About Hard Money Mortgages
Hard money mortgages provide alternative financing solutions for property acquisitions and refinancing when conventional mortgage lending standards cannot accommodate borrower circumstances, property characteristics, or transaction timing requirements. These asset-based loans use real estate collateral as the primary underwriting criterion, enabling approvals for borrowers who may not qualify for traditional mortgages due to credit challenges, income documentation complexities, employment status, or property condition issues. In San Francisco's high-value real estate market, hard money mortgages open property ownership opportunities that conventional financing excludes.
The fundamental distinction between hard money mortgages and conventional loans lies in underwriting philosophy. Traditional lenders emphasize borrower credit scores, debt-to-income ratios, employment verification, and extensive documentation requirements. Hard money lenders prioritize property value, equity position, and exit strategy feasibility, creating accessibility for self-employed entrepreneurs, foreign nationals, investors with complex tax situations, credit-impaired borrowers recovering from financial difficulties, and properties requiring improvement. This asset-based approach streamlines approval processes while providing financing options for challenging scenarios.
San Francisco's expensive housing market amplifies the importance of alternative financing options. With median home prices exceeding $1.2 million, even minor qualification obstacles can exclude buyers from conventional loan programs. Hard money mortgages enable property acquisition while borrowers address credit issues, establish employment history, document self-employment income, or complete property improvements that will qualify for conventional refinancing. These loans serve as bridge financing, enabling transactions that create long-term wealth despite temporary financing challenges.
Hard Money Lender San Francisco provides hard money mortgages for Bay Area sponsors who need quick, decisive execution without conventional bank delay.
We structure each loan around collateral profile, timeline, and exit strategy to support your business plan from acquisition through disposition or refinance.
Frequently Asked Questions
What credit score do I need to qualify for a hard money mortgage?
While we review credit history as part of our underwriting process, we don't have minimum credit score requirements like conventional lenders. We've approved hard money mortgages for borrowers with credit scores ranging from 500 to 800, evaluating each application based on overall circumstances including equity position, property quality, exit strategy, and compensating factors. Borrowers with lower credit scores may qualify with larger down payments (30-40% versus 25-30%), liquid reserves demonstrating financial capacity, or strong exit strategies indicating ability to refinance. We focus on whether the loan makes sense given the collateral value and borrower's plan to address any credit challenges, rather than disqualifying based solely on credit scores.
Can I refinance my hard money mortgage into a conventional loan later?
Yes, refinancing from hard money mortgages to conventional loans is a common exit strategy and our preferred outcome for borrowers using hard money as bridge financing. Most borrowers plan to refinance within 1-3 years after addressing the issues that initially prevented conventional qualification, whether credit improvement, income documentation, seasoning requirements, or property condition upgrades. We recommend beginning conversations with conventional lenders 6-12 months before your planned refinance to understand current requirements and ensure you're taking appropriate steps to qualify. Some borrowers maintain relationships with mortgage brokers who can monitor conventional loan availability and alert them when refinancing opportunities arise. We don't charge prepayment penalties on many of our loan programs, facilitating cost-effective refinancing when the time comes.
How much down payment is required for a hard money mortgage?
Hard money mortgages typically require down payments of 25-35% of the property purchase price, though exact requirements vary based on credit profile, property type, and loan structure. Borrowers with strong credit and documented income may qualify with 25% down, while those with credit challenges or complex circumstances may need 30-40%. Investment properties generally require larger down payments than owner-occupied homes, often 30-35% versus 25-30%. The down payment creates equity cushion protecting both borrower and lender, while demonstrating borrower commitment to the transaction. Cross-collateralization using equity from other properties can reduce or eliminate cash down payment requirements for qualified borrowers with substantial real estate holdings. We evaluate each transaction individually, structuring down payment requirements that reflect specific risk profiles while making financing accessible.
Can self-employed borrowers qualify without providing tax returns?
Yes, self-employed borrowers are excellent candidates for hard money mortgages precisely because our underwriting doesn't rely on tax returns that may not reflect actual income due to business deductions. We verify self-employment income through bank statements (typically 12-24 months), business licenses, client contracts, or accountant letters rather than tax documentation. This approach accommodates entrepreneurs, freelancers, consultants, and small business owners whose tax returns show lower net income than actual cash flow available for housing payments. We evaluate the stability and sustainability of self-employment income, business longevity, and industry prospects rather than focusing on taxable income calculations. Many of our self-employed borrowers have been declined by conventional lenders despite strong actual income, making hard money mortgages essential for their property ownership goals.
What's the difference between a hard money mortgage and a regular hard money loan?
The terms are often used interchangeably, but technically a hard money mortgage refers specifically to loans secured by a first mortgage lien on owner-occupied or residential investment properties with longer terms (typically 3-10 years) and amortizing payment structures similar to conventional mortgages. These loans serve as alternatives to conventional mortgages for borrowers who don't qualify for traditional financing. Hard money loans more broadly include shorter-term financing (6-24 months) with interest-only payments for fix-and-flip projects, bridge financing, or construction, loans not designed as permanent financing. Hard money mortgages generally have lower interest rates than short-term hard money loans due to longer durations and lower perceived risk. Both rely on asset-based underwriting, but hard money mortgages more closely parallel conventional mortgage structures in term length and payment design.
