Finding private money lenders for real estate loans is tricky and difficult to do on your own. More often than not, the average real estate borrower doesn’t understand the ins and outs of private money lending, so it makes it difficult to know the process, loan requirements, and where to find those hard money lenders.
The good news is you’ve found the right place to embark on this journey. Our website is dedicated to hard money loans and helping connect real estate borrowers with lenders. Let me get you started by covering the basics of private money loans, then I’ll answer some of the most common questions I answer about these loans.
Understanding Real Estate Hard Money Loans
A hard money loan will allow a borrower to obtain a loan in return for using the property as collateral. This loan can come from an individual or an investor. This investor could be a broker, a commercial lender, a finance company, or an online lender.
A hard money loan could be used for a traditional residential home, a rehab or reno, construction, or raw land.
One major advantage of hard money loans is the length of time to process. In some cases, loans can be in as little as 24 hours. Another advantage you can still obtain a hard money loan when a traditional lender will not approve a loan.
FAQs for Residential Loans
How do I apply for a hard money residential loan?
Begin by finding a residential hard money lender that does the type of hard money loan you are looking for and then request a loan application.
How do I gain access to a list of residential hard money lenders?
You can browse real estate private lenders by state on our website. No other lending guide gives you the ability to search by loan types such as bridge loans, rehab loans, multi-family loans, commercial loans, residential loans, apartment loans, construction loans, and a variety of other types of loans.
Are there hard money lenders for residential loans who are currently lending money?
Yes. Regardless of whether or not the banks are lending, the hard money lenders in our guide are making residential loans to hard money borrowers.
Which is the best lender for a residential loan for real estate?
Our lender list will provide detailed information on each lender and allow you to match lenders up to geography and types of loans. Start by reviewing this criteria, as it will help you narrow down your options and find a lender most suited to your needs.
Where does the money come from in a residential hard money loan?
The funds come from private investors. The source could be an individual investor or a group of investors.
How do I know if I qualify for a residential hard money loan?
Find a lender who specializes in the type of loan for which you are looking. For example, if you need a residential loan, find an expert in residential hard money lending.
Do I need equity to borrow hard money?
Yes and no. Hard money lending is primarily based on the asset you pledge as collateral. In general, most hard money lenders want you to have at least 40% equity in the property. The exact amount of equity varies by lender and investor, but it will be based on the amount and type of collateral. If you do not have equity in the project you are working on, hard money lenders will generally accept other collateral, such as equity in another property, as a guarantee on the loan.
How do I apply for a hard money loan?
Initially, the first step for any hard money loan application is to find a private or hard money lender with the real estate loan type you need. Then, request an application.
Real Estate Title Endorsements
Obtaining a title policy, especially on a private money loan transaction, without endorsements, is like driving a car with no air in the tires. The following is a listing of the most commonly used endorsements.
- FORM 100 : This endorsement offers an explicit extension of coverage to an ALTA Extended Coverage Loan Policy by adding insurance for certain “off-record” matters. The coverage is extended to Covenants, Conditions and Restrictions; encroachments; and the rights to use the land surface for mineral development. Form 100 also assures a lender that existing Covenants, Conditions and Restrictions do not contain any enforceable reverter, right of re-entry or power of termination. This endorsement is not issued in conjunction with policies covering raw land or construction loans.
- FORM 102.4 : A Foundation Endorsement which insures the lender that the foundations of the structure under construction are within the boundaries of the insured land; and that the location of these foundations does not violate the Conditions, Covenants and Restrictions (CC&Rs) included in Schedule B.
- FORM 102.5 : The same as 102.4 with the addition of insurance that the foundations do not — at the date of endorsement — encroach upon any easements referred to in the policy.
- FORM 100.12 : Also used with ALTA policies, Form 100.12 assures a lender that existing Covenants, Conditions and Restrictions do not contain any enforceable reverter, right of re-entry or power of termination.
- FORM 101 : A Mechanic’s Lien Endorsement issued only with a Standard Coverage policy insuring a construction loan deed of trust, it insures the lender against loss if a Mechanic’s Lien establishes priority because of the prior commencement of the work on the improvement.
