What are some requirements that private lenders have?

Question

What requirements do private lenders or even hard money lenders have when applying for a loan?

What credit score is necessary do I need to achieve when applying for a loan?

What papers or documents will I have to provide?

What are the normal interest rates charged for those loans?

Account Closed · Answer

@Tyler Carraway Each private money lender and hard money lender has their own lending criteria. Generally speaking, they require two sets: 1) property wise, the deal needs to be profitable and fit their lending box; 2) borrower wise, the borrower needs to meet some minimum requirements, mainly about credit scores and experience level.

For fix and flip loan, some lenders doesn't require minimum credit score, and some can even work with first time flippers. Interest rate looking at 8-10% with 1-3 points.

For long-term rental loan, most lenders require minimum 620 or higher credit score. They may require experience or not. Interest rate looking at 5-6% with 1-3 points.

It's better to call lenders or brokers to discuss your specific needs to get a better quote. Hope this helps!

Blake A. Rivers · Answer

@Tyler Carraway

What requirements do private lenders or even hard money lenders have when applying for a loan?

Depends on what type of loan you are looking for:Bridge loans ( fix & flip loan) 650 C.S or higher and at least 1 fix/flip completed or ownership of 2 rentals and your primary

Rental loans= 680 or higher C.S. and own 1 rental and your primary or 2 rentals and rent your primary.

What credit score is necessary do I need to achieve when applying for a loan?

Bridge loans ( fix & flip loan) 650 C.S or higher
Rental loans= 680 or higher C.S.

What papers or documents will I have to provide?

Articles of incorporation, EIN letter, lease or sales contract, bank statements and construction budget (if applicable)

What are the normal interest rates charged for those loans?Bridge loans ( fix & flip loan) 7.49%-9.99% interest onlyRental loans 4.25%-5.75% ( 3.5% for select investors)

Hopefully this information helps when you are looking into private money lenders. I work for a national private money lender and these are our generally requirements and terms.

Patrick Prunty · Answer

@Tyler Carraway

Some private/hard money lenders have no credit requirement or even care to check credit.

If a private/hard money lender gets into credit, income, dti, etc, the idea of private/hard money, to me, looses its luster.

The idea of private/hard money is underwriting geared towards the asset, not the borrower.

For short-term, high ltv renovation loans funded in 7-10 days, you're likely looking at 9-12% interest.

For long-term, lower ltv rental or bridge loans funded in 14-21 days, you're likely looking at 5-8% interest.

Keep in mind there are loan fees to borrow private money too which are not included in the interest referenced above.

What are some requirements that private lenders have?

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