Hard money loan for down payment ?

Question

Can you get a hard money loan just for a down payment and if so, is it wise to do so? It would be my first rental property.

Wayne Brooks · Answer

HML’s do Not loan money for down payments....that would put them with a 2nd position mtg, which they wouldn’t do, the primary mtg will require a 1st position.

Down payment either comes from you, or a partner.

Sam Shueh · Answer

100K purchase- you need proof that you have 20K min.  My understanding it is based on your past business track record with them assuming you have above avg FICO (>750 FICO) and low debt to income ratio. They charge you interest for min 180 days at prevailing interest rate.  Most lenders want you to foot 50% (50K) and finance the rest. You need incomes.

Tom S. · Answer

@Dale Nesmith  You're not buying "cash" with HML - it's still a loan, and it still might not come through for a variety of reasons.  Because of the quicker close versus conventional lenders, you might be able to negotiate a better price.  However for the points, interest and higher fees over the course of a year, it might not be worth it.  Plus you'll have to refinance out, and there will be another set of closing costs.

Dale Nesmith · Answer

@Wayne Brooks

I have a question along the same line.  I am looking at a property. $238,000 for 7 units. Rents would be about $3,750. So, it cash flows well.

I have HML lender who will loan with 10% down. Would it be viable to buy “cash” with 10% down and HML and get as much cash discount as possible. Give the HML 1st position on loan and use the time to accumulate the other 15% to refinance loan with conventional loan after a year?

Chris Mason · Answer

And on top of that, lenders have CLTV requirements. $80k first position plus $20k second position on a $100k property would be 100% CLTV.

The only 100% CLTV out there is down payment assistance programs for "moderate to low income" FTHB, which just for laughs is defined in the SF East Bay Area as less than $204k/yr at this point.

Echezona Ozoemena · Answer

@Sam Shueh @Wayne Brooks Thanks for the info

Echezona Ozoemena · Answer

@Sam Shueh Is this what u mean? For instance, a 20% downpayment on a 100k home. I can get a hard money lender to put half of the 20% down payment? And also is it possible to get the hard money lender to also cover the estimated repair cost. Or is that gonna come from my pocket?

Kerry Bragg · Answer

@Sam Shueh Ok, thanks.

Sam Shueh · Answer

You will not be able to get hard money with no money of yours. For starters they may expect 50% down. The lowest I have seen is you put 20% down.

Hard money loan for down payment ?

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