Hard Money Lender and Terms

Hello to Everyone reading this post, my question is concerning hard money loans and terms. I have heard that sometimes a hard money lender will require an investor to pay in conjuction to down payment and closing costs (loan origination fees/hazard insurance/title insurance/appraisal fees etc), to receive a 5-7 month payment up front on a hard money loan. I will like to understand the benefits and detriments of a hard money lender requiring a mandatory 5-7 month payment.

One potential detriment of the hard money lender requiring a mandatory 5, 6 or 7 month payment is that if the investor completes the rehab in 3-4 months, he will not be able to refinance because he is locked into the 5, 6, or 7 month terms the hard money lender has set. If my idea is wrong, I will appreciate if any hard money lenders or investors can correct me. Thanks.

When hard money is involve the investors will charge high rates to get their returns sooner. Most go to 18months on average. Some will have a prepay. If no prepay, then the LTV must be good and they will charge higher rates and points. To play you have to pay.

i need help finding anyone that can help me out,i was sent to this location.i got behind on my mortgage by chose-at the time my son was in rejection and no insurance,now he has medicaid,i dont want to lose my home and this may be my last resort,where can i go?

If the lender collects mandatory payments upfront, that would not lock you in or prohibit you from refinancing with another lender.

It’s just a cost you’d have to eat.

There are actually very few hard money lenders that will roll in payments. Many investors would prefer this.

If they only rolled in a mandatory of 4, would that help you out?

Thanks for the information Johnny Q and Investment Loans. Investment Loans, if the question you ask really depends on the amount of time that the rehab will be completed. If the rehab is completed in 3 months, but the hard money lender was only able to roll in a mandatory payment equivalent to 4 months, it probably would not help me out. The reason why is that I my objective is for the rehab to be completed in the third month, so I will be able to refinance in the 4 month to reduce holding costs.

Do you think that you would be able to qualify for a soft money loan? Credit needs to be around 600+ with tax returns and/or bank statements collected. A debt to income ratio is not calculated like with conventional loans but the lender wants to see that you have some type of income coming in.

There’s a couple of those lenders who may be able to help. 70-75% arv, roll payments in but none mandatory.

Thanks for the response Investment Loans. I have never heard of the term "soft money loan. I assume that this type of loan can be used for rehabs. Can you provide other details about these type of loans? What are the major differences or similiarities between hard money loans and soft money loans?
I think I may be able to qualify for these type of loans.

Soft money is the term used for rehab loans which are structured similar to hard money loans but require a specific score with income and asset verifications.

Hard money is not score driven nor does the lender require verifications.

Rates and costs still vary from lender to lender.

These would be great loans for you if able to qualify.

Thanks for the information Investment Loans. you mentioned that the rates and costs still vary from lender to lender, but are the loan origination fees and interest rates for the soft money loans on average slightly lower than Hard money loans???

about the same…ltvs are usually a little higher though.

You would need to tell the board at minimum; 1) What is your current loan amount, 2) What is your house appraised for, 3) What is your mid FICO, 4) What state are you in, 5) DTI, etc.

There are several lenders that can assist you with foreclosure bailout if that is your circumstance.


Thanks for the information Investment Loans.

so is hard money lending for rehabs and foreclosures with FICO less then 500 and DTI is over the roof? And for soft money lending is also for rehabs and foreclosures but with better score and better DTI? It is a little confusing becuase most people in foreclosure can not afford to make mortgage payments and other bills which result in their FICO being shot. So how can they afford to pay the hard money lender upfront to qaulify for the loan?

I’d imagine that there are some hard money lenders out there that work with people in foreclosure. I’m not familiar with them as 99% of my clients are real estate investors. They use the hard money and soft money for rehabs.

We are looking to purchase, update and flip a house. The purchase price will be 1 mil with about 200-250,000 to update. The property should resell between 1.5 to 1.6 mil. We have A paper credit scores but do not have the income for this type of purchase. Any suggestions on how to finance?


Sounds as if your #s are too high for hard or soft money lenders.

Hard money is usually around 70% arv and soft can be up to 80% arv.

Even at your highest sales price $1.6M, 80% would be $1,280,000. This barely covers the purchase + fix. There’s no room for points are to roll payments in.


This needs to be put together properly. There are too many unanswered questions here. Many loan officers are not able to work with loans that size nor have the experience in their structure. Let me know if you need help putting this together as I specialize in million dollar loan projects.

I’ll send you a pm.

also i am very interested in a short sale…thanks

The hard money lender will be more concerned with the LTV and less with your credit scores and income.