 5-7 business days
  • Loan Amounts from $200,000 to $20,000,000

  • Interest Rates from 8% to 10.5%
  • Loan Term: 3 – 24 months

  • Commercial & Residential (non-owner occupied) Real Estate

  • Purchase, Refinance, Cash-out Refinance, Rehab, Blanket Loans
  • Foreign National Loans Available


About Wilshire Quinn

Wilshire Quinn is a San Diego hard money lender focused on short term bridge loans, secured by first trust deeds. The company is based in San Diego, CA with offices in Los Angeles and San Francisco. Wilshire Quinn typically funds loans for their customers in 5-7 days. Their successful track record is closely linked to their ability to make immediate lending decisions based on their highly disciplined underwriting approach. The company funds a variety of loans such as: refinance, purchase, blanket, rehab loans, 1031 exchange, partnership buyouts, and more. They originate hard money loans ranging from $200,000 – $20,000,000. Wilshire Quinn works with commercial and residential buyers nationwide.

Recently Funded Hard Money Loan Transactions

Loan Amount: $15,575,000 Loan Type: Blanket Construction Property Type: Industrial Loan-To-Value: 62% Term: 12 Months
UKIAH, CA Loan Amount: $6,575,000 Loan Type: Purchase Property Type: Self Storage Loan-To-Value: 61% Term: 7 Months BONITA, CA Loan Amount: $3,450,000 Loan Type: Purchase Property Type: Office Loan-To-Value: 61% Term: 18 Months LOS ANGELES, CA Loan Amount: $10,675,000 Loan Type: Refinance Property Type: Parking Structure/Retail Loan-To-Value: 52% Term: 12 Months

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