Hard money lenders offer short-term loans to quickly facilitate the purchase and renovation of residential and commercial properties. With more than 600 hard money lenders in the U.S., it’s hard to find a reputable lender that’s right for you. To help, we looked at a range of hard money lenders and found that LendingHome, Patch of Land, and Lima One offer the best mix of options for hard money loans.
Best Hard Money Lender 2017: LendingHome
LendingHome is our top pick because they offer loan amounts up to 90% loan-to-value (LTV), up to 75% after-repair-value (ARV), and have interest rates starting as low as 7.5%. Further, LendingHome charges only a small amount of lending fees (between 1.5% – 2.5%), and they conduct their own appraisals at no additional cost to the borrower. These terms make them a good option for small businesses.
Hard Money Lenders Comparison Table: LendingHome vs. Patch of Land vs. Lima One
|Best For||Small Businesses||Quick Financing||Permanent Loan Options|
|Types of Properties|
|Short- Term Residential (Single-Family, Multi-Family, Apartments, Condos, Short-Sales, Foreclosures, REOs)||Short- Term Residential (Single-Family, Multi-Family, Apartments, Condos, Short-Sales, Foreclosures, REOs) |
Short-Term Commercial (Mixed Use, Offices, Shopping Centers)
|Short-Term Residential (Single-Family, Multi-Family, Apartments, Condos, Short-Sales, Foreclosures, REOs)
Long-Term Residential (Single Properties and Single-Family Rental Portfolios)
|Maximum Loan Amount|
|Up to 90% LTV|
Up to 75% ARV
($100k - $10mm)
|Up to 80% LTV|
UP to 70% ARV
($100k - $10mm)
|Up to 90% LTV
Up to 70% LTV
($50k - $5mm)
|Average Interest Rates|
|7% - 12%||7.99% - 13%||4.99% - 12%|
|Average Lender Fees|
|Average Loan Term|
|12 Months||1 - 3 years||1 - 30 Years|
|550+ Credit Score|
Proof of Funds up to 10% LTV and 25% ARV
List of Past Projects
|550+ Credit Score|
Proof of Funds up to 20% LTV and 30% ARV
|660+ Credit Score
Proof of Funds up to 10% LTV and 70% ARV
|Average Time to Funding|
|10 - 15 Days||5 - 7 Days||7 - 14 Days|
|Reputability (Service + Experience)|
|1+ Billion in Available Capital, Dedicated Customer Service (Phone + Email)||400 Total Loans Funded, Dedicated Customer Service (Phone + Email)||1+ Billion in Capital Raised, Dedicated Customer Service (Phone + Email)|
|Visit LendingHome||Visit Patch of Land||Visit Lima One Capital|
*Last Updated: October, 2017
Best Hard Money Lender 2017: LendingHome
LendingHome is a national hard money lender that finances residential real estate such as single-family homes, multi-unit properties, apartments, and condos. We chose them as the best hard money lender because they offer comparatively high maximum loan amounts and offer comparatively low interest rates and lender fees.
LendingHome can finance residential properties in both good and poor conditions. For a property in good condition, LendingHome issues a loan up to 90% of its loan-to-value (LTV) ratio, which is equal to 90% of its purchase price. This represents the highest LTV on our list.
For a property in poor condition, LendingHome issues a loan up to 75% of its after-repair-value (ARV) ratio, which is equal to 75% of the expected fair market value (FMV) of the property after renovations. This represents the highest ARV on our list.
For both LTV and ARV, LendingHome offers low interest rates starting at 7.5%, which is low compared to industry averages. However, it’s not uncommon to receive an interest rate between 9% – 12%. LendingHome also charges lender fees between 1.5% – 2.5%, which is the least expensive option when compared to Patch of Land, tied with Lima One.
However, the downside to LendingHome is that they only finance short-term residential real estate. If you’re looking for more permanent residential loan options then Lima One Capital is right for you. If you’re looking to finance commercial spaces, it’s best to look at Patch of Land, which issues hard money loans for both residential and commercial real estate properties.
