10 Best Hard Money Lenders: Our Favorite Bridge Loans for Flipping

A hard money loan offers a great short-term financing solution for rehabbing and flipping investment property. But unlike a traditional loan, you can't go to any old conventional lender to get one. Most traditional lenders don’t even offer hard money loans.

So where can you find them?

We have the answer. We’ve rounded up the best hard money lenders. In this article, we’ll talk about their benefits and limitations so you can find the right loan option for you.

A hard money loan, also called a "short-term bridge loan," is a type of loan usually given out by an individual or company — not a bank — for a real estate transaction. It is often a last-resort loan based on the value of the property you're buying. 

Hard money loans are different than traditional loans in a few ways:

• The funding time is shorter.
• Hard money loans are not given by banks but by individuals.
• A hard money loan is riskier because credit worthiness isn't considered but the value of the property is.

Hard money loans are usually used by property flippers who plan on buying a property, fixing it up and selling it very quickly. A hard money loan is helpful because closing is fast and you do not need a high credit score because you are not getting the money from a bank. Instead the loan comes from an individual who gets to set the terms. 

A hard money loans has to be paid off quickly (usually within one to three years). If the borrower does not pay it off, the lender can take the property, which was used as collateral. 

With traditional loans, a high credit score typically means you have a better chance at a larger loan and a lower interest rate. The terms are set and tend to be rigid. With hard money loans, the terms are more flexible. You may be able to re-negotiate payment terms throughout the loan.

Traditional loans are regulated because they are offered by banks. With very few regulations, anyone willing to loan hard money can arrange the transaction as they see fit — which may not be advantageous for you. Consider shopping around if you can and comparing offers.

Different hard money lenders have different loan requirements, but there are a few things they usually look at.

Since your property doubles as collateral for your loan, they’ll usually want to know about your specific property and project. That’s why an appraisal (among other things) is a typical part of the funding process. They may also ask about your specific rehab plans.

Some hard money lenders may also require you to have flipping experience. While you can find lenders willing to work with first-time flippers, the best deals are usually reserved for experienced rehabbers.

Then there’s the financial side of things. Some hard money lenders have specific income or liquid asset requirements. (Basically, they want you to have money in the bank). And most lenders will check your credit. However, they don’t all have a specific credit score requirement.

Finally, pretty much all lenders will require you to have an actual business (usually an LLC) to get funded. They don’t fund individuals. That means you’ll also need a business bank account.

Of course, your specific lender will walk you through their own requirements.

A commercial hard money loan will often have an origination fee, which is a percentage of the total loan amount. Hard money financing also comes with closing fees, just like any other real estate loan. This can include appraisal fees, title fees and insurance fees.

Some hard money loans come with a prepayment penalty. Be careful when getting one of these. Remember, hard money loans come with high interest rates because they’re designed to be paid off or refinanced ASAP after finishing a project. You don’t want to get a nasty (and costly) surprise when that time comes.

If you want to find a good hard money lender, take a look at our recommendations below. We’ve found some great options.

Wondering how to compare hard money lenders? You’ll want to look at a number of factors:

• Loan amounts
• Interest rates
• LTV (loan-to-value) and ARV (after repair value) percentages
• Minimum time to closing
• Down payment
• Prepayment penalty (if any)

You’ll also want to make sure your hard money lender of choice operates in your area (most have at least a few state restrictions) and funds your type of project (townhome, condo, single-family home, etc.).

Flip Funding offers enough versatility to work for all sorts of property projects, making it our favorite hard money lender overall.
As you may know, many hard money lenders only fund a particular type of project. Flip Funding, on the other hand, has loan programs for all sorts of property projects.

For example, its Fix and Flip term loan lets you purchase and rehab property, just as you’d expect. But if you have land you want to build on, its New Construction loans offer funding for that. Likewise, if you already own a property and just need the funds, you can turn to Flip Funding’s Rehab loan. It’s also got loans for multi-family, mixed-use, and even commercial property projects.

That flexibility is far from Flip Funding’s only redeeming quality, though. It also offers competitive rates, a relatively fast closing time, and low minimum down payments. Yes, other lenders may do better at each of those things individually (as you’ll see in the reviews below), but few do it all as well as Flip Funding does.

That makes Flip Funding the best hard money lending for most people.

Groundfloor has an obvious advantage over the other hard money lenders: lower starting interest rates.

Groundfloor’s rates start off some 6% lower than other lenders. Even its maximum interest rate is just 18%. Sure, that’s probably higher than you’d hope to get, but it’s a lower maximum than you’ll find at many lenders (even for traditional term loans).

The catch? Getting a low rate from Groundfloor isn’t the easiest. Your rates and terms depend on several factors, including your experience as a rehabber and the details of the flipping project itself. And Groundfloor has pretty strict guidelines for what kinds of projects it funds. 

For example, only single-family or one-to-four-unit projects qualify―no larger multifamily, commercial, construction, or other projects.

So if experience and an eye for good projects, Groundfloor offers your best chance at low-interest rates.

Sometimes, you just need your loan funds ASAP. That’s when Kiavi comes in handy.

Kiavi has the shortest possible time to closing we’ve seen―as little as five days. For reference, Groundfloor and Residential Capital Partners both have a minimum turnaround time of two weeks, and CoreVest’s is even longer. So Kiavi's five days really stand out. It means you can take advantage of even the most time-sensitive of opportunities.

Now, that short time frame does come with caveats. You, as a borrower, need to get all your documents in pronto and be super responsive after submitting your loan application. Plus, Kiavi offers that five-day time frame to only experienced flippers. So first-timers (all the way to fourth-timers) should expect closing to take longer—around 10 days. You can probably expect Kiavi to take less time than other hard money lenders.

