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Guide to Applying for a Hard Money Loan

 



 

  • The minimum for hard money loans is $1,000,000, and the maximum is $100,000,000.  

     
  • The maximum loan to value allowed is 50% for land, and 65% for other kinds of property.  In addition, a borrower is required to have at least 20% cash or equity invested in a project.  The remaining 15%, of the value of the collateralized property can be financed in the form of a seller carry back or other subordinated 2nd mortgage.

     
  • Complete and submit the Hard Money / Land Acquisition and Development Application.  Be sure to complete the Executive Summary part of this application.  Include photos if available.

 

  • After the completed Hard Money / Land Acquisition and Development Application has been reviewed, the borrower will be notified within a few days as to whether or not the funding source can proceed with the process of due diligence, and subsequent funding of the new hard money loan.

 

  • If the funding source decides it can proceed with the process of due diligence, the borrower will be sent a Letter of Interest with a term sheet.

 

  • When a borrower receives a Letter of Interest, he signs it and returns it with a deposit, to cover the down payment for the 3rd party costs of due diligence.

 

  • Due diligence costs include the cost of an appraisal, title report, legal document preparation, visit to the property for an inspection, escrow costs, etc. At closing, the sum of the initial deposit will be credited against the cost of due diligence, and any balance will be refunded to the borrower.  Also, in order to cap the borrower's out of pocket expenses, if the cost of due diligence exceeds the borrower's initial deposit, the funding source will wrap the extra cost into the new hard money loan.

 

  • Complete the commercial loan application and submit it.  After the funding source has reviewed this application, the borrower will receive a final loan decision within seven business days.

 

The borrower's new hard money loan will be funded approximately five to seven business days after it has been approved.

 

Questions and Answers About Hard Money Funding

Land Acquisition and Development

Hard Money / Land Acquisition and Development Application

Resources:  Financial Links /Glossary

 

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