- FORM 101.2 : A Mechanic’s Lien Endorsement used with either an ALTA Extended or Standard Coverage policy, issued after a Notice of Completion is recorded. Usually requested when a construction loan is exchanged for a permanent loan to the borrower or the loan is designed for sale to another lender.
- FORM 103.1 : An Encroachment Endorsement used with ALTA or Standard Coverage policies which expands the coverage provided by a Form 100. Issued when items listed in the preliminary report are “blanket” easements which cannot be precisely located.
- FORM 108.7 & 108.8 : Both are used to insure the priority of additional advances secured by a Deed of Trust or Mortgage. Form 108.7 is used with Standard Coverage policies. Form 108.8 is the ALTA version.
- FORM 116 : An Address Endorsement used with ALTA policies, designating the street address of the land insured and specifying the type of improvement on said land.
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FORM 116.2: An Address Endorsement used with either an ALTA Extended or Standard Coverage policy which insures an interest in an condominium.
- ALTA Form Endorsements:
- ALTA Form 1 (Street Assessments)
- ALTA Form 2 (Truth in Lending)
- ALTA Form 3 (Zoning) [CLTA FORM 123.1]
- ALTA FORM 3.1 (Zoning- Completed Structure) [CLTA FORM 123.2]
- ALTA Form 4 (Condominium) [CLTA FORM 115.1]
- ALTA Form 5 (Planned Unit Development) [CLTA FORM 115.2]
- ALTA Form 5.1
- ALTA Form 6 (Variable Rate Mortgage) [CLTA FORM 111.5]
- 6.1 (VRM- Regulations) [CLTA FORM 111.6] 6.2 (VRM- Negative Amortization) [CLTA FORM 111.8]
- ALTA Form 7 (Manufactured Housing) [CLTA FORM 116.5]
- ALTA Form 8.1 (Environmental protection lien) [CLTA FORM 110.9]
- ALTA Form 9 (Restrictions, Easements & Minerals) [CLTA FORM 100.2]
- ALTA Form 10 (Assignment of Mortgage) [CLTA FORM 104.12]
- ALTA Form 11 (Modification of Mortgage)
- ALTA Form 12 (Aggregation/Tie-In) (lender only)
- CLTA Endorsements — primarily in accordance with California Land Title Association
- 100 Used with A.L.T.A. lender’s policy. No CC&R’s that can impair or prime the insured mortgage lien; no past or present violations of CC&R’s ; no encroachments onto the land or onto adjoining land or onto easements located on the land; no right of surface entry by holder of mineral rights. This endorsement can be modified to provide similar broad coverages to an owner and a similar endorsement (C.L.T.A. 126) is routinely included in the standard form of homeowners title policy. A modified version of the C.L.T.A. 100 endorsement has been adopted as the A.L.T.A form 9 endorsement (see C.L.T.A. 100.2)
- 100.1 Same as C.L.T.A. 100; used with C.L.T.A. rather than A.L.T.A. form of policy.
- 100.2 Identical to A.L.T.A. Form 9 endorsement. Intended to be used in connection with improved property. Includes compliance with building setback lines. The latest (1992) version includes coverage against recorded notices of violations of covenants, conditions and restrictions relating to environmental protection.
- 100.4 No present violation of a specific covenant, condition or restriction. Does not provide coverage against future violations.
- 100.5 Owner’s policy version of 100.4.
- 100.6 No present or future violation of a specific covenant, condition or restriction.
- 100.7 Unenforceability of present violation of specific covenant, condition or restriction. Does not provide coverage
against future violations.
- 100.8 Unenforceability of present or future violation of specific covenant, condition or restriction.
- 100.12 Unenforceability of reverter, right of reentry or right or power of termination upon breach of covenant, condition or restriction. Includes coverage against any exercise or attempted exercise. Broadens the coverage provided by C.L.T.A. 100, paragraphs I (b) and 2 (a).
- 100.13 Assessment liens under declaration of covenants, conditions and restrictions are subordinate to the insured deed of trust.
- 100.17 Validity of modification of recorded declaration of covenants, conditions and restrictions. Useful when not all
parties execute modification instrument.
- 100.18 Same as C.L.T.A. 100. 12 plus assurance that title is not unmarketable in view of the existence of the reverter,
right of reentry or power of termination.
