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A hard money loan is a type of short-term financing secured by real estate. Unlike traditional loans that are based on the borrower’s creditworthiness and income, hard money loans are based on the value of the property being used as collateral. They are provided by private lenders like Source Capital rather than traditional banks, allowing for quicker approval and funding.
Source Capital’s hard money loans offer several benefits to borrowers, including:
- Speed: We can fund hard money loans within 7-10 days.
- Easy qualification: Our hard money loans are accessible to borrowers with poor credit, little or no income and those with past bankruptcy, foreclosure, etc.
- Simple process: At Source Capital, we offer a web-based, streamlined platform that allows for less paperwork and constant communication with our clients.
- Direct source: We are the lender so the process from initial contact to funding is handled in-house which saves our clients time with a single point of contact.
There is little to no difference between a private money loan and a hard money loan. In both cases, they are loans secured by real estate financed by individual investors instead of traditional (bank) sources.
The “hard” part of “hard money” refers to a hard asset, real estate, that is used as security for the loan. The “private” part of “private money” refers to the source of funding (private party vs a bank).
Unlike traditional mortgages or other types of secured loans, the approval process for hard or private money loans is much faster and less stringent, making them ideal if funding needs to happen quickly.
Our loans can fund a max of 75% of the after repaired value of your property, to be determined by appraisal. Our purchase/rate and term loans are capped at 80% LTV and cash out programs can fund up to 75% of the current value of the property.
We provide financing for purchase only, buy and hold, purchase and rehab, refinance/cash out, rehab only, new construction and multi-family/mixed use projects.
Just visit our website, www.CapitalFunding.JCREIG.com, and click the “Apply Now” tab. Then complete the short application. After submission, we review your deal and follow up with terms, usually on the same day.
Never! This is usually the first sign of a scam.
No recent bankruptcies or foreclosures in the past 2 years.
We can lend as little as $75,000 and as much as $10,000,000. Approvals are not solely based on equity. We must make sure you can afford the monthly interest-only payments on your requested loan.
Most of our loan programs require a down payment of at least 10-20%, but we do offer 100% funding for fix and flip loans for borrowers that qualify.
Yes. Once you are pre-qualified, we can begin issuing proof-of-funds letters. We can submit these as frequently as needed as general letters or specific to the property address and offer price the client requests to be disclosed.
We can close deals as soon as 10 business days. Timing is contingent upon appraisal, clear title, and requested documents being submitted in a timely manner.
Yes, if the property is owned free and clear (no liens), we can fund 100% of the repairs. Up to 70% of the ARV.
We will not take second lien position ever on a property.
No, we do not charge a prepayment penalty on short term loans. We encourage a quick flip.
Yes, you can close under an LLC, trust or corporation. However, one owner must still be the personal guarantor on the loan. Some loan programs allow you to close in your personal name as well.
You have several options to apply: you can either complete our online loan submission, email us, or call us directly. We find that discussing your loan scenario over the phone is often the most efficient approach, as we can quickly assess how to best assist you once we have a few key questions answered. Contact us now to speak directly to a decision maker.
General Questions
We do not provide financing for primary residence purchases as we fund loans for business purposes only.
Business purpose loans are defined as loans to: purchase, repair or improve real property for use in the Borrower’s business; acquire, improve or maintain certain non-owner occupied rental property; purchase, improve or repair tools, equipment, machinery, fixtures or furnishings used in Borrower’s business; fund operating capital (e.g., employee salaries) or purchase or pay for business inventory, supplies, rent, taxes, insurance or other related expenses; or to pay off, refinance or consolidate business debts.
Debt Service Coverage Ratio. This is simply: Your total payment / Your total rents.
If this number is 1.0 or greater, than your rents are higher than your total payment. The higher that is, the better your rate generally is.
The ratio is calculated by dividing the property income (rental income) from the property PITIA (principal + interest + taxes + property insurance+ homeowners association dues). The resulting ratio lets the lender know how much income is available to pay the mortgage. A ratio of 1.0x means that the property that the revenue from rental income AND expenses is equal. A DSCR above 1 means the property is positively cash-flowing. Conversely, a DSCR of less than one means that the expenses exceed the rental revenue and the property has a negative cash-flow.
There’s many reasons clients prefer DSCR loans vs. Conventional financing. First, DSCR loans do not take into account your other debts beyond the PITI payment of your loan. So, if you are self employed and report very little income, using a DSCR loan may be the best option.
Secondly, a DSCR loan does not report to credit, and therefore may not affect your future ability to qualify for additional properties.
Another benefit is that a DSCR loan allows you to vest in an LLC , whereas FNMA does not allow that on traditional financing.
Rates and leverage are dependent on risk. Risk is measured on flipping experience, credit, loan details, and loan term. You are able to set your loan term from 6-18 months. The rate and allowable max leverages will be determined on a number of factors including credit profile, experience and project size. Get started today to find out where you qualify. It just takes a couple minutes to submit your application!
Great- there is no pre-payment penalty, so you can pay-off the loan at anytime, without incurring additional fees. Your interest is simply calculated by the days you hold the loan before payoff.
Generally, yes. However, approval of an extension is considered with a few factors including but not limited to, on-time payment history, project status, etc.
For Bridge and Fix and Flip loans, we can look at exceptions down to 600 with compensating factors such as experience and additional guarantors.
Yes! We love helping first-time flippers. In fact, many of our expert flippers started their first flip financing with us. With 5k+ loans closed, we are here to help you with any questions you have including budget reviews, property valuations, and profitability analysis. Our goal is to make your flip a financial success for you!
Our technology and our experience. With 5,000+ loans closed since 2017, and our average employee having 8+ years in the industry, we’ve got you covered to close fast!
Our draws are generally reimbursed in 3-5 business days from the time of request. If you are using our draw app, you may receive them in as little as 24 hours. To make sure your draws are on time, you must be current on your loan. We pay draws on a reimbursement basis only based on your rehab budget and work completed on the property, so no receipts are necessary!
Yes, we love and protect our Brokers! To get setup, simply submit a scenario on our website or give us a call.
The top 3 factors that affect the DSCR rate include the actual Debt Service Coverage Ratio (DSCR), Loan-to-Value, and your FICO (credit score).
The higher the DSCR is on a property, the lender is able to forecast a lower risk for lending the capital since the property may be positively cash-flowing and the investor is able to pay the monthly loan payments. Loan-to-Value, or LTV, refers to the loan amount as it relates to the actual value of the property.
Typically, DSCR loans will never exceed 80% LTV. That means that the borrower needs to bring about 20% +closing costs as a down payment for the loan. The lower the LTV, the less risk for the lender, hence a better rate.
Finally, your credit score is still a factor when determining the rate. Lenders use the score and it affects the final rate for your DSCR loan.