Is Private Money or Hard Money a Good Loan??

As a Hard Money Lender/Broker for Northern CA, I provide loans for Owner-Occupied properties which many Lenders/Brokers do not due to increased regulations, licensing, etc. I provide loans for condos, commercial properties, land, investments, etc.   

As a Hard Money or Private Money lender for the last 24 years I have been asked many, many times – “Is that a good loan?”   Initially I would do the analysis of the house payment compared to 30 year fixed rates and the costs divided by the number of years they’d have the loan, blah, blah, blah.  Finally I just told them the simple truth, if it’s the only loan you can get.  That’s a good loan. 

I’m not being flip here, but when your home loan application has been turned down by the 30 year fixed rate lenders, the credit union, the bank you’ve been at for umpteen years and your family won’t loan you money, the truth is the only program left is private money.  And that requires you have equity and an ability to repay the loan (if it’s your principal residence) or a down payment if the loan is to buy a principal residence.

The lending standards nationwide have become so overly restrictive that to get a loan almost requires an act of Congress.  In actuality that is not far from the truth as the federal government now owns most of Fannie Mae and Freddie Mac.  They are trying to tighten up the standards to help the housing industry but they are actually messing up the works.  They sure will not go to bat for a homeowner who desperately needs a loan but if you can prove you don’t need it they will give you one.  Don’t get me started here!

Private money loans are based largely on equity but you do need to be able to prove you can make the payment.  The most you will get is 75% of the value of the property.  If it’s worth $300,000 you will be able to get $210,000.  If you want a 100% loan, hard money will not work.

Happy Home Buyer with more people able to get a new home.  So I ask you again, is private money a good loan?


Forest Tardibuono is a CA DRE Broker and “Guy in the White Hat” of Sun Pacific Mortgage & Real Estate - Your Northern CA Hard Money Lender since 1988.


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