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Do I Need a Substantial Down Payment for a Hard Money Loan?

Now that you’ve decided to move forward with your real estate investment, it’s now time to answer your biggest question: do I need a substantial down payment for a hard money loan? The quickest answer depends on your lender and your own situation, however, there are also other factors at play.

Hard Money Loans Require a Sizable Down Payment

It’s almost impossible to get a loan that will finance 100% of your real estate purchase. The vast majority of lenders will require a down payment and hard money loans are no exception. In fact, hard money lenders usually require sizable down payments. Most hard money lenders require a down payment between 30% to 50% .

Why are the down payments for hard money loans so high? The answer is simple: risk. A hard money lender is taking additional risk by giving loans to borrowers that do not meet some of the standard loan requirements of traditional lenders, such as a high credit score.

In some cases hard money loans may not be personally guaranteed, which is another risk the lender may take on. If you default on your loan, your lender will need to find a way to get paid back. That being said, the bigger your initial down payment, the less likely you are to default on your loan.

Hard money loans have short loan terms, usually 3 to 24 months. This means your lender expects to get paid back quickly, which is another risk factor. A sizable down payment will increase the lender’s chances of being paid back on their loan, as most borrowers to not want to lose the equity in their property.

Do I Need a Substantial Down Payment for a Hard Money Loan?
Do I Need a Substantial Down Payment for a Hard Money Loan?

Finding 100% Financing from Hard Money Loans

While hard money loans requiring no down payment do exist, you should expect to have to meet more requirements than the average hard money loan. For example, while hard money loans do not typically have a credit score requirement, you may have to meet one if you are trying to avoid a down payment. Your chances of obtaining a hard money loan will also increase if you have a solid track record for being able to invest in real estate or you’re able to cross-collateralize other properties you own that have substantial equity.

If you are fortunate enough to find a lender that will require a minimal down payment, you should expect to pay a higher interest rate and more lender fees. Given these higher costs, it’s important to realize that hard money loans are not a long-term solution, rather a bridge to solve an immediate financial issue. After a hard money loan is received, it’s usually best to have a plan to sell the property or have a traditional lender pay off your loan.

Does My Real Estate Transaction Qualify for a Hard Money Loan?

Feel free to contact the loan experts at Wilshire Quinn for a free rate quote on your next real estate purchase or refinance. Wilshire Quinn simplifies the lending process by providing funding solutions in a matter of days and you can be pre-approved in less than 24 hours. Call 619-872-6000 or visit our website www.wilshirequinn.com for more information.

  • 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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