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What do Hard Money Lenders Look for in Applicants?

If you’re thinking about applying for a hard money loan to expand your real estate portfolio, you probably wonder what hard moneylenders look for in applicants.

The requirements aren’t a lot different from any other loan program, but they can be more flexible. Since hard money lenders focus on the collateral rather than the borrower, there are some nuances you should know.

A High Property Value

The first factor is the property’s value. This is the loan’s collateral so it’s the most important. The more a property is worth compared to how much you borrow, the easier it is to get approved.

If the property you’re using for collateral isn’t enough, you may be able to work with a lender that will cross-collateralize, but most lenders want the collateral from the property you’re using the funds for.

A Good Down Payment

Lenders like to see your own investment in the property. Your loan-to-value ratio compares how much you invest in the property to the property’s value. Ideally, you should invest 20 – 30% to increase your chances of approval.

Your Real Estate Experience

If you’re buying a home to fix and flip or buy and rent out, it helps if you have some type of real estate experience.

Since everyone needs to start somewhere, this may be a hard step, but any real estate experience you can show can help. For example, if you house hacked and bought a multi-unit property, living in one unit and renting out the rest, that’s experience.

Maybe you have experience in buying a property, living in it, and then turning it into a rental after a few years.

Keep track of all experience to use as a compensating factor when you apply for a hard money loan.

Your Network

It takes a village to invest in real estate. If you have a network of contractors and real estate professionals, you can use this to your advantage. Having contracted rates for renovations and other real estate tasks can help lower your costs and increase your chances of getting approved for financing.

Showing lenders that you have a real estate network and that you all work together to complete the transactions increases the likelihood of the transaction being successful in the eyes of the lender.


It’s always important to be honest about your qualifying factors. Let lenders know your situation so they can match you with the right program. Every factor must be verified, so stretching the truth is never a good idea.

Final Thoughts

Getting approved for a hard money loan is much easier than most other loans, but you still must prove you qualify. Giving lenders as many ‘good factors’ as possible will help you get approved for your hard money loan. Whether you’re looking to buy a rental home or fix-and-flip, a hard money loan can be just what you need. Contact us today so we can match you with the perfect lender. We have a wide network of hard money lenders that are great for our borrowers!

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