Hard Money Lenders Arizona: Fast Funding Solutions
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Sam Dadofalza Associate EditorClose
Sam Dadofalza Associate EditorSam Dadofalza is an associate editor at HomeLight, where she crafts insightful stories to guide homebuyers and sellers through the intricacies of real estate transactions. She has previously contributed to digital marketing firms and online business publications, honing her skills in creating engaging and informative content.
Are you planning your next real estate project in Arizona and need quick funding? Whether you’re scoping out a fixer-upper in Phoenix or looking to invest in rental properties in Tucson, hard money lenders in Arizona offer the fast and flexible financing you need. Hard money loans are a practical alternative to traditional mortgages, suitable for those with short project timelines, limited initial capital, or weaker credit scores.
Start Making Offers Without Waiting to Sell Your Home
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
If you’re not an investor but need to bridge the gap between buying and selling your home, we’ll also discuss other financing options that can leverage your home’s equity. This article will cover the essentials of hard money lending in Arizona, helping you decide whether this type of financing aligns with your real estate goals, whether you’re buying a home or making an investment.
What is a hard money lender?
Hard money lenders are institutions that offer hard money loans, which are named after the “hard” assets used as collateral, typically real estate. Instead of relying heavily on a borrower’s credit or income, these loans are approved based on the property’s value. They often work with clients like house flippers and rental property buyers who need quick, flexible funding.
To determine loan amounts, hard money lenders consider the after-repair value (ARV), which is the estimated value of a property after renovations and repairs are completed. They lend a percentage of the ARV to ensure the investment is secure and profitable.
These loans usually have higher interest rates, often ranging from 8% to 15%, and come with additional fees like origination fees, closing costs, and points. If a borrower fails to repay the loan, the lender can take possession of the asset, such as a house, to recover their investment.
How does a hard money loan work?
If you’re a real estate investor in Arizona looking for a financing option that offers speed and flexibility, connecting with hard money lenders could be beneficial. Here’s an overview of how hard money loans work:
- Short-term loan: Hard money loans are designed for the short term, typically lasting six to 24 months, unlike the more common 15- or 30-year mortgage terms.
- Faster funding: These loans can be approved and funded in a matter of days, a much quicker process compared to the 40 to 50 days it usually takes for traditional mortgages.
- Less focus on creditworthiness: Approval for hard money loans relies more on the property’s value than on your credit score or income history.
- Greater scrutiny on the collateral: The amount you can borrow is based on the property’s loan-to-value ratio, making the property itself the collateral.
- Non-traditional lenders: Hard money loans are provided by private investors or specialized lending companies, not by conventional banks.
- Traditional loan denial: These loans are a solution for those with significant home equity but poor credit, and are often used by those who have been denied traditional mortgages.
- Higher interest rates: Due to the higher risk involved, hard money loans come with higher interest rates compared to standard mortgages.
- Larger down payments: Borrowers often need to make a substantial down payment, sometimes as high as 20% to 30% of the property’s value.
- More flexibility: These loans offer flexible terms, with less stringent debt-to-income requirements and the potential to help homeowners avoid foreclosure.
- Interest-only payments: Hard money loans may allow for initial interest-only payments, giving borrowers time before full repayment begins.
What are hard money loans used for?
Hard money loans meet specific financial needs in the Arizona real estate market. They are typically used by investors who need quick funding or have difficulty qualifying for traditional bank loans. Let’s explore some common situations where hard money loans could be worthwhile:
Flipping a house: For Arizona investors focused on flipping homes, hard money loans provide fast cash access for purchasing and renovating properties. These quick-turnaround loans help you instantly secure properties, complete renovations, and sell them for a profit in a short timeframe.
Buying an investment rental property: Investors looking to acquire rental properties can use hard money loans to quickly purchase and renovate homes. Compared to traditional loans, hard money loans enable landlords to make repairs quickly and start generating rental income sooner.
Purchasing commercial real estate: Hard money loans are useful for buying commercial real estate due to their flexibility and fast closing times. They are particularly advantageous in time-sensitive situations, allowing investors to secure valuable properties quickly.
Looking for alternatives to traditional loans: Individuals with substantial home equity but poor credit often turn to hard money lenders. These loans are based more on the asset’s value than the borrower’s credit score, making them accessible to those who struggle with traditional loan qualifications.
Facing foreclosure: Homeowners facing foreclosure may use hard money loans to refinance their debts or buy time to sell the property. This can offer a temporary solution to avoid losing their home or having a foreclosure mark on their credit report.
How much do hard money loans cost?
Hard money loans generally come with higher costs due to the convenience and speed they offer. Here’s a breakdown of typical expenses:
- Interest rates: These typically range from 8% to 15%, reflecting the lender’s risk.
- Origination fees: Lenders may charge 1% to 5% of the loan amount upfront.
- Closing costs: Additional fees at closing can include legal, appraisal, and administrative expenses.
- Points: Lenders might charge points, which are a percentage of the loan amount paid upfront.
Online hard money loan calculators can help you estimate these costs accurately.
Alternatives to working with hard money lenders
If you’re not a seasoned real estate investor, but rather a homeowner looking to tap into your home’s equity, here are a few alternatives you might want to consider:
Take out a second mortgage: If you have a lot of equity, a home equity loan or home equity line of credit (HELOC) can provide funds at lower interest rates compared to hard money loans.
Cash-out refinance your home: This option allows you to refinance your existing mortgage, withdrawing cash for new investments, often with lower interest rates than hard money loans.
Borrow from family or friends: Securing a personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making it a lower-cost option.