- 100.19 No present violations of existing declaration or covenants, conditions and restrictions.
- 100.20 Unenforceability of present violation of declaration of covenants, conditions and restrictions.
- 100.21 Plans and specifications have been approved as required by the declaration of covenants, conditions and restrictions.
- 100.27 Coverage against loss or lien prior to foreclosure, loss of title after foreclosure or marketability of title acquired on foreclosure as a result of a present violation of covenants, conditions and restrictions. This endorsement makes more specific the coverages afforded by paragraphs I (b) and 2 (b) of C.L.T.A. 100.
- 100.28 Unenforceability of specific provision of covenants, conditions and restrictions caused by the construction of specified improvements.
- 100.23 Coverage against exercise of right of surface entry by holder of oil and gas lease.
- 100.24 No right of surface entry by lessee under the terms of the lease.
- 100.25 No violation of declaration of covenants, conditions and restrictions by exercise of subsurface oil drilling operations. Intended primarily for lender to oil and gas lessee.
- 100.26 Coverage against exercise of right of surface entry or use of upper 500 feet of land where FHA loan is involved.
- 100.29 No damage to improvements or landscaping as a result of exercise of surface entry right by holder or reserved mineral rights. Similar to C.L.T.A. 100.23, except involves reserved mineral rights.
- 101 Loss resulting from priority of mechanics lien as a result of commencement of construction prior to recordation of construction deed of trust. May require indemnity of owner or third party.
- 101.1 – 101.9 No mechanics liens following recordation of Notice of Completion applicable to all of the land described in the policy. Usually requires passage of lien filing period or indemnity. If less than all of the land is covered by the Notice, 10 1. 9 should be used.
- 101.2 Same as 101.1, for lender. If less than all of the land described in the policy is covered by the Notice, 101.10 should be used.
- 101.3 No mechanics liens arising out of work under construction or completed. Statutory bond, indemnity or favorable state law required to obtain. If less than all of the land described in the policy is to be covered, 10 1. 11 should be used.
- 101.4 – 101.12 Same as 101.3, for owner. If less than all of the land described in the policy is to be covered, 10 1. 12 should be used.
- 101.5 Notice of Completion recorded in regular form for portion of land; no mechanics liens except as specified; liability limited, usually to amount disbursed by construction lender.
- 101.6 Same as 101.5, except no limit on liability
- 101.8 Narrower version of C.L.T.A 10 1; applicable to C.L.T.A. lender’s policy and covers mechanics liens arising out of work of improvement paid for in whole or in part with proceeds of insured loan.
- 101.13 Provides coverage against mechanics liens resulting from a particular work of improvement without regard to priority. This is an extremely broad endorsement and an indemnity agreement will likely be required.
- 101.14-15-16-17-18 Used with A.L.T.A. construction loan policies in states other than California. Provides mechanics lien coverage similar to C.L.T.A. 10 1.2, 101.3, 101.9, 10 1. 10 and 101.13.
- 102.4 Foundations installed are within property boundaries and do not violate declaration of covenants, conditions and restrictions.
- 102.5 Same as 102.4 plus assurance that foundations do not encroach into easements.
- 102.6 Same as 102.4, except limited to a portion of the land described in the policy and liability is limited to a specified amount, usually an aliquot portion of the construction loan.
- 102.7 Same as 102.5, except limited to a portion of the land described in the policy and liability is limited to a specified amount, usually an aliquot portion of the construction loan.
- 103.1 Coverage against use or maintenance of an easement over or through the land. This coverage is broader than C.L.T.A. 100, which is limited to damage to improvements located or encroaching upon the easement.
- 103.3 No compulsory removal of existing improvement which encroaches upon an easement; limited in scope to designated use of the easement by its owner.
- 103.4 Described easement provides access to a public street.
- 103.5 Coverage against surface entry right to extract or develop water rights excepted from the legal description
- 103.6 No encroachment of improvements onto easement encumbering the land. Satisfies FNMA requirement. Broader than 103.3.
- 103.7 Land abuts upon a named physically open public street.
- 103.8 Same as 103.5, except it applies to damage to improvements where FHA insures the loan.
- 103.9 Coverage against forced removal of improvements which encroach into a public street. Title insurer must approve construction plans.
