Hard Money Lenders in California

How Hard Money Loans Work in California

Hard money loans are asset-based — the property's value secures the loan, not your income or credit history. California hard money lenders evaluate the property's as-is value and, for renovation projects, its after-repair value (ARV). Typical loan-to-value ratios are 65-75% of the as-is value or 70-75% of ARV. On a $500,000 property, a 70% LTV provides $350,000 in financing with the borrower contributing $150,000 in equity or down payment. Closings happen in 7-14 business days — compared to 30-45 days for conventional loans — because there is no income verification, no employment confirmation, and minimal credit analysis.

Hard money interest rates in California range from 9-13% with 1-3 origination points, and terms of 6-24 months. While these costs are significantly higher than conventional financing, hard money serves situations where speed and certainty of closing outweigh interest costs: auction purchases requiring 24-48 hour closings, properties in poor condition that don't qualify for conventional financing, bridge loans covering the gap between buying a new property and selling an existing one, and fix-and-flip investments where the holding period is 3-9 months. The interest cost on a $400,000 hard money loan at 11% for six months is approximately $22,000 — acceptable when the flip profit target is $80,000-$120,000.

Hard Money Exit Strategies

Every hard money lender requires a defined exit strategy before funding. The three most common exits are: sell the property after renovation (fix-and-flip), refinance into a permanent loan (DSCR for investment properties, conventional for owner-occupied), or pay off from the sale of another asset. The exit strategy must be realistic and documented — a fix-and-flip exit requires a detailed renovation budget, contractor estimates, and comparable sales supporting the projected ARV. A refinance exit requires evidence that the borrower will qualify for permanent financing once the project is complete. Lenders who fund without a clear exit strategy expose both themselves and the borrower to default risk when the short-term loan matures.

Last updated: July 2026. Sources: California Department of Real Estate broker licensing requirements. California Finance Lenders Law regulations for hard money lending.

Frequently Asked Questions — Hard Money Loans