Use a government-backed loan program: Programs from the FHA, VA, or USDA can help buyers purchase homes with lower down payments and reduced interest rates.
Consider peer-to-peer loans: These loans are offered by individual investors through lending platforms. They function similarly to hard money loans but often have different terms.
Explore specialized loan programs: If you need to replace a hard money loan, look into specialized loans for fixer-uppers or refinancing investment properties.
Request a seller financing option: On occasion, sellers may agree to finance the purchase themselves, which can yield lower closing costs and looser eligibility requirements.
How to buy before you sell
Sometimes, the perfect home hits the market when you least expect it, whether it’s a single-level home with a pool or a three-bedroom new-construction condo. If you’re an Arizona homeowner who wants to buy a new home before selling your current one, HomeLight offers a convenient solution.
The Buy Before You Sell (BBYS) program allows you to use the equity in your current home to make a strong, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved in 24 hours or less, with no cost or obligation. Once approved, you can purchase your next home and then sell your current one vacant, avoiding the hassle of moving twice.
Here’s how HomeLight Buy Before You Sell works:
While the program has a flat fee based on your current home’s sold price, you can save a lot in other areas, such as moving expenses and temporary housing, and possibly secure a better purchase price for your new home. Additionally, HomeLight’s BBYS fees are generally much lower than the interest rates on bridge loans, which typically range from 9.5% to 12%.
3 top hard money lenders in Arizona
Finding the right hard money lender in Arizona can make or break your deal, especially with how fast the market moves. To help you out, here are three lenders investors in the area trust for quick, flexible financing. Each one has a solid track record, competitive terms, and experience with the unique pace of Arizona real estate:
Hard Money Lenders Arizona
Hard Money Lenders Arizona, located in Phoenix, specializes in private funding for a range of real estate needs, from fix and flips to construction and cash-out refinances. The company provides hard money loan programs for both owner-occupied and non-owner-occupied residential properties, serving flippers, landlords, and developers. They offer extremely fast processing times, with business-purpose loans often approved within just 24 hours.
Lending clientele: Residential and commercial real estate investors, plus homeowners
Loan criteria: Up to 85% LTV or LTC; in some cases, up to 90%
Hard Money Lenders Arizona touts an impressive 4.9-star rating on Google from over 200 reviews. Clients say the team delivers hands-on, professional support throughout the entire loan process. Reviewers appreciate being kept informed at every stage and note the team’s dedication to making sure the loan closes successfully.
Many highlight the hard work, clear communication, and smooth experience from start to finish. Overall, clients highly recommend the team for reliable, attentive hard money lending.
Website: hardmoneylendersarizona.com
Phone number: 480-999-6183
Prime Plus Mortgages
Prime Plus Mortgages offers rapid financing solutions, with loan approvals in as little as one hour and funding available within 48 hours. The firm provides funding for fix-and-flip projects, rental rehabs, and land acquisitions, catering specifically to experienced real estate investors. Their streamlined application process requires minimal documentation, eliminating the need for bank statements, tax returns, or proof of income typically required by conventional lenders.
Lending clientele: Residential and commercial real estate investors
Loan criteria: Up to 90% LTV
Prime Plus Mortgages earned 5 stars on Google Reviews, with several clients commending how reliable and responsive the company is as a lending partner. Some note that the staff made the application process easy, provided great rates, and closed deals quickly. Many acknowledge the staff’s professionalism and expertise, recommending them for smooth, successful real estate transactions.
Website: primeplusmortgages.com
Phone number: 480-923-7602
Capital Fund 1
Capital Fund 1 maintains offices in several states, including Arizona, and has been delivering direct private capital and hard money financing since 2009. The firm offers a comprehensive suite of loan programs, including fix-and-flip, buy-and-hold, bridge, and construction financing tailored to real estate investors.
Its streamlined application process enables qualified borrowers to receive same-day approvals. Once all required documentation is finalized, funding can be completed in as little as 24 hours.
Lending clientele: Residential and commercial real estate investors
Loan criteria: Depends on the loan program; contact Capital Fund 1 for details
Capital Fund 1 maintains a 4.5-star Google rating, with reviews highlighting their excellent customer support, prompt communication, and willingness to answer questions. Reviewers note consistently positive experiences across multiple loans, highlighting exceptional support and fair terms. Many appreciate the dependable process and value the team’s commitment to doing right by their clients.
Website: capitalfund1.com
Phone number: 866-310-7673
Investing in real estate?
Hire an investor-friendly real estate agent who can help you get access to off-market properties at a discount and assess potential rental income based on market trends. HomeLight can connect you with investment property specialists at no cost.
Should I partner with a hard money lender in Arizona?
The decision to use a hard money lender in Arizona hinges on your individual circumstances and real estate investment goals. This type of financing is well-suited for real estate investors who need fast funding for projects with quick turnaround times or when traditional financing isn’t available. If you’re equipped to handle higher costs and shorter repayment periods in exchange for fast and flexible financing, a hard money loan might be a solid option for your next investment.
For Arizona homeowners looking to access their home’s equity, HomeLight’s Buy Before You Sell program is an attractive alternative. Instead of dealing with high interest rates, you’ll pay a small flat fee while gaining the advantage of making a non-contingent offer and simplifying your move.
As with any major financial decision, consider your long-term plans. Consult with a financial advisor to make sure your decision aligns with your broader investment strategy. If you need help connecting with investor-friendly real estate professionals in Arizona who have access to trusted hard money lenders, let HomeLight introduce you to top agents in your area.
Editor’s note: This post is for educational purposes only and should not be considered financial advice. HomeLight encourages you to consult your own advisor.
Header Image Source: (sepavone / Deposit photos)
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