Secure Your Investment: Hard Money Lenders Florida

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

Are you looking to jumpstart your next real estate project in the Sunshine State with a hard money loan? From renovating a historic home in St. Augustine to securing an investment property in Orlando, hard money lenders in Florida can provide the financial flexibility you need. For individuals with tight deadlines, limited budgets, or less-than-perfect credit, these loans offer a practical alternative to traditional financing.

If you’re a homeowner rather than an investor and need to bridge the timing gap between buying and selling a home, we’ll discuss alternatives to help you leverage your home’s equity. This guide will cover the essentials of hard money loans in Florida, giving you the know-how to decide if this financial option aligns with your real estate goals.

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.

Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.

What is a hard money lender?

A hard money lender is a private individual or company that provides short-term loans secured by real estate. Hard money lenders in Florida base their decisions on the property’s potential, unlike traditional lenders who focus on your credit score and income history. Their clients often include house flippers and those purchasing rental properties who need quick access to cash and flexible loan terms.

Hard money lenders use after-repair value (ARV) — the estimated value of a property after renovations — to determine loan amounts. They usually lend a percentage of the ARV to ensure the investment’s security and profitability. Interest rates for hard money loans range from 8% to 15% or more, with repayment periods between 6 to 24 months. Costs can include origination fees, closing costs, and points. Failure to repay can result in the lender seizing the property to recover their investment.

How does a hard money loan work?

If you’re a real estate investor in Florida seeking a financing option that offers speed and flexibility, working with hard money lenders could be a smart move. Here’s a quick rundown of how hard money loans work:

  • Short-term loan: These loans typically have a repayment period of 6–24 months, unlike the 15- or 30-year terms of conventional mortgages. Some lenders might extend the term up to 36 months if needed.
  • Faster funding option: Hard money loans can be approved within days, compared to the 30 to 50 days typical for a mortgage loan. This makes them ideal for quick transactions.
  • Less focus on creditworthiness: Approval relies less on your credit score or income history and more on the property’s value. This can be beneficial for those with imperfect credit.
  • More focus on property value: These loans require collateral, such as a home, and are based on the loan-to-value ratio of the property. The property’s potential after-repair value (ARV) is crucial.
  • Not traditional lenders: Individual investors or private lending companies usually provide hard money loans, not traditional banks. This can result in more personalized lending terms.
  • Loan denial option: These loans are often used by those with poor credit who have been denied a mortgage but possess significant home equity. It offers an alternative route to financing.
  • Higher interest rates: Due to higher risk, these loans have higher interest rates than traditional mortgages. Borrowers should be prepared for this increased cost.
  • Might require larger down payments: Borrowers may need to provide a larger down payment, sometimes up to 20%–30%, depending on the property’s value and loan specifics.
  • More flexibility: With less government regulation, hard money lenders in Florida can set flexible credit scores and debt-to-income (DTI) criteria, and loans can help avoid foreclosure.
  • Potential for interest-only payments: Unlike traditional mortgages, hard money loans may allow for interest-only or deferred payments initially. This can help manage cash flow during a project’s early stages.

What are hard money loans used for?

Hard money loans cater to specific financing needs within Florida’s real estate market. These loans are popular among investors needing quick funding or those unable to qualify for traditional bank loans. Here’s a closer look at common uses for hard money loans:

Flipping a house: For Florida investors focused on flipping homes, hard money loans provide quick access to funds for buying and renovating properties. These loans help flippers quickly acquire homes, make necessary repairs, and sell them for profit in a short period.

Buying an investment rental property: Investors looking to purchase rental properties can utilize hard money loans to secure properties quickly, especially those needing urgent repairs. Compared to traditional loans, hard money loans allow landlords to complete renovations and start generating rental income sooner.

Purchasing commercial real estate: In commercial real estate, hard money loans are favored for their flexibility and fast closing times. They are ideal for investors who need to act quickly to secure valuable commercial properties and do not have time to wait for traditional financing.

Borrowers who can’t qualify for traditional loans: Those with substantial home equity but poor credit sometimes turn to hard money lenders. These loans focus on the asset’s value rather than the borrower’s credit score, providing a lifeline for those unable to secure conventional financing.

Homeowners facing foreclosure: Homeowners at risk of foreclosure can use hard money loans to refinance their debts or buy time to sell their property. This option can help avoid foreclosure and the negative impact it has on credit reports.

How much do hard money loans cost?

The cost of hard money loans is generally higher than traditional loans due to the increased risk and quick, less restrictive funding. Here are some typical costs:

  • Interest rates: These can range from 8% to 15%, depending on the lender’s risk assessment.
  • Origination fees: Lenders may charge 1% to 5% of the total loan amount as an origination fee.
  • Closing costs: Additional fees at closing can include legal fees, appraisal fees, and other administrative fees.
  • Points: Lenders might charge points (a percentage of the loan amount) upfront, adding to the initial cost of obtaining a loan.

