What are the Qualities Hard money lenders want in a Borrower?

Hard money lenders spend time assessing borrowers to ensure they meet a specific criteria; they look for specific qualities in borrowers as a security measure.

last updated Wednesday, May 17, 2023
#Hard Money Lenders #Repay the loan

John Burson     Subscribe
What Do Hard Money Lenders Look for in a Borrower


Before approaching hard money lenders, you must understand the qualities that will improve your chances of accessing the funds you need. You must research and identify the deals that may work in your favor and the deals hard money lenders avoid, which will help you prepare all the information they may need to approve your request.  

Here we look at the top three qualities hard money lenders pay attention to when processing loan requests:  

The Ability to Take Risks

Hard money lenders always look for significant risk-takers who will confidently invest their finances by making a substantial down payment before looking for additional funds from lenders. Such a move proves to the hard money lenders that you are invested in the project and willing to lose if things fall apart. Once you understand this requirement, you can appreciate the lower loan-to-value ratio from hard money lenders, which differs significantly from the norm in conventional lending. Your down payment also gives the lender assurance and the equity needed should the property go into foreclosure. If you cannot raise the required amount alone, you should consider finding an investor to help you increase the balance. Alternatively, you can contribute to labor by covering the renovation or investing in the improvement process. Either way, you must be willing to make a commitment that shows you are also taking a financial risk.

Proof of Repayment Ability

Unlike bank lenders who use your credit score and previous banking history to assess your ability to repay a loan, hard money lenders tend to focus more on the estimated value of a distressed property after improvements or the potential of a property to generate a stable income. You also need to provide a long-term plan for the property as evidence that you plan on generating money from the investment.

Commitment to Repay the Loan

Hard money lenders also require you to present an exit strategy that assures them that you can repay the money should, even when the property fails to commercialize as per your original plan. Hard money lenders make money through loans, and they need assurance that they are not risking having their money tied to a single property for longer than is necessary. As a business strategy, it helps them ensure their business continuity.


Ideally, hard money lenders are looking for proof that you are committed to repaying their money so that they can keep it in circulation. Hard money lenders are business owners looking for a return on investment; they have no interest in owning properties they do not intend to manage. Additionally, they make more money by lending to other borrowers instead of having it tied down to a property.


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