Hard Money Lender with Fastest Funding: Patch of Land
Patch of Land is a national hard money lender that finances both residential and commercial real estate. The lender issues loans on single-family homes, multi-unit properties, apartments, and condos, as well as mixed use buildings, offices, and shopping centers. Patch of Land is our top pick for those in need of the quickest financing.
This is because Patch of Land, similar to both LendingHome and Lima One Capital, offers prequalification that takes only a few minutes. However, while LendingHome and Lima One rely on crowdfunding to finance their loans, Patch of Land prefunds their loans, speeding up the crowdfunding process.
It can take a borrower as little as 5 days to receive the funds from a hard money loan with Patch of Land, and the average time to funding is 7 days. This is in contrast to LendingHome and Lima One Capital, both of which take around 10 – 15 days to finance an approved loan.
Even though the time to funding is the best, it should be noted that Patch of Land requires more up-front information during prequalification. It’s best to already have all the necessary documents prior to applying, which we talk about more in-depth below. Further, Patch of Land offers a lower residential LTV ratio, ARV ratio, and a higher interest rate and fees when compared to LendingHome.
Best Hard Money Lender with Permanent Loan Options: Lima One Capital
Lima One Capital is a national hard money lender that finances both short-term and permanent residential real estate projects. The lender offers short-term fix-and-flip and bridge loans for single-family homes, multi-unit properties, apartments, and condos. They’re also the only hard money lender on our list that also offers a 30-year mortgage for rental properties.
Their permanent mortgage can be used for a single, non-owner occupied rental property as well as for a portfolio of single family rental units. The permanent rental mortgage can have both a 30-year fixed or variable interest rate that starts as low as 4.99% for variable rates and 6.99% for fixed rates. The loan rental loan can range from $50k – $5mm+, have an LTV of 75%, and don’t finance repairs.
This is the only permanent loan option on our list of the best hard money lenders. However, Lima One Capital also offers short-term fix and flip loans for multi-unit properties between 1 – 4 units as well as apartments of 5+ residential units. Their fix and flip options include loans for 90% of purchase plus rehab costs, 70% of the expected loan-to-value, as well as construction financing and cash out refinances.
Overall, Lima One Capital offers the most loan options out of the three lenders on our list. Specifically the lender can originate the following types of short-term and permanent mortgages:
- Fix and flip loans (rehab, cash out refinance, construction)
- Multifamily loans
- Rental bridge loans
- Permanent rental loan (single-family, portfolio)
By comparison, LendingHome doesn’t originate permanent rental loans and instead focuses on fix-and-flip loans based on LTV or ARV. Patch of Land also doesn’t offer permanent loan options. However, Patch of Land is the only lender on our list that originates hard money commercial loans.
In-Depth Review of Hard Money Lenders: LendingHome vs. Patch of Land vs. Lima One Capital
Types of Properties
Hard money lenders may fund both residential real estate and commercial real estate, or they may stick to just one or the other. Hard money lenders that finance residential properties typically fund single-family homes, multi-unit buildings, apartments, and condos.
Hard money lenders that finance commercial properties typically fund mixed use buildings, offices, and shopping centers. These loans are often used to finance rehab projects or when flipping houses. Let’s take a deep dive into the types of properties that each of our top hard money lenders finance.
LendingHome offers hard money loans on residential properties only. Specifically, the hard money lender funds:
|Residential Real Estate||Commercial Real Estate|
Patch of Land offers hard money loans on both residential property as well as commercial property. Specifically, Patch of Land funds the following:
|Residential Real Estate||Commercial Real Estate|
Lima One Capital is the only lender on our list that issues short-term as well as permanent loans. Lima One offers fix and flip loans for residential properties that include single family as well as multi-family and apartment buildings. Their fix and flip loans include rehab loans, cash out refinances, and construction loans.
Lima One Capital also offers permanent rental loans with 30-year terms. These permanent loans can be used to finance single-family rentals or a portfolio of single-family homes. The properties cannot be owner-occupied to qualify.
