Choosing between hard money loans and traditional bank financing is one of the most important decisions for real estate investors. Each option has distinct advantages and drawbacks. Let's break down everything you need to know to make the right choice for your investment strategy.
Hard money lenders focus on the property's value rather than the borrower's creditworthiness. These short-term loans are ideal for investors who need fast funding and have strong equity positions.
Traditional bank loans offer lower interest rates and longer terms but require more stringent qualification criteria and longer approval timelines.
| Factor | Hard Money | Traditional Bank |
|---|---|---|
| Speed | 3-7 days | 30-60 days |
| Interest Rate | 8-15% | 5-8% |
| Term Length | 6-18 months | 15-30 years |
| Credit Score | 620+ or flexible | 680+ preferred |
| Documentation | Minimal | Extensive |
| Best For | Fix & flip, quick deals | Long-term rentals |
Choose Hard Money if: You need to move quickly on a deal, have limited credit history, or are flipping a property that will sell within months.
Choose Traditional Financing if: You have strong credit, need lower monthly payments, or are purchasing a long-term rental property where cash flow can support traditional debt service.
Our lending experts can help you compare options and find the best financing solution for your specific situation.
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