Are HML's requiring more money down????

I’ve successfully used private lenders before. I shopped around for my next project and had one HML tell me that even though all the fees, points, and pre-pay interest for 6 months fit into the loan at 70% ARV, that they still are going to require me to come out of pocket 20% of purchase price! I asked why and he said that HMLs are moving to that with the increase in risk over the last year or so. Anyone else heard that before? Keep in mind, the HML has seen my work and verfied that I successfully completed my projects and have good credit. I just assume that I might as well go to a local bank if they are going to make me put down an additional 20% to do a project…

My hml requires 3 points 10% down and 16% interest at a 65% arv they only pull comps on low prices and are fast in getting the job done. Paayback is 1 year max.

I’m getting that now. Last deal everything was rolled into the HML. It was a 75% ARV and $0 down. This time around they all want 10% down. ($40K in this case)

I hate to say it, but I think this time it’s going to be $0 down, interest only, 100% of purchase price mortgage, and then immediately do a second to do the renovations.

I can’t tell you how much that pains me.

there are still lenders that will do this with nothing down

St. louis to 80%
OH 85%

It’s not the norm, but it is done in some instances (mostly in =>75 ARV scenarios)…


Scott Miller

Everyone I have been calling (search for hard money lender on the net) is not asking for a down. I have only run into one that asked for a down and he wanted 10%. I crossed him off my list. I am not seeing that same trend. I’m seeing the best as 4 pts, 14% interest, 65%arv, no prepay penalty; but only a 6 month term. :frowning: I really need the term to be a year.

In an area where the median home price is $450K, it’s almost impossible to find a 65% or 70% deal. 75% isn’t especially easily but it is do-able. A $400k ARV would mean a $300k Loan with a puchase price below that figure. So, you’re already talking about finding a house that is more than $100k below ARV.

My last deal was 75% ARV with no money down. No one seems to want to do that now.


You are correct that most HML do not give 100% loans even if you purchase the property below 65%. Most HML will think you are insane for asking such a thing on a commercial apartment. I don’t know about SFH, but on commercial apartments HML want money down. Some want around 10, 20, or even 30% down. It’s dumb why they think they can charge 6% in fees and 14% int. rates while expecting 20% down, but most do have those requirements. HML think they are great because you can get money fast, big deal. I want no money down, not money fast.

If you call every HML on the list to the left, there may be 1 or 2 that will even entertain the idea of a zero down commercial loan. But some will so call them and just use them.

As the markets cool down, HML’s always lower their LTV, raise points and junk fees, and increase the borrower’s requirements all in an effort to reduce their huge risk. Now that any fool can’t make money on appreciation, their capital is reserved for those who appear to be a safe bet. They turn into institutional lenders wanting to charge rates flirting with usury. Most will go out of business since their products are similar to any bank but 3 times as expensive.

HML’s are not a good long term strategy. I had to use them in the beginning because it was the only thing available and it was not fun watching 20+% of the loan amount go to a loan shark. Wean yourself off HML’s ASAP by saving your profits. They should only be used when it’s the only way.

Conventional lenders suck for rehabs also…

My last HML was 15% interest only and 5 points. Plus a crapload of fees. I got a loan for aboput 70% ARV (they used really low comps) so i had to bring about $3500 to closing.

Having said that i have another HML lined up that charges 13% and 4 points. I’ve learned that a lot of HML’s are doing bad business or have a few bad investors, thus they might have had trouble recouping their cash. Remeber, you’re the customer MAKING THEM MONEY! 20% down is ludicrous :shocked…shop around…Also some HM Lenders run out of money or get low on funds and will tighten up the guidlines in an effort to make more cash. This is what I’ve seen personally. Bottom line if the bank doesn’t treat you right…go to the next one

The best advise on this topic is to “Shop Around”. I feel like I’ve called them all in the past few months, they are all different. Most HML are completely worthless and you will never have a use for them, but the few that are good can really open doors for you.

Iron Range is right, call around, find out what lenders know what they are talking about, have a history of doing solid lending, and work with you on your plans, exit strategies, etc.

There are many lenders that are NOT requiring any money down. Just keep searching, you will find solid lenders out there!

Every HML has a group of things they are looking for in a borrower. Some want money down, some want huge loans with quick refinancing to get their money back, some want experience, and some lend to only awesome deals, not awesome borrowers. The ones that focus on the deal itself are the ones I personally like. They are probably who you will want to focus on. I prefer the HML that will lend money to almost anyone just because the deal is so great that it is unlikely they will lose no matter what happens.

Then the ball is in your court. It is up to you to find the deal or make a deal.