Specifically, Lima One Capital funds the following types of properties:
|Residential Real Estate||Commercial Real Estate|
Maximum Loan Amount
Hard money lenders typically issue loans based on the percentage of a property’s loan-to-value (LTV) ratio, after-repair-value (ARV), and sometimes a percentage of its loan-to-cost (LTC).
Properties in good condition typically receive a loan amount as a percentage of its purchase price, known as its LTV ratio. This is the case when long-term buy-and-hold investors either can’t qualify for a conventional mortgage or need quick financing to compete with all-cash buyers. After the property is purchased, investors fill their property with tenants before refinancing with a conventional mortgage.
Properties in poor condition usually receive a loan amount as a percentage of its expected fair market value (FMV) after repairs, known as its ARV ratio. This is the case when short-term rehabbers look to purchase, renovate, and sell a property within 12 months. It’s also the case when buy-and-hold investors seek to purchase and renovate a property before finding tenants and refinancing with a conventional mortgage.
Some hard money lenders also issue hard money loans as a percentage of a project’s expected costs. This is known as a projects loan-to-cost (LTC) ratio and is common for commercial real estate projects such as new office developments. Like LTV, hard money lenders use LTC to loan out a percentage of the expected cost to construct the commercial building.
Patch of Land: Patch of Land is a hard money lender that issues loans for both residential and commercial properties. Similar to LendingHome, Patch of Land issues loans based on a property’s LTV or ARV.
Average Interest Rates
Hard money lenders typically charge interest rates that are higher than those found on conventional mortgages. This is due to hard money loans’ shorter terms, interest-only payments, and increased risk for lenders. Interest payments are considered part of an investor’s “holding costs,” which are the monthly fees that incur prior to selling or refinancing with a conventional mortgage.
However, since monthly hard money loan payments are typically interest-only, the higher interest rates actually result in a lower monthly payment when compared to an amortized conventional mortgage. Let’s take a look at the average interest rates of each of our top lenders.
Patch of Land: Patch of Land issues hard money loans with interest rates that range from 7.99% – 13%+. However, Patch of Land tells us that it’s possible to receive interest rates as high as 20% or more, depending on the qualifications of the borrower and property. Like LendingHome, Patch of Land offers interest-only monthly payments and the repayment of its hard money loan in full at the end of its term. There is no penalty for prepayment.
Average Lender Fees
Hard money lenders typically charge lender fees known as “loan origination fees” or “points.” These fees are usually taken directly out of the hard money loan and aren’t considered out-of-pocket expenses.
In addition to lender fees, borrowers of hard money loans should typically expect to cover the following, many of which are out-of-pocket fees:
- Closing costs for the purchase and the sale
- Independent appraisal costs
- Loan application fee
- Prepayment penalties
- Loan extension penalties
Let’s take a look at the specific fees charged by each of our three hard money lenders.
Patch of Land: Patch of Land offers residential and commercial hard money loans with slightly higher fees than LendingHome. Specifically, Patch of land charges the following on its loans:
Lima One Capital: Lima One Capital offers residential fix and flip and permanent loans with comparative fees to LendingHome. Specifically, Lima One Capital typically charges the following fees:
Average Loan Term
Hard money loans have a typical loan term between 1 – 3 years. However, some hard money lenders issue loans up to 5 years and also allow for loan extensions. With loan extensions, additional fees are charged and interest rates usually increase, adding to an investor’s holding costs.
Some hard money lenders also assess a prepayment penalty for early payment between 1% – 3%. Depending on the type of project, it might make sense to repay the loan early and incur any prepayment penalty. For example, if an experienced rehabber takes out a 1 year loan but fixes-and-flips a house in 3 months, the penalty for early repayment may be less than the extra 9 months of interest payments.
However, some hard money lenders don’t have early repayment penalties, giving investors maximum flexibility with their timeline. Let’s dive into each of the average loan terms of our hard money lenders.
Patch of Land: Patch of Land offer hard money loans with loan terms between 1 – 3 years and doesn’t have a prepayment penalty. This gives residential investors as well as commercial investors the opportunity to spend up to 3 years purchasing and renovating a property before finding tenants and refinancing with a conventional mortgage.
