Hard money lenders have no minimum credit score because they focus more on property value and overall real estate projects.  Although lower scores may still qualify for a loan, you can expect higher rates and larger down payments if credit is low.

Getting a hard money loan in Maryland is relatively easy compared to traditional financing since the approval process is based more on the property’s value or viability of the overall project than credit and income history.  Most lenders will require down payment funds, a clear exit strategy to repay the loan, and typically have higher interest rates than banks (e.g., 12-14%).  The approval process and overall transaction are usually much faster than a bank (ex.. a few days instead of a few weeks)

When choosing a hard money lender in Maryland, compare their reputation, location, and loan terms.  Referrals from other investors are a great way to find hard money lenders or private lenders.   Most lenders attend real estate investor groups.  Including the Real Estate Investing Incubator Meetup Group.  Mortgage Brokers also work with direct lenders, Real Estate Agents, and Title Companies.  Finally, you can search for ‘hard money lenders near me’ online.   Make sure to check their online reviews and if they are local.

One of the greatest things about a hard money loan is the speed at which you can get one. Approvals typically happen within 24 hours, and settlements can occur in less than a week. Many loans we close are within a few business days. However, remember that the lender has due diligence and underwriting to conduct depending on the overall project. This may include property inspections, ordering and inspecting title work, and drafting lender documents. Depending on the circumstances, this could take anywhere from a few hours to a week, but in a rush situation, we can speed up the process to accommodate you.

The down payment for hard money lenders typically ranges from 10% to 40% of the property’s purchase price. The exact amount depends on the overall project, the borrower’s creditworthiness, experience, and overall property value.  Hard money lenders focus more on the overall project than the borrower’s credit history.

The average interest rate for Maryland hard money lenders typically ranges between 12% and 15%, depending on the loan-to-value (LTV) ratio, down payment amount, borrower’s experience, credit scores, and market conditions. These rates are higher than banks or traditional lenders because hard money loans are short-term and funded with private capital.

Most hard money lenders that use private capital don’t require a standard appraisal. However, they may use a broker price opinion (BPO), an internal valuation, or a comparative market analysis instead of a full formal appraisal. The focus is primarily on the property’s value rather than the borrower’s credit history. Banks and institutionally backed lenders typically require a full appraisal.

Typical terms from hard money lenders in Maryland may differ, but expect to see:

• Loan Term: 6 months to 3 years (usually short-term)
• Interest Rates: 12% to 15% (higher than traditional loans)
• Loan-to-Value (LTV) Ratio:55% to 65% of the property’s value
• Down Payment: 10% to 40% (varies by lender and risk)
• Origination Fees: 2% to 5% of the loan amount
• Repayment: Interest-only payments with a balloon payment at the end

Hard money loans are primarily used for fix-and-flip projects, real estate investments, bridge loans, or situations where fast funding is needed. Hard Money Lenders fund investment residential and commercial loans.

The 4 C’s of lending in order of importance are:

Collateral: This is the asset (e.g., real estate) securing the loan, against which the lender will have a 1st lien/mortgage/deed of trust.

Character: Does the borrower have good characteristics, communication, and the ability to perform and not default on the loan?

Capacity: The borrower’s ability to perform on the loan. Do they have enough cash down payment and reserves? Do they have the ability to complete the construction project?

Credit: The borrower’s credit history and score indicate their ability to repay debt.

Hard money lenders determine the After-Repair Value (ARV) by analyzing comparable sales (comps) of similar properties and assessing local market trends. They review the borrower’s construction scope, including renovation plans and budget. They may also use a broker price opinion (BPO) or a professional appraisal or Realtor to estimate the property’s potential value after improvements. Additionally, a borrower’s experience with past real estate projects can influence the lender’s assessment. Typically, lenders offer loan amounts between 55% and 65% of the ARV to maintain a safety margin against market fluctuations.

Real estate investors and commercial property owners borrow money from hard money lenders for several reasons, primarily when they need quick and flexible financing that traditional banks cannot provide. Hard money loans are popular among real estate investors, house flippers, and those purchasing distressed properties because they focus on the property’s value rather than the borrower’s credit score or income. These loans allow faster approvals and funding (often within days), flexible terms, and financing for properties that banks may not approve. Real Estate Investors also use hard money loans when they need short-term funding, such as bridge loans, or when competing with cash buyers in competitive markets. Most Hard Money Lenders charge higher interest rates and fees, which typically only makes sense for shorter-term projects.

Yes, many hard money lenders pull credit, but it is usually not the primary factor in their lending decisions. Unlike traditional lenders, hard money lenders focus more on the property’s value and equity than the borrower’s credit score. However, some lenders may review credit reports to assess financial responsibility, past bankruptcies, or outstanding debts. A higher credit score can sometimes lead to better loan terms, lower interest rates, or reduced down payments, but even borrowers with low credit can still qualify if they have substantial collateral (a suitable property) and a solid investment plan (have the ability to execute/perform on their project).