There are many online calculators available to help estimate these costs.

Alternatives to working with hard money lenders

Let’s say you’re not an investor, but a Florida homeowner looking to leverage your current home’s equity. Here are a few options you might want to consider:

Take out a second mortgage: If you have a significant amount of equity, a home equity loan or home equity line of credit (HELOC) could provide the necessary funds at a lower interest rate compared to a hard money loan.

Cash-out refinance: This option allows you to refinance an existing property, withdrawing cash to finance your new investment. It usually comes with lower interest rates than hard money loans.

Borrow from family or friends: A personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making it a more cost-effective option.

Use a government-backed loan program: Programs offered by the FHA, VA, or USDA can assist in purchasing homes with lower down payments and reduced interest rates.

Peer-to-peer loan: These loans are put forward by individual investors through lending platforms like LendingClub or Prosper, functioning similarly to hard money loans but often with different terms.

Specialized loan programs: Consider specialized loans for fixer-uppers or investment property refinancing if you already have a hard money loan and want to replace it.

Request a seller financing option: In select cases, sellers may agree to finance the purchase themselves, which can result in lower closing costs and less stringent eligibility requirements.

How to buy before you sell

Imagine finding the perfect home just when you least expect it — a cozy bungalow in a sought-after neighborhood or a sleek downtown condo. For Florida homeowners wanting to buy a new home before selling their current one, HomeLight’s Buy Before You Sell program is an ideal solution.

Buy Before You Sell (BBYS) allows you to unlock the equity in your existing home to make a competitive, non-contingent offer on a new property. If your home qualifies, you can receive approval for your equity unlock amount in 24 hours or less, with no upfront costs or obligations. This enables you to purchase your next home confidently, sell your current one after you move, and avoid the stress of moving twice.

Here’s how HomeLight Buy Before You Sell works:

The program charges a flat fee of 2.4% of your current home’s sale price, but the benefits tend to outweigh this cost. Savings on moving expenses, temporary housing, and the potential to secure a better deal on your new home are just a few advantages. Plus, HomeLight’s BBYS fees are typically lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.

3 top hard money lenders in Florida

While traditional lenders offer stability, their approval process can be slow. Hard money lenders in Florida specialize in quick closings — ideal for time-sensitive real estate opportunities. Here are three top-rated options:

A to Z Capital Lending

A to Z Capital is a Boca Raton-based lender and broker, described as a “one-stop shop for all of your mortgage needs.” They offer hard money loans to real estate investors, ranging from $50,000 to over $3 million. Loans typically close in seven to 10 days, and there are no minimum credit score requirements.

Lending clientele: Residential and commercial real estate investors

Loan criteria: Up to 75% LTV

Hard Money Loan Solutions

Based in Delray Beach, Hard Money Loan Solutions (HMLS) provides private hard money real estate loans including rehab loans, fix and flip loans, bridge loans, and commercial loans. Their loan amounts range from $100,000 to over $50 million, and they don’t require credit reports, tax returns, or bank statements.

Lending clientele: Residential and commercial real estate investors, as well as homeowners and foreign nationals

Loan criteria: Up to 75% of the as-is value or purchase price

Capital Funding Financial LLC

Located in Boca Raton, Capital Funding Financial is a nationwide, direct private money lender that offers a variety of loan programs, including hard money loans for real estate investors and borrowers who can not qualify with a conventional bank. Loans can close in as few as three to seven days, and the company considers several property types, from single-family homes to multi-family properties and commercial retail spaces.

Lending clientele: Residential and commercial real estate investors, plus homeowners and foreign nationals

Loan criteria: Under 660 credit up to 65% LTV, over 660 credit up to 80% LTV

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 Florida?

The decision to use a hard money lender in Florida should be based on your unique circumstances and real estate investment goals. Hard money loans are best suited for real estate investors who need quick access to capital, whether it’s for flipping a property or securing a rental investment. If you’re comfortable with higher interest rates and shorter repayment terms, hard money loans can offer fast, flexible funding for time-sensitive real estate opportunities in the Florida market.

For homeowners looking to leverage their home’s equity without taking on high interest rates, HomeLight’s Buy Before You Sell program is a compelling alternative. The program allows you to make a non-contingent offer on your next home by unlocking your existing home’s equity. It involves a small flat fee, unlike the high costs of hard money loans.

As with any significant financial decision, it’s important to consider your long-term strategy and consult with a financial advisor to make sure your choices align with your overall investment goals. If you’re looking to connect with investor-friendly real estate agents in Florida who have connections to trusted hard money lenders, let HomeLight introduce you to top professionals in your area who fit that criteria.

Header Image Source: (Eric Ardito/ Unsplash)