Hard money loans make it easy to qualify for a real estate loan. Hard money lenders are used to working with borrowers with low credit, borrowers in need of a quick financing, as well as fix-and-flippers.
Hard money lenders typically focus on the property itself when assessing a loan application. When it comes to the property, they’ll want to know such things as:
- Address and location
- Initial purchase price
- Scope of rehab work for fix-and-flip projects
- Rehab timeline for fix-and-flip projects
- Contractor bids for fix-and-flip projects
- Expected “after-repair-value” (ARV)
However, hard money lenders also check the qualifications of the borrowers themselves. Potential hard money borrowers should expect to provide the following:
- Personal credit history report
- Personal bank statements
- List of past investment projects
Let’s take a look of each of our three hard money lenders and their specific qualifications.
LendingHome breaks down its qualifications into two types: prequalification and funding. The prequalification stage takes as little as 3 minutes and gives a borrower some back of the napkin numbers regarding his or her potential loan. During funding, LendingHome requests in-depth documents in order to verify the numbers given during prequalification, assess the loan opportunity, and fund the loan.
Specifically, borrowers should expect to have the following in order to qualify for a hard money loan with LendingHome:
|Prequalification (3 Minutes)||Funding (10 - 15 Days)|
Patch of Land also breaks down its loan approval process into two stages. However, unlike LendingHome, Patch of Land requires that all of a borrower’s documents be submitted during prequalification. The hard money lender then conducts an independent background check of the borrower, reviews all documents, and calls the borrower regarding final appraisal, loan terms, and funding.
Patch of Land focuses mainly on the experience of the borrower as well as the current fair market value of the property when assessing qualifications. When a borrower applies with Patch of Land, he or she should expect to have the following:
Lima One Capital, like the other two lenders on our list, breaks its hard money and permanent loan approval process into two steps. The first step is prequalification where the same or similar preliminary documents are required. This helps the lender give a borrower a loan estimate based on qualifications. During the funding stage, more information is gathered and the actual loan is issued.
Specifically, borrowers should expect to have the following in order to qualify:
Average Time to Funding
One of the key benefits with hard money loans is that they’re fast. From prequalification to approval to funding, hard money lenders can typically finance a loan in a third of the time of a conventional mortgage.
Prequalification typically takes a matter of minutes and the time to funding takes a few days. This helps investors compete with all-cash buyers and purchase properties that sell quickly. Let’s look at each of our hard money lenders funding time in more detail.
Patch of Land: Patch of Land is the fastest hard money lender on our list when it comes to receiving funds. This is because Patch of Land “prefunds” their loans before officially funding it using its crowdfunding platform of accredited investors. This is in contrast to LendingHome and Lima One Capital, both of which don’t prefund and instead wait until they can crowdfund the loan with accredited investors.
Lima One Capital: Lima One Capital an online hard money lender that offers a quick and seamless online application process. This online application lets borrowers get prequalified in as little as a few minutes. It’s during this state that borrowers submit their preliminary borrower information.
Reputability (Experience + Service)
The hard money lending market is wrought with local lenders that offer poor service. To help, we focused on major hard money lenders that service borrowers nationally. Specifically, reputable hard money lenders should have a wealth of previous lending experience coupled with a dedicated customer service staff.
We’re happy to say that each of our top three hard money lenders are both established as well as offer a high level of service. Let’s take a look at the reputability of each of our three hard money lenders.
Patch of Land: Patch of Land is a national hard money lender that has funded more than 400 total real estate projects.
Lima One Capital: Lima One Capital is a national hard money lender that’s raised more than $1 billion in capital from institutional investors. The lender also has more than 60 employees that offer dedicated customer service and support for all of their loans. Like the other two lenders on our list, Lima One capital is a full-service lender that helps borrowers throughout the lending process.
Hard money lenders provide short-term financing options for buy-and-hold investors as well as fix-and-flip investors. Further, hard money loans can be used to finance both residential property, commercial property, as well as rehab projects.
Our best hard money lender for small businesses is LendingHome, due to its comparative lower interest rates and fees and comparatively higher ARV and LTV ratios. Interest rates start as low as 7.5% and prequalification takes just minutes: