Hard Money Lenders Texas: Short-Term Loan Solutions

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Are you planning your next real estate investment in Texas and considering a hard money loan? Whether you’re looking to flip an American Foursquare in Old East Dallas or secure a rental property in San Antonio’s Pearl District, hard money lenders in Texas offer the speed and flexibility you need. These loans are an alternative to traditional financing and are ideal for projects with tight deadlines, limited upfront capital, or credit challenges.

For those not in the real estate investment game but needing to bridge the timing gap between buying and selling a home, we’ll also explore alternatives to help you leverage your home’s equity. This guide will walk you through the essentials of hard money lending in Texas, helping you determine if this financing method 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.

What is a hard money lender?

A hard money lender is a private entity that provides short-term loans secured by real estate. Unlike conventional lenders, who scrutinize a borrower’s credit score and income, hard money lenders in Texas focus on the property’s value. Their services are sought after by house flippers and those acquiring rental properties who need quick funding and flexible terms.

Hard money lenders use the after-repair value (ARV) — the projected value of a property after renovations — to determine loan amounts, typically offering a percentage of this ARV to protect their investment. Interest rates on these loans are higher, ranging from 8% to 15%, with short repayment periods of 6 to 24 months. Costs typically include origination fees, closing costs, and points. If a borrower defaults, the lender may seize the property to recover their funds.

How does a hard money loan work?

If you’re considering investing in Texas real estate, it’s a good idea to familiarize yourself with the workings of hard money loans. Here’s a brief overview:

  • Short-term loan: These loans typically have a repayment period of 6 to 24 months, unlike the traditional 15- or 30-year mortgage terms. Some lenders might offer extensions of up to 36 months if needed.
  • Faster funding option: Hard money loans can be approved within days, a significant advantage over the typical 30 to 50 days required for conventional mortgage loans.
  • Less focus on creditworthiness: These loans rely less on your credit score or income history and more on the value of the property.
  • More focus on property value: The loan amount is based on the loan-to-value ratio of the property, requiring collateral such as a home.
  • Not traditional lenders: Hard money loans are typically provided by private investors or lending companies rather than traditional banks.
  • Loan denial option: These loans are a solution for individuals with poor credit who have been denied a mortgage but have significant home equity.
  • Higher interest rates: Due to the higher risk involved, these loans carry higher interest rates compared to conventional mortgages.
  • 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 fewer government regulations, hard money lenders can offer flexible terms regarding credit scores and debt-to-income criteria, helping in situations like avoiding foreclosure.
  • Potential for interest-only payments: These loans may allow for interest-only or deferred payments initially, unlike traditional mortgages.

What are hard money loans used for?

Hard money loans serve specific needs within the Texas real estate market, particularly for those requiring quick funding or having difficulty securing traditional loans. Here’s a closer look at common scenarios where hard money loans can be beneficial:

Flipping a house: For Texas investors focused on flipping homes, these loans help finance the purchase and renovation of properties with the goal of reselling them quickly for a profit.

Buying an investment rental property: Investors shopping for rental properties can use hard money loans to quickly secure properties, especially those needing repairs. This quick financing helps landlords complete renovations and start generating rental income sooner than traditional bank loans would allow.

Purchasing commercial real estate: In commercial real estate deals, hard money loans are attractive because they can be adapted to specific needs and close quickly. This is especially beneficial when timing is crucial, as investors can act on promising opportunities without the wait associated with traditional bank loans.

Borrowers who can’t qualify for traditional loans: Homeowners with a lot of equity in their property but a lower credit score or other limitations may find hard money lenders as an option. These loans focus on the value of the home rather than the borrower’s credit history, allowing access to funding for those who might not qualify for traditional mortgages.

Homeowners facing foreclosure: Those nearing foreclosure may use hard money loans to refinance their debts or buy time to sell the property. This can provide a temporary solution to avoid losing their home or having a foreclosure mark on their credit report.

How much do hard money loans cost?

The cost of hard money loans is generally higher due to the convenience and speed they offer. Here are some typical costs associated with these loans:

  • Interest rates: These can range from 8%–15%, based on the lender’s risk assessment.
  • Origination fees: Lenders may charge 1%–5% of the total loan amount as a fee.
  • Closing costs: Additional fees at closing can include legal, appraisal, and administrative fees.
  • Points: Lenders might charge points, which are a percentage of the loan amount paid upfront.

Online calculators can help you estimate the total costs of a hard money loan.

