Rehab Loan Qualifications getting tougher

If you have been in the market for a rehab hard money loan and are stunned as to why the credit score requirements are going up, it is because of the market change.

The main reason is because most rehab hard money lenders are not in the business of foreclosing on your property. If your exit strategy is to sell and you don’t sell, then what is plan B? If you do not meet the requirements for the take out loan (refinance) then the rehab lender is stuck with the property. But isn’t that good for the rehab lender? Not really. Each state is different with foreclosure laws and it can be a huge pain to legally go through the steps and take property back.

There are still rehab lenders that do not care about credit. There is a new loan in Austin that will not check credit.

Also, be careful when dealing with hard money lenders. Make sure to check them out from A-Z. You would be shocked to find that you might be ready to close on a deal and the lender magically runs out of money in the last minute. It happened to one TX lender 4 times in two years with hundreds of loans falling off. They are still in business.

Good luck!


Good Afternoon everyone. I will start to tell you that I have 4 years as a Mortgage Loan Officer and Mortgage Broker. After about two years of doing here and there jobs. I was introduced to the Investment flipping from a previous co-worker he was telling me about how easy it would be and how profitable it will be. AFter listening for a while I asked questions about what about repayment, what about credit and where in the hell are you going to get the money from the repairs? He went on to tell me that you have 6 months to repay the loan in full, there is no credit check(from the company he uses down in Florida) and the money you get from the loan pays for the renovations i.e. The home is worth $270,000 ARV and the home is selling for $95,000 the highest LTV that you are allowed with this company is 65% that leaves you with $175,000 Loan Amount after you pay $10,000-$15,000 in closing cost you are left with about $65,000 thats the money that you are left with to do the repairs. Form that conversation on I’ve been wanting to become a Real Estate Investor in Residential homes only. I have the drive the patience and the style to make a difference in the customers home and in my pocket. If anyone out there is knowledgable about any Hard Money Lenders that service in the MD, DC and VA area that does not require credit check or collateral PLEASE LET ME KNOW!! Thank you!

There seems to be a few posts recently from people wanting a hard money loan without any kind of credit check. Sorry but it’s not going to happen! (well it might but be prepared to put up a chunk of money yourself)

If you are finding such great deals, the easiest thing to do is bring in a partner who does have the required scores.

Wouldn’t you rather partner with someone and make say 50% of the profit for right now? Do a couple of deals, use some of your profit to fix your own credit and within say 12 months you can go it alone at that time.

Ryan already touched on it, the hard money lender wants to see reasonable credit not for their concerns but to see if you qualify to refinance into a conventional mortgage if you need to.

After the rehab is complete, why would you want to keep paying higher interest for hard money month after month? YOU DON’T!
If that property hasn’t sold within the first month, you seriously need to get out of the hard money but how are you going to do that if your credit is too low to re-fi?

The HML is protecting themselves as well as you by wanting to see decent credit scores.

Find a partner, do it with him, flip two or three deals, fix your own credit and then do your own thing!

Oh, and Ryan, I think you’ll find your LTV is now 70% :slight_smile: