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Requirements for a Hard Money Loan

If you are interested in real estate investing, you might wonder what credit score is needed for a hard money loan. Hard money loans are popular among investors looking to finance a real estate transaction quickly and are much easier to obtain than a traditional loan.  Knowing the different requirements between a hard money loan and a traditional loan will help you navigate the lending process.

Hard Money Loan Basics

Hard money loans are short-term asset-based real estate loans.

Hard money loans function differently than traditional bank loans. Hard money loans are usually approved in a matter of days as opposed to months with traditional lenders.

Investors involved with rehabbing property, or purchasing multi-unit apartment buildings, duplexes, triplexes, and commercial properties have different needs than someone that is purchasing an owner-occupied property.

Traditional loans may not work well for certain real estate investors who have higher debt-to-income ratios or inconsistent income.  Conventional loans also take much longer to approve, so investors may lose out on their real estate transaction because of bank delays.

Hard money loans come from private lenders.  As such, they may be individuals involved in real estate or private investment firms with funds to lend.  While hard money loans have higher interest rates and lending fees, they get approved move much quicker as the underwriting guidelines are not as strict.

Credit Score Requirements for Hard Money Loans

Hard money lenders focus on the overall value of the property, not the financial history of the borrower. However, most lenders still check your credit. They want to see some positive history of good credit, but they also review red flags like tax liens or past bankruptcies.

Typically, hard money lenders want a minimum credit score of 575. On the other hand, traditional lenders usually mandate a 680 or better credit score when financing a property. Hard money loans may be an excellent option for borrowers than have a lower credit score.

Requirements for a Hard Money Loan
Requirements for a Hard Money Loan

Other Hard Money Lending Requirements

Credit score is not the only lending requirement. Hard money lenders also look for:

Sufficient equity in the property. You should have a good portion of your own money invested in the property to reduce the lender’s default risk. If you default, the lender assumes the property and liquidates it to pay off your loan. In contrast, some traditional loans do not require money down. Depending on the hard money lender, expect to produce a 30-40% equity position in the property you are acquiring or taking cash out of.

Previous real estate and property flipping experience. Some lenders want to see past experience in real estate. It shows them that you are prepared to weather the ups and downs of real estate market.

Proof of financial stability. Lenders also expect you to have some cash reserves to cover expenses like HOA dues, insurance, taxes, and maintenance. Since hard money lenders can provide financing in just a few days, you should be prepared to start making payments immediately.

How Do You Get a Hard Money Loan?

In order to find a hard money lender, communicate with real estate professionals in your area; real estate agents, mortgage brokers, or other real estate investors may be a good resource. Some cities also have monthly investor group meetings where you can network to find a lender.

Wilshire Quinn Capital may also be a strong resource for a hard money loan and is a direct private money lender, not a broker, for commercial and non-owner occupied residential real estate in California and nationwide.  For more information, please visit www.wilshirequinn.com or call 619-872-6000 to speak with a Wilshire Quinn loan representative today.

  • 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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