Hard Money Lenders Austin: What to Know
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Kelsey Morrison Former HomeLight EditorClose
Kelsey Morrison Former HomeLight EditorKelsey Morrison worked as an editor for HomeLight's Resource Centers. She has seven years of editorial experience in the real estate and lifestyle spaces. She previously worked as a commerce editor for World of Good Brands (eHow.com and Cuteness.com) and as an associate editor for Livabl.com. Kelsey holds a bachelor’s degree in Journalism from Concordia University in Montreal, Quebec, and lives in a small mountain town in Southern California.
Are you looking to kickstart your next real estate project in Austin with a hard money loan? Whether you’re eyeing a fixer-upper in East Austin or an investment property near the bustling downtown area, hard money lenders in Austin can offer the flexibility and funding speed you need. Unlike traditional loans, hard money loans are often favored by investors with tight timelines, limited initial capital, or unique credit challenges.
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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.
This guide will walk you through the basics of hard money lending in Austin. We’ll cover how these loans work, their typical uses, and potential costs. We’ll also explore some alternatives to hard money loans, introduce top local lenders, and discuss whether partnering with a hard money lender is the right move for your real estate goals.
What is a hard money lender?
A hard money lender is a private individual or institution that offers 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. These firms usually accommodate real estate investors like house flippers and rental property buyers.
To determine loan amounts, these lenders use after-repair value (ARV) or the estimated value of a property post-renovation. Generally, they lend a percentage of the ARV to maintain a secure investment margin.
Hard money loans come with higher interest rates, typically between 8% and 15%, and shorter terms, often from six to 24 months. Borrowers also face additional costs like origination fees, closing costs, and points. Failure to repay a hard money loan can lead to the lender seizing the property to recover their investment.
How does a hard money loan work?
If you’re a real estate investor in Austin looking for a financing option that offers speed and flexibility, hard money loans could be the perfect solution. Here’s a brief overview of how these loans work:
- Short-term loan: These loans typically have a repayment period of six to 24 months, unlike the 15- or 30-year terms of conventional mortgages. Some lenders may extend the term up to 36 months if necessary.
- Faster funding: When you need to close a deal quickly, hard money loans can be approved within days, compared to the 40 to 50 days typical for a mortgage loan.
- Less focus on creditworthiness: Approval relies less on your credit score or income history and more on the property’s value.
- Greater scrutiny on the collateral: These loans require collateral, such as a home, and are based on the loan-to-value ratio of the property.
- Non-traditional lenders: Individual investors or private lending companies usually provide hard money loans, not traditional banks.
- Traditional loan denial: These loans are often used by those with poor credit who have been denied a mortgage but possess significant home equity.
- Higher interest rates: Due to higher risk, these loans have higher interest rates than traditional mortgages.
- Larger down payments: Borrowers may need to provide a larger down payment, sometimes up to 20% to 30%, depending on the property’s value and loan specifics.
- More flexibility: With less government regulation, hard money lenders in Austin can set flexible credit scores and debt-to-income (DTI) criteria, and loans can help avoid foreclosure.
- Interest-only payments: Unlike traditional mortgages, hard money loans may allow for interest-only or deferred payments initially.
What are hard money loans used for?
Hard money loans are a go-to option for unique financing needs in Austin’s real estate market. They’re especially helpful for investors and homeowners who need cash fast or can’t qualify for a traditional bank loan. Below are some of the most common ways people use hard money loans:
Flipping a house: For Austin investors focused on flipping homes, hard money loans provide fast cash for buying and renovating properties. These loans allow flippers to quickly acquire homes, make necessary fixes, and resell them for profit within a short timeframe.
Buying an investment rental property: Investors looking for rental properties can use hard money loans to quickly purchase homes, especially those needing repairs. This type of loan allows landlords to complete renovations quickly and start generating rental income sooner than with traditional loans.
Purchasing commercial real estate: Hard money loans are great for buying commercial properties because they offer flexibility and fast approval. This makes them especially helpful when timing is crucial, allowing investors to quickly secure valuable real estate opportunities.
Looking for alternatives to traditional loans: Individuals with significant home equity but poor credit often turn to hard money lenders for assistance. These loans are based more on the property’s value than the borrower’s credit score, offering a viable option for those unable to secure conventional financing.
Facing foreclosure: Homeowners at risk of foreclosure may use hard money loans to refinance debts or gain extra time to sell their property. This can help avoid the foreclosure process and its impact on their credit report.
How much do hard money loans cost?
Hard money loans typically come with higher costs compared to traditional loans due to the increased risk and convenience of quick funding. Here are some typical costs associated with hard money loans:
- 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 costs.
- Points: Lenders might charge points (a percentage of the loan amount) upfront, adding to the initial cost of obtaining a loan.
Online hard money loan calculators can help estimate these costs and give you a better idea of your total expenses.
Alternatives to working with hard money lenders
If you’re a homeowner looking to leverage your current home’s equity, you might want to consider these alternatives:
Take out a second mortgage: If you have significant equity, a home equity loan or home equity line of credit (HELOC) can provide funds at lower interest rates compared to a hard money loan.
Cash-out refinance: This option allows you to refinance an existing property, pulling out cash to finance your new investment, often 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 affordable option.
Use a government-backed loan program: Programs offered by 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 provided by individual investors through lending platforms like LendingClub or Prosper, functioning similarly to hard money loans but often with different terms.
Explore specialized loan programs: Consider specialized loans for fixer-uppers or investment property refinancing if you already have a hard money loan and seek 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 less stringent eligibility requirements.