Alternatives to working with hard money lenders

If you’re a homeowner looking to tap into your current home’s equity, consider these alternatives to a hard money loan:

Take out a second mortgage: If you have significant equity in your home, a home equity loan or home equity line of credit (HELOC) can offer the needed funds at a lower interest rate than a hard money loan.

Cash-out refinance: This method allows you to refinance an existing property, pulling out cash to fund your new investment. It usually comes with a lower interest rate than a hard money loan.

Borrow from family or friends: Securing a personal loan from family or friends can provide 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 help in purchasing homes with lower down payments and reduced interest rates.

Peer-to-peer loans: These loans are provided by individual investors through platforms like MeridianLink or Funding Circle, offering similar benefits to hard money loans but often with different terms.

Specialized loan programs: Explore specialized loans designed 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 some cases, sellers may agree to finance the purchase themselves, which can result in lower closing costs and more lenient eligibility requirements.

How to buy before you sell

Sometimes, the perfect home becomes available when you’re not quite ready to sell your current one. Maybe it’s an industrial-chic loft in Downtown Dallas or an architect-designed home in Marfa. If you’re a Texas homeowner looking to buy a new home before selling your current one, HomeLight offers a streamlined solution with its Buy Before You Sell program.

The Buy Before You Sell (BBYS) program allows you to use the equity in your existing home to make a stronger, non-contingent offer on a new property. If your home qualifies, you’ll get your equity unlock amount approved within 24 hours, with no initial cost or commitment. Once approved, you can purchase your new home first, then sell your old home without the stress of moving twice.

Here’s how HomeLight Buy Before You Sell works:


Although there’s a flat fee of 2.4% of your current home’s sold price, you might find savings in other areas, such as reduced moving expenses, temporary housing costs, and even a better purchase price on your new home. 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 Texas

Traditional lenders may not always be the right fit for every real estate investment. If you need to act fast on a valuable opportunity, consider these top-rated hard money lenders in Texas.

Wildcat Lending

With a corporate office in Plano, Texas, Wildcat Lending offers hard money loans for real estate investors. They provide fix-and-flip loans, rental property loans, and Wildcat Zero loans, in which the company covers the origination fees and requires 16% interest-only payments. They operate in 22 states, including Texas, and can close loans in less than a week, sometimes even within hours.

Lending clientele: Residential real estate investors (properties with 1-4 units)

Loan criteria: Up to 80% LTV purchase or 75% LTV cash-out refinance

Corridor Funding

Corridor Funding, founded in 2016 and based in Spring Branch, Texas, offers short-term, value-add loans for real estate investors. They operate in all major MSAs of Texas, and seven other states. Loan products include fix-and-flip, new construction (1-4 units), and 30-year fixed rate rental loans. Corridor Funding advertises fast funding approvals and up to 75% LTV on rental properties.

Lending clientele: Residential and commercial real estate investors, LLCs, and corporations

Loan criteria: Up to 75% LTV on rental properties; up to 85% loan-to-cost (LTC) on flips

Loan Ranger Capital

Based in Austin, Loan Ranger Capital is a direct hard money lender serving Texas and Tennessee. Specializing in fix-and-flip, construction, and bridge loans, they pride themselves on their local market knowledge and quick closing timelines. Loan Ranger Capital will lend on non-owner occupied investment real estate properties, and can typically have your loan funded in less than a week.

Lending clientele: Commercial and residential real estate investors

Loan criteria: Maximum LTV in most cases is 70%–75%

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 Texas?

Deciding whether to use a hard money lender in Texas depends on your specific circumstances and real estate investment objectives. Hard money loans are perfect for projects needing immediate action or when traditional financing just isn’t feasible. If you can handle the higher costs and shorter repayment terms for the benefit of fast, flexible funding, reaching out to a hard money lender in Texas might be the best move for your next investment.

For homeowners wanting to leverage their equity, HomeLight’s Buy Before You Sell program could be a better alternative. Instead of facing high interest rates, you’ll pay a small flat fee while enjoying the benefits of making a stronger, non-contingent offer and a smoother move.

As with any significant financial decision, it’s essential to consider your long-term strategy and consult with a financial advisor to ensure it aligns with your overall investment goals. If you’re looking to connect with investor-friendly real estate agents in Texas who have access to trusted hard money lenders, let HomeLight introduce you to top professionals in your area who meet these criteria.

Photo credit: (Daniel Lee / Unsplash)