If you don’t have any time to spare, then Kiavi’s turnaround speed makes it the best lender for you.

You've probably heard the saying it takes money to make money, but sometimes you want it to take just a little less money to get started. Fortunately, Residential Capital Partners understands.

Residential Capital Partners offers hard money loans starting at a 0% down payment. Other lenders ask for anywhere from 10% to 20%, which can add up quickly (especially if you’ve got a big project in mind). But Residential Capital Partners offers its down payment–free deal to all its borrowers.

Yes, you’ll still have to pay closing costs (title insurance, property insurance, and appraisal fees). And depending on your flipping experience and financial qualifications, Residential might offer you a lower percentage of the property’s ARV (after repair value) than other lenders would.

If you want to save money on a down payment, Residential Capital Partners lets you do exactly that.

Many lenders offer hard money loans (like the 10 on this list), but not many offer a hard money line of credit. CoreVest does.

In addition to its usual bridge loan, CoreVest has a Fix and Flip line. It works just like a business line of credit. That means you can draw from it, repay your draw amount, and draw again. In other words, you won’t have to reapply for a new commercial hard money loan every time you start a new project―instead, you can just draw from your Fix and Flip line.

Keep in mind that these lines start at $1 million. So if you mainly deal in smaller projects, CoreVest’s line might be overkill. (You can always apply for its bridge loan instead.) Note also that CoreVest looks for borrowers that have completed at least a couple of projects. So brand-new flippers should look for a different lender.

But if you have lots of projects coming your way, CoreVest’s Fix and Flip line offers a convenient way to finance them.

Patch Lending is an unusual hybrid of lending and crowdfunding. Patch Lending initially funds your hard money loan, but then it invites investors to crowdfund the loan amount in return for interest. It’s an exciting model, and borrowers seem to like Patch Lending overall.

That said, it’s not the cheapest or fastest lender out there. Plus, we’ve seen some grumbling from dissatisfied investors, which makes us worry about Patch Lending's future. That shouldn’t necessarily keep you from borrowing, but it does keep Patch Lending from being one of our top picks.

Sherman Bridge Lending offers perfectly good hard money loans with reasonable rates and turnaround times. There’s a lot we like about it, and we’d happily recommend it to many borrowers.

So why is it only an honorable mention? Well, Sherman Bridge has some of the more restrictive hard money loans out there. You can only use them to fund projects for single-family or two-to-four-unit projects. Plus, it doesn’t deal with first-time flippers. That means Sherman Bridge isn’t as well-rounded or competitive as other lenders. It’s still a solid choice, but it’s not our favorite.

Lima One offers pretty low-interest rates compared to most hard money lenders on this list. So if saving on interest matters to you but Groundfloor doesn’t work, Lima One provides a good alternative.

Just note that Lima One places some restrictions on first-time flippers. For example, they can’t qualify for all of its loan types. Also, Lima One offers lower percentages of both LTV (loan-to-value) and ARV (after repair value) than other lenders, so you may get less money overall.

RCN Capital is another hard money lender that’s good but not quite competitive enough. Take its interest rates. Sure, they’re reasonable—but far from the lowest we’ve seen.

Throw in the fact that first-time flippers can qualify for only some loans, plus prepayment penalties on some loans, and RCN Capital lands squarely in honorable mention territory. In other words, it’s fine, but it’s not the best.

If we’re being honest (we are), we think Lending One has a lot to offer, but we don’t know that for sure. Its website is woefully lacking in information. Crucial data such as interest rates, maximum loan amounts, ARV, down payments, and more are all missing. But it does invite you to call for more information.

That sort of coy invitation is annoying at the best of times (why not put the information on the internet?). But when we try to call and then have to leave a message without getting any answers, it’s downright obnoxious. We’re still including it because we’ve read good things. Just know that you’ll have to confirm that for yourself because we, unfortunately, couldn’t.

If a hard money loan feels too risky for you, don't worry. We have alternatives. 

Commercial bridge loans are the closest alternative to a hard money loan. Both loans are similar in that they are short-term loans with large origination fees and high interest. 

The biggest difference is that they are given by traditional banks making bridge loans safer than hard money loans. 

Crowdfunding is a good standard and becoming more and more popular. Essentially, crowdfunding is exactly what it sounds like — you are funding your real estate loan via a crowd of people.

There are different platforms where you can state your financial goals and the people who want to support your business can donate. The popular platforms include Kickstarter, GoFundMe, and Patreon. These platforms are often reward based and may not be a good alternative for a hard money loan. 

Good news for you! There are platforms that work for businesses and not creative projects or healthcare donations. This is called equity crowdfunding and it can be great way of raising funds without having to deal with hard money lenders.

Peer-to-peer loans  are loans by an individual investor instead of a credit union or bank. 

Peer-to-peer loans are not as risky as hard money loans because, even though they are individuals lending money similar to a hard money loan, they are highly regulated and usually do business through different lending platforms like Funding Circle or StreetShares. 

Another difference between hard money lenders and P2P lenders is that lender never personally interacts with the borrower in a P2P loan. The lending platform mediates the transaction and makes sure everything is done on above board. 

With a hard money loan from the lenders above, you can get the cash you need to buy and improve a property. So no matter what your priority is―whether it’s a fast closing or a low-interest rate―we’ve found a hard money lender for you.

Now it’s up to you to apply for your loan and complete your project―and (hopefully) make a tidy profit along the way.

Before you accept a hard money loan, make sure you understand how much your hard money loan will cost by using our commercial loan calculator.

Enter your loan needs and qualifications to get matched with a list of lenders best suited to you. Then, sort by the financing factor that you find most important. (Note: not all lenders allow personal loans for business use.)

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.