Hard Money Loans And Down Payments: What You Need to Know

When considering a hard money loans for your real estate investment, understanding the role of down payments is crucial. While hard money loans are often associated with lower down payment requirements compared to traditional mortgages, there are still factors to consider. Let’s break down the nuances of down payments in hard money lending. 

NOTE: CoreLend Financial does NOT require downpayments, while most lenders do. If your purchase and rehab costs fit with 75% of the after-repair value, CoreLend will not require you to make a downpayment and can fund your deal 100%. 

Down Payments in Hard Money Lending: The Basics 

• • Flexibility in Down Payments: Unlike traditional mortgages with strict down payment requirements, hard money lenders often have more flexibility. They typically focus on the property’s value and your investment experience rather than your credit score. 

• • Range of Down Payment Requirements: While some lenders might offer 100% financing, most hard money lenders require a down payment, which can range from 10% to 30% of the property’s purchase price. 

• • Factors Affecting Down Payment: The required down payment can vary based on several factors, including the property’s condition, the borrower’s experience, and the lender’s risk assessment. 

Strategies for Meeting Down Payment Requirements 

• • Leverage Other Investments: If you own other properties, consider using equity from those investments to fund the down payment for your new project. 

• • Partner with Other Investors: Bringing in additional investors can help you pool resources to cover the down payment. 

• • Explore Alternative Financing: Consider options like seller financing or crowdfunding to supplement your down payment.