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.

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Hard Money Lenders Comparison Table: LendingHome vs. Patch of Land vs. Lima One

	LendingHome	Patch of Land	Lima One Capital
Best For	Small Businesses	Quick Financing	Permanent Loan Options
Types of Properties Learn More	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 Learn More	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 Learn More	7% - 12%	7.99% - 13%	4.99% - 12%
Average Lender Fees Learn More	1.5% - 2.5% Points 2% - 5% Closing Costs No Prepayment Penalty	2% - 5% Points 2% - 5% Closing Costs No Prepayment Penalty	1.5% - 3.5% Points 2% - 5% Closing Costs No Prepayment Penalty
Average Loan Term Learn More	12 Months	1 - 3 years	1 - 30 Years
Qualifications Learn More	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 Learn More	10 - 15 Days	5 - 7 Days	7 - 14 Days
Reputability (Service + Experience) Learn More	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.

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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.

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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.

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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

LendingHome offers hard money loans on residential properties only. Specifically, the hard money lender funds:

Residential Real Estate	Commercial Real Estate
Single-Family Homes Multi-Unit Properties Apartments Condominiums Short-Sales Foreclosures REOs	N/A

Patch of Land

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
Single-Family Homes Multi-Unit Properties Apartments Condominiums Short-Sales Foreclosures REOs	Mixed Use Offices Shopping Centers

Lima One Capital

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
Short-Term Single-Family Homes Permanent Single-Family Rentals Multi-Unit Properties Apartments Condominiums Short-Sales Foreclosures REOs	N/A

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.

LendingHome: LendingHome can fund residential properties in both good and poor condition. For properties in good condition, LendingHome issues loans up to 90% of its LTV. This means that the hard money lender lends up to 90% of a property’s purchase price, tied for highest on our list.

For properties in poor condition, LendingHome issues loans up to 75% of its ARV, the highest of the three lenders. This means that LendingHome lends up to 75% of a property’s expected fair market value (FMV) after renovations. These loans are most typically rehab loans for fix-and-flip investors. Regardless of LTV or ARV, LendingHome has a capped loan amount of $10 million.

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.

Properties in good condition can receive loans up to a 80% LTV ratio, meaning that Patch of Land will finance up to 80% of its purchase price. Properties in poor condition can receive loans up to a 70% ARV ratio, which means the lender will finance up to 70% of a fix-and-flip’s expected fair market value after renovations. Patch of Land has a cap of $10 million for both loans issued on LTV as well as ARV.

Lima One Capital: Lima One Capital offers the lowest range of loan amounts on our list. The lender can finance fix and flip properties in good condition up to 90% LTV and finance properties in poor condition up to 70% ARV. Lima One Capital also offers permanent mortgages up to 75% LTV for non-owner-occupied rental properties. Their loan amounts range from $50k – $5mm.

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.

LendingHome: LendingHome issues hard money loans with interest rates that range from 7.5% – 12%. This means that LendingHome has the lowest possible interest rates on our list of top hard money lenders. However, LendingHome says that it’s common to receive an interest rate between 9% – 12%.

Interest rates are based on the qualifications of the borrower and the project, as well as based on the size of the hard money loan. LendingHome offers interest-only monthly payments and the repayment of a hard money loan in full at the end of its term. There is no penalty for prepayment.

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.

Lima One Capital: Lima One Capital offers interest rates that start as low as 4.99% for its variable rate permanent rental mortgage. However, the rates start at 6.99% for its 30-year loan if the borrower chooses the fixed rate option. Interest rates start at 7.99% for the lender’s fix and flip loans with maximum interest rates around 12%.

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.

LendingHome: LendingHome offers residential hard money loans with the lowest amount of total fees on our list. Specifically, LendingHome charges all of its borrowers the following:

Lender Fees (Points): 1.5% – 2.5%
Closing Costs: 2% – 5%
No Prepayment Penalty

LendingHome charges its points based on the size of a loan. The hard money lender has a minimum floor of $3,000 for all loans. Lender fees are taken directly out of the loan. The loan application fee and any closing costs are considered out-of-pocket expenses and covered by the borrower.

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:

Lender Fees (Points): 3% – 5%
Appraisal Fee: $300 – $500
Closing Costs: 2% – 5%
No Prepayment Penalty

Patch of land also charges its points based on the size of a loan, with a minimum floor of $3,000 for all loans. Lender fees are also taken directly out of the loan. The appraisal fee and any closing costs are considered out-of-pocket expenses and are covered by the borrower.

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:

Lender Fees (Points): 1.5% – 3.5%
Closing Costs: 2% – 5%
No Prepayment Penalty

Lima One Capital charges its points based on the size of the loan. The hard money lender has a minimum floor of $50k for its loans. Closing costs and loan origination fees are considered out-of-pocket expenses and covered by the borrower.

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.

LendingHome: LendingHome’s hard money loans have a typical loan term of 12 months and requires that the full amount be paid in full at the end of the term. However, LendingHome doesn’t have any penalties on early repayment. This makes LendingHome the shortest lender when it comes to the life of its hard money loans.

Fix-and-flip and rehab investors use the lender’s rehab loans to purchase, renovate, and sell a property ideally within 3 – 6 months. Buy-and-hold investors use LendingHome’s short loan terms to compete with all-cash buyers and purchase and possibly renovate a property before finding tenants and refinancing with a traditional mortgage within a year.

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.

Of course, this also gives fix-and-flippers the option of a shorter-term bridge loan where they can purchase, renovate, and sell a property within a year.

Lima One Capital: Lima One Capital offers hard money fix and flip loans with terms between 1 – 3 years and also doesn’t charge any prepayment penalties. These fix and flip loans can come in the form of a rehab loan, cash out refinance, construction loan, and more. The hard money lender also has permanent rental mortgages with terms of 30 years. Interest rates can be fixed or variable.

Qualifications

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.