What Credit Score Do You Need for a Hard Money Loan

Do you need quick financing for a real estate investment but need more-than-stellar credit? Hard money loans might be the solution you’re looking for. Unlike traditional bank loans, hard money loans are typically offered by private investors or lending firms. They are known for their quick approval and funding processes, making them a popular choice among real estate investors.


Credit Score Requirements for Hard Money Loans


One of the appealing aspects of hard money loans is that they center less on your credit score and more on the value of the property you’re utilizing as collateral. However, credit scores are still relevant. While hard money lenders are generally more flexible than traditional lenders, they still have specific credit score expectations.

Typical Credit Score Range


The credit score prerequisites for hard money loans can fluctuate, starting with one lender and then onto the next. Yet, as a general guideline, most hard money lenders prefer borrowers with a minimum credit score of 550 to 620. Some may even consider borrowers with lower scores if the property used as collateral has substantial equity and strong investment potential.

What Lenders Look for Besides Credit Scores?


In addition to your credit score, hard money lenders evaluate other factors when deciding whether to approve your loan application. These factors may include:


  1. Property Value: The primary focus for hard money lenders is the value of the property you use as collateral. They want to ensure the property has enough equity to cover the loan amount.
  2. Exit Strategy: Lenders will want to know your plan for repaying the loan. This may involve selling the property, refinancing, or other means of repayment.
  3. Borrower Experience: Your experience in real estate investments and your track record may also be considered.
  4. Loan-to-Value (LTV) Ratio: Lenders calculate the LTV proportion, the loan sum divided by the property’s value. They might have the most significant LTV limits, and the lower the LTV, the more favorable the terms.


In conclusion, while hard money loans offer a more flexible approach to credit scores, it’s essential to understand that they are not solely based on credit. A minimum credit score of 550 to 620 is often preferred. Still, different elements, including property value, exit procedure, borrower experience, and LTV proportion, also play a critical role in getting a hard money loan. Assuming you’re thinking about this funding option, it’s crucial to explore potential lenders and their specific prerequisites to expand your possibilities of approval and progress in your real estate adventure.


Leave Us Your Information

Someone from our team will be in contact shortly

TheĀ Conduit Between Borrowers and Lenders

Work Hours