Real Estate Tips |6 min read

Hard Money Loan Requirements: A Guide to Financing Rentals

There are several ways to finance an investment property. One popular way investors can secure real estate is with hard money loans. However, although hard money loans are a quick way to secure a deal, they can get complicated. So, before you look for financing, it’s crucial to understand all the hard money loan requirements and how to navigate the process. Keep reading as we review hard money lending requirements and what you need to get a loan. 


Contents of This Article:

  • What Is Hard Money Lending?
  • What are Hard Money Loan Requirements?
  • How Can You Finance a Property With a Hard Money Loan?
  • How Much Can You Borrow From a Hard Money Lender?
  • How to Find Hard Money Lenders for Real Estate Investing

What Is Hard Money Lending?

Hard money lending is a form of alternative financing that doesn’t involve your bank or credit score. These loans come from private investors or individuals that will help you finance your investment with your property as collateral. 

Hard money loans are popular for real estate investors and developers interested in flipping properties. Since it’s a quick way to secure funding, investors can quickly restore a fixer-upper and flip it to earn a profit, which they can use to pay back the loan. 

When looking at loan options, many investors are intrigued by hard money loans since they have fewer requirements and are faster to obtain than traditional loans. Next, let’s review some hard money loan requirements and how you can finance a property with one. 

What are Hard Money Loan Requirements?

Hard money loans are a great way to get funding for your investment fast. After all, they aren’t like traditional bank loans, which heavily rely on your personal qualifications. This makes it easier for investors who don’t have excellent credit. 

However, hard money loans are funded by private investors and companies who may have their own terms and regulations. As such, here are some standard hard money loan requirements to consider before applying for one. 


  1. Down Payment
  2. Credit Score
  3. Target Property
  4. Proof of Income
  5. Real Estate Experience

Down Payment

Hard money loans generally require a down payment. Your down payment for a hard money loan may be significantly higher than for a traditional bank loan. After all, hard money lenders want to avoid risk and ensure you can repay the loan. 

So, before looking for a hard money lender, ensure you have enough capital saved for a large down payment. Typically, a down payment for a hard money loan would be between 20% and 30% of the real estate purchase price. However, it can depend on your real estate investing experience. 

Credit Score

Although your credit score doesn’t matter as much for a hard money loan, there are still some requirements. For instance, most traditional lenders require a credit score of 680 to 700. However, hard money lenders will generally require a minimum score of 600. 

The minimum credit score requirements can differ depending on the property you’re looking to purchase and your loan terms. So, talk with your local Maryland hard money lender to see if you qualify for this financing option. 

Target Property

Hard money loans are asset-based, meaning they’re secured by collateral. In this case, the property you’re purchasing is the collateral. So, if you cannot repay the loan, the lender can seize the property. That said, since hard money loans are based on the property, investors need to have a target property in mind to calculate loan terms and other factors. 

Most of the time, hard money lenders use the expected after-repair value of a property to help calculate interest rates and loan terms. So, finding a great property deal is one of the first steps to securing financing. 


Proof of Income

Lenders aren’t going to want to borrow you money if you can’t pay it back within a reasonable timeframe. As such, some lenders will ask for proof of income before they give you a loan. Providing sufficient proof of income can get you approved faster. 

Proof of income may require you to show your tax returns, pay stubs, W2 forms, and bank statements. From there, lenders will look at your finances and expenses to ensure you can repay your monthly loan. As such, your debt-to-income ratio will need to meet their expectations. 

Real Estate Experience

Finally, if you don’t have real estate experience, it can be harder to get a hard money loan. Most lenders like to see that you have some experience with investing, fixing and flipping houses, or landlord experience. After all, taking out a hard money loan comes with some risk, so investors must know how the process works. 

However, it’s important to remember that prior experience won’t necessarily guarantee a loan. You’ll still have to meet other hard money loan requirements and find a desirable property. At the same time, less experience won’t exclude you from getting a loan. It ultimately depends on the property, loan terms, and investment goals. 

How Can You Finance a Property With a Hard Money Loan?


If you meet the hard money loan requirements and are ready to finance your property, a few things to prepare before applying. First, you’ll need to save for your down payment. Once you have enough to fund your loan, you may want to set up an LLC. 

Although it’s not required, setting up an LLC for real estate investing is an excellent way to protect your assets and limit risk. Additionally, most hard money lenders prefer lending to LLCs and corporations. 

Next, you’ll want to search for a reputable Maryland hard money lender. Remember that each lender has different requirements, and loan terms differ. As such, finding a local lender with a good reputation, fast approval rates, and competitive rates and fees is best. 

Once you find a lender, you’ll want to gather all the documentation you need for the loan. For instance, prepare your proof of income and devise a repayment strategy. Remember that hard money loans are short-term, so you’ll typically pay them back within 12 months. So, you’ll want to plan payments accordingly. 

Once you have all the details, you can apply for a hard money loan. Next, let’s discuss how much you can borrow from a hard money lender. 

How Much Can You Borrow From a Hard Money Lender?

When it comes to how much you can borrow from a hard money lender, it ultimately depends on your needs and the investment you’re financing. All lenders differ, so the minimum and maximum loan amounts may vary. Most lenders will provide up to 75% of the property’s value to give you a better idea. 

Some other factors that may determine how much you can borrow are the loan-to-value ratio and the loan-to-project cost. The loan-to-value (LTV) ratio is important since most lenders want you to have some money invested in the property as well. You can calculate the LTV ratio by dividing the loan amount by the property’s value. 

The loan-to-cost (LTC) ratio can also determine how much a lender will fund based on the project’s cost. So, unlike the LTV ratio, which is based on property value, the LTC ratio is based on the whole project, which usually involves renovations or construction projects. 

How to Find a Hard Money Lender for Your Next Investment

Are you looking to finance your next investment with a hard money lender? Knowing the hard money loan requirements and how much you can borrow for your investment is crucial. Then, you can find a Maryland hard money lender to help you secure a property deal. 

Our experts have the licensing and expertise to help make your investment goals a reality. So, if you’re interested in learning more about our services and lenders, contact your local Maryland hard money lenders today!

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