How to buy before you sell
Sometimes, the perfect home listing pops up out of nowhere. Maybe it’s a charming bungalow in historic Hyde Park or a loft-style condo in the Market District. If you’re an Austin homeowner who wants to buy a new home before selling your current one, HomeLight offers an innovative solution that simplifies the process.
The Buy Before You Sell (BBYS) program lets you tap into the equity of your current home to make a strong, non-contingent offer on a new property. Once your home qualifies, you can get your equity unlock amount approved within 24 hours with no cost or commitment required. This allows you to purchase your new home first and then sell your current home vacant, eliminating the stress of moving twice.
Here’s how HomeLight Buy Before You Sell works:
While BBYS charges a flat fee based on your current home’s sold price, the savings in other areas can offset this cost. You could save on moving expenses, temporary housing, and potentially get a better deal on your new home. Plus, HomeLight’s BBYS fees are usually much lower than the interest rates on bridge loans, which range from 9.5% to 12%.
3 top hard money lenders in Austin
Austin’s real estate market moves fast, and having the right lender can make all the difference. Whether you’re flipping a property, funding a renovation, or need to close quickly, hard money loans offer speed and flexibility that traditional banks often can’t. Below, we’ve rounded up three of the top hard money lenders in Austin to help you find the right fit for your next deal.
Loan Ranger Capital
Loan Ranger Capital offers hard money financing tailored to real estate investment projects. Borrowers submit essential deal details, such as the property, purchase price, construction budget, after-repair value, and exit strategy, for a quick evaluation.
The team reviews and underwrites each deal to deliver terms customized to the specific opportunity. With pre-approvals available within 24 hours and closings completed in a matter of days, Loan Ranger Capital helps investors access capital quickly and keep their projects moving forward.
Lending clientele: Residential and commercial real estate investors
Loan criteria: Up to 75% LTV
Loan Ranger Capital earned an A+ grade from the Better Business Bureau (BBB). It boasts a near-perfect 4.9-star rating on Google, with over 100 reviews. Most clients say the company delivers an outstanding lending experience. Some highlight the team’s expertise, professionalism, and hands-on support throughout the process.
Others describe the service as smooth and confidence-building, noting they felt well taken care of from start to finish. The positive experience often leads clients to confidently refer others.
Website: loanrangercapital.com
Phone number: 512-220-9916
HouseMax Funding
HouseMax Funding, based in Austin, is a hard money lender that provides home renovation loans, non-owner occupied hard money loans, and hard money construction loans throughout Texas and beyond. Since launching the business seven years ago, they have funded over 3,500 deals and flipped more than 3,000 houses. Applicants can get pre-qualified in just a few minutes, and loans can be funded in 10 days or less.
Lending clientele: Residential real estate investors
Loan criteria: Up to 75% of the ARV
HouseMax Funding maintains an A+ rating from the BBB. On Google, it scored an average of 4.8 stars based on more than 300 reviews. Customers highlight the team’s strong knowledge, quick responsiveness, and willingness to help at every stage. Many also point to the friendly, approachable nature of the staff, noting that it makes the entire process more enjoyable and efficient.
Website: housemaxfunding.com
Phone number: 512-379-6917
Park Place Finance
Park Place Finance, based in Austin, is a trusted hard money lender that has funded over $1 billion since 2006. They lend in 46 states, including Texas, and offer a variety of loan programs like fix-and-flip, bridge, debt service coverage ratio (DSCR), and ground-up construction. Whether you’re buying or refinancing an investment property, they’ll work with you to fund a loan in three to five days using in-house capital.
Lending clientele: Residential real estate investors and homeowners
Loan criteria: Up to 75% of the ARV
Park Place Finance holds a high 4.8-star rating on Google based on more than 400 reviews. Clients say this team goes above and beyond to keep deals on track, even when another lender falls through. They highlight the team’s diligence and problem-solving approach in high-pressure situations.
Many appreciate how quickly they step in and work to close transactions without unnecessary delays. Their commitment and responsiveness make them a trusted partner for time-sensitive deals.
Website: parkplacefinance.com
Phone number: 866-407-1599
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 Austin?
The decision to use a hard money lender in Austin should be based on your specific situation and real estate investment goals. This type of financing is ideal for projects requiring quick turnaround or when traditional loans simply aren’t an option. If you’re ready to handle higher costs and shorter repayment terms in exchange for fast, flexible funding, a hard money loan in Austin might be your best choice.
Real estate investors, especially those focusing on quick flips or rental property acquisitions, can benefit significantly from the speed and flexibility of hard money loans. However, for homeowners looking to leverage their equity, HomeLight’s Buy Before You Sell program might be a better fit. Instead of facing high interest rates, you’ll pay a small flat fee while enjoying the advantage of a stronger, non-contingent offer on your new home.
As with any major financial decision, consider your long-term strategy and consult with a financial advisor to ensure it aligns with your investment goals. For those looking to connect with investor-friendly real estate professionals in Austin who have access to trusted hard money lenders, let HomeLight introduce you to top agents in the area.
Photo Credit: (Carlos Alfonso / Unsplash)
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.
- "What is ARV and how is it calculated?," Rehab Financial Group (June 2023)
- "What Is Loan-to-Value and Why Does it Matter?," U.S. News, Ben Luthi & Rebecca Safier (March 2024)
- "A Comprehensive Guide to Common Terms Used in Hard Money Lending," LinkedIn, Joseph Walker (September 2023)
- "What Are The Costs Involved In A Hard Money Loan?," NorthWest Private Lending (March 2024)
- "Bridge Loan Rates: Current 2024 Interest Rates," Vaster (October 2023)
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.
