Hard Money Loan FAQ for California

A short-term, asset-based loan secured by real estate and funded by private or portfolio lenders. It's underwritten on the property's value and your exit — not your income — and used for investment deals like flips and bridges.

Private lenders, portfolio lenders, and funds — not traditional banks. A broker connects you to the right one for your deal and shops the terms.

The loan is secured by a "hard" asset — the real estate itself — which is the lender's primary security rather than your creditworthiness.

They overlap. Hard money is often used as a bridge, but "bridge" describes the purpose (spanning a gap) while "hard money" describes the asset-based structure. See bridge loans.

Fix-and-flips, bridge financing, quick closes, auction purchases, value-add rentals, and cash-out on investment property.

Generally ~9.5–15%. Experienced residential flips often 9–12%; construction/higher-risk toward 12–15%. CA prices lower than many states thanks to competition.

Typically 1.5–4 points (most 2–3), each equal to 1% of the loan, paid at closing.

65–75% of as-is value, or 70–75% of ARV on rehabs; loan-to-cost up to 85–90% within the ARV cap.

6–24 months (12 most common), interest-only with a balloon at maturity.

Usually yes — you pay interest monthly and repay the full principal via your exit (sale or refinance) at maturity.

100% of cost (purchase + rehab), available only when the total stays under the ARV cap — not 100% of value. Reserves are still required.

Often none or minimal on short hard money — an advantage for quick flips. Confirm per lender.

Often not — many lenders have no minimum and focus on the asset. Some set a 600–620 floor; stronger credit prices better.

No — hard money is asset-based, so there's no income or DTI check. Great for self-employed and portfolio investors.

Yes, with a solid deal, reserves, and a clear plan — though a first flip usually prices ~1–2% higher. See eligibility.

Usually — most hard money is business-purpose and vests in an LLC or corporation.

Non-owner-occupied SFR, condos, townhomes, 2–4 unit, small multifamily, and select commercial/land. Not primary residences.

Your repayment plan — sell after renovation or refinance into permanent financing like a DSCR loan. Required before funding.

Yes — a common exit. Stabilize, then refi into a lower-rate DSCR or conventional loan.

Often 5–14 days, sometimes 3–5 — the core advantage over a bank's 30–45.

Purchase contract, scope of work/budget, proof of funds, borrower resume, entity docs, and an appraisal or BPO. No tax returns. See the process.

You may negotiate an extension (with fees) or refinance; worst case, the lender can foreclose since the property secures the loan. Plan a realistic timeline and reserves.