- 103.10 In case of vertical subdivision of land, coverage against owner of the land lying below the described land exercising a right to use the surface of the land.
- 104 – 104a – 104a Validity of assignment and continued priority of insured deed of trust. Not to be used with assignments for collateral.
- 104.1 Validity of assignment of deed of trust and no reconveyance of record.
- 104.4 Validity of assignment of deed of trust as collateral and no reconveyance of record; liability limited to specified amount.
- 104.6 Execution and priority of separate assignment of rents or lessor’s interest in leases given as additional collateral.
- 104.7 Priority of assignment of rents contained in the insured deed of trust.
- 104.8 Same as 104, except excludes loss resulting from lack of possession of the original note or lack of a proper endorsement. 104.9 is the version to be used with the C.L.T.A. form of lender’s policy.
- 104.9 Same as 104.1, except excludes loss resulting from lack of possession of the original note or lack of a proper endorsement.
- 104.11 Same as 104.4, except excludes loss resulting from lack of possession of the original note or lack of a proper endorsement.
- 105 Insures multiple deeds of trust in the same A.L.T.A. policy.
- 105.1 Insures multiple deeds of trust in the same C.L.T.A. policy
- 106- 106c – 106.1 – 106.2 – 106.2a – 106c – 106.1 – 106.2 – 106.2a Assurance that abutting owner rights of access have been relinquished; applicable in California in cases of Freeway construction.
- 107.1 Allocation of policy liability to individual lots of parcels of land.
- 107.2 Increase in face amount of policy.
- 107.5 Improvements included in definition of land even though severed.
- 107.9 Add another named insured which is a nominal successor in interest to the named insured under the policy
- 107.10 Add another named insured where the new party was not named because of error or misunderstanding.
- 107.11 Validity of lien continues despite lienholder acquiring an interest in the fee; must show nonmerger and include appropriate recitals in the note and deed of trust.
- 108.7 Priority of insured lien with respect to additional advance authorized but not required under the note and deed of trust. Covers vesting, priority and lack of reconveyance, unless excepted. Used with the C.L.T.A. form of lender’s policy only.
- 108.8 Same as 108.7, except used with the A.L.T.A. form of lender’s policy. Because of the broader coverages under the A.L.T.A. policy, an inspection is made to determine if any construction has recently occurred.
- 108.9 Similar to 108.7, except issued to the California Department of Veteran Affairs.
- 108.10 Increases amount of coverage to reflect an increase in a revolving credit limit. Similar to 108.8.
- 109 No assignments of record of lessor’s interest in community oil and gas lease where lessor’s interest is appurtenant to the lessor’s land.
- 110.3 Owner of mineral rights has conveyed right of surface entry to the surface owner.
- 110.1 Deletion of an exception shown in Schedule B; can be used to create partial extended coverage by deleting one or more of the printed exceptions.
- 110.4 Insured deed of trust has been properly modified. Does not cover intervening matters.
- 110.5 Insured deed of trust or obligation secured has been properly modified and is prior to other liens and encumbrances except as specified. Used with A.L.T.A. extended coverage lender’s policy only. Used frequently in hard money loan transactions when buying a pre-funded loan. Be sure the hard money lender is willing to have the title company hold the original assigment and provide this endorsement using a sub-escrow.
- 110.6 Same as 110.5, except coverage is limited to matters of record. Used with C.L.T.A. and A.L.T.A. standard coverage lender’s policy.
- 110.7 Unenforceability of deed of trust or bond shown as an exception or payment of indebtedness secured by them.
- 110.8 – 110.9 Coverage against recorded or statutory environmental protection liens; available only in connection with A.L.T.A. lender’s policy.
- 111 No loss of priority as to remainder upon partial reconveyance of land.
- 111.1 Life insurance company lender’s version of 111. Requires that insurer assure that it will not claim waiver of liability because of partial reconveyance.
- 111.2 Subordination agreement subordinates but does not otherwise impair the lien of the deed of trust.
- 111.3 Same partial reconveyance coverage as 111, plus assurance that there are designated improvements located upon the remaining land and that there are no encroachments on or from the remaining land.
