A hard money loan is a loan on investment real estate that is approved on the property instead of the borrower’s paycheck. On Hilton Head, where good listings draw several offers and many properties do not fit bank guidelines, that is often the difference between getting a deal and watching it go.
When investors choose hard money
- The property needs work. Banks rarely lend on a house that needs a full renovation. A fix and flip loan funds the purchase and the rehab together.
- The property is a condotel or non-warrantable condo. Conventional loans often exclude them. We finance both.
- The seller wants a fast closing. Fix and flip loans average up to 21 days and can close in about 7 days when title and insurance are ready.
- Your income is hard to document. Approval is on the deal, with no tax returns or employment check.
- You already hold several mortgages. There is no limit on the number of loans.
How the amount is decided
- A flip: the price, the rehab budget and the after-repair value.
- A rental: the value and whether the rent covers the payment.
- A new build: total cost and the finished value.
The cost
Hard money carries a higher rate than a bank mortgage, because the lender closes quickly and takes more risk. It is meant for a defined plan with a clear exit: sell the renovated house, or refinance the rental into long-term debt.
Programs
| Program | Top leverage |
|---|---|
| Fix and flip | 90% of purchase and 100% of rehab, up to 70 to 75% of after-repair value |
| DSCR rental | 85% loan-to-value to buy, 80% on a cash-out refinance |
| New construction | 90% of cost for experienced builders, up to 70 to 75% of finished value |
Credit
Credit affects leverage and price more than approval. Programs start at a 600 score. The best fix and flip terms are for 720 and above.
Working with us
We pre-underwrite loans in-house so they fund correctly the first time. If another lender has given you terms, show us. We will tell you honestly whether we can do better.
Read more about lending on Hilton Head Island, or send us a deal.