- 111.4 HUD required coverage that neither a conveyance of the land nor a release of a borrower’s liability will impair the lien of the deed of trust.
- 111.5 Variable interest rate provisions do not affect validity, enforceability or priority of the lien of the deed of trust, including with respect to interest as changed.
- 111.6 Same as 111.5, except must refer to specific federal or state statutes authorizing variable rate loans.
- 111.7 Same as 111.5, except includes “renewal of the mortgage” as a covered event.
- 111.8 Same as 111.5, except includes negative amortization
- 111.9 Same as 111.5, except covers a conditional right to refinance under the FNMA 7 year balloon payment mortgage.
- 111.10 Optional advances under revolving credit agreements shall have same priority as advances secured as of the date of the policy, except federal tax liens, matters known to the Insured and bankruptcies; and variable interest provisions shall not affect validity, enforceability or priority of the lien of the deed of trust.
- 111.11 Obligatory advances under revolving credit agreements shall have same priority as advances secured as of the date of the policy, except federal tax liens, matters known to the Insured if the advance is made after occurrence of a default and bankruptcies; and variable interest provisions shall not affect validity, enforceability or priority of the lien of he deed of trust.
- 112 Modifies C.L.T.A. policy provisions to apply to a bond Offering.
- 112.1 Modifies A.L.T.A. policy provisions to apply to a bond offering.
- 112.2 Same as 112, except applies to issuers who are joint powers authorities.
- 114 Allocates insurance liability among more than one insurer on a several basis.
- 114.1 Provides insurance liability among more than one insurer on a joint and several basis.
- 114.2 Allocates insurance liability among more than one insurer on a several basis, except as to a portion of the risk, which is joint and several.
- 115 Insured estate is a statutory condominium and will be taxed as a separate parcel.
- 115.1 Unit and common area are part of a condominium; project documents affecting title comply with law; no present violations affecting use; no recorded environmental liens not shown; no assessment lien priority; separate property tax assessment; no encroachments; and no failure of title due to a right of first refusal.
- 115.2 Same as 115.1 as applicable to planned unit development, except those provisions relating to condominium status.
- 116 Identifies street address and describes improvements and assures that the map attached to the policy shows the correct location and dimensions of the land.
- 116.1 Land is the same as shown on a described survey.
- 116.2 Identifies condominium unit, describes its elements and gives assurance that the project boundaries are as shown on a recorded map.
- 116.3 Described land is the same as a designated parcel shown on a subdivision map.
- 116.4 Insured land is contiguous to other described land.
- 116.5 Manufactured housing unit included in definition of “land”.
- 116.6 Describes specific manufactured housing unit as “land”
- 116.7 Described land is a legal parcel under the California Subdivision Map Act and local ordinances adopted pursuant thereto.
- 119 No defect in lease execution and priority of lease is as shown.
- 119.1 Excludes from C.L.T.A. policy coverage matters which could be ascertained by inquiry of the lessors or the effect of failure to comply with the lease.
- 119.2 Lease is valid and has priority shown. Need estoppel letter from lessor.
- 119.3 Circuity of lien priority endorsement. Used where lease is subordinate to a junior lender’s lien and the senior lender subordinates to the junior loan.
- 119.4 Facilities lease or sublease as security for bond issue is valid and binding, except for specified exceptions.
- 120.2 Lien of deed of trust is subordinate to the described lease.
- 122 Obligatory advances under a promissory note secured by the insured deed of trust have the same priority as when the deed of trust was recorded, except as to tax and assessment liens, and shall be prior to mechanics liens. This is the same coverage against mechanics liens as provided under the AL.TA. extended coverage policy or C.L.T.A. 103. 1.
- 122.2 Same as 122, except the base policy is written for the original advance and coverage increases over time with each subsequent advance.
- 122.3 A.L.T.A. endorsement that are the same as C.L.T.A. 122, except that they have broader mechanics lien coverages in the event that advances are not deemed to be obligatory in a state such as California.
- 123.1 Specifies zone and uses permitted. Applicable to unimproved or improved land.
- 123.2 Same as 123ures. Provides coverage against encroachments, mechanics liens, access rights and violations of covenants, conditions and restrictions.
- A.L.T.A. Form 1 Street assessments that gain priority over the insured lien.