Loan terms,plainly stated.

Hard money is underwritten on the asset and the plan more than on your financial statements. We look at four things.

• The property: purchase price, as is value, and after repair value where a renovation is planned.
• The plan: scope of work, budget, timeline, and who is doing the work.
• The borrower: experience with similar projects, liquidity, and credit.
• The exit: a sale, or a refinance into a DSCR loan, with numbers that support it.

Renovation and construction funds are released by draw as work is completed and inspected. Interest, points, and fees are set on your term sheet.

• Investment property only. The borrower and family members may not occupy the property.
• Eligible property: single family, attached, detached, and 2 to 4 units. Warrantable condominiums are eligible, and non-warrantable condominiums carry a leverage reduction. Rural property is not eligible.
• A DSCR of 1.00 or better is standard. Programs exist for ratios from 0.99 down to 0.75 and for ratios below 0.75, at reduced leverage.
• Interest only is available on qualifying scenarios.
• Reserves: none up to $1.5 million, two months of PITIA above $1.5 million, and six months above $2.5 million. Cash out proceeds may be used to satisfy reserves.
• Twelve months of housing history is required. Bankruptcy, foreclosure, short sale, or deed in lieu seasoning of 36 months carries no leverage reduction.
• Gift funds are permitted. Seller contributions are capped at 6%.
• Loans of $2 million or more require two appraisals.

• Residential 5 to 8 unit property only. Mixed use is not eligible. Property up to two acres.
• Borrowers must have owned and managed commercial or non-owner occupied residential property for at least one year in the last three. First time investors are not eligible.
• Leverage is highest on purchase, with lower limits on rate and term refinance and on cash out. Cash in hand is capped at $1 million.
• Six months of PITIA in reserves. Cash out proceeds cannot be used to satisfy reserves.
• Qualifying rent uses the lower of market rent or lease, net of any management fee. Up to two units may be vacant and are counted at 75% of market rent. Short term rental income is not eligible.
• Appraisal is a narrative report with a full interior inspection and rent roll, plus a commercial review product. Properties rated fair or poor, or with structural deferred maintenance, are not eligible.
• No housing late payments in the last 12 months. Gift funds are not permitted.

Choose the documentation that reflects how you actually earn.

• Twelve months of personal bank statements, for borrowers self employed two years or more.
• Twelve months of business bank statements, for businesses in existence two years or more.
• A twelve month profit and loss statement prepared by a CPA or registered tax preparer, alone or with two months of bank statements.
• 1099 income, for borrowers self employed at least two years.
• Asset utilization, using checking, savings, money market, brokerage, and eligible retirement assets.

Reserves run three months on loans up to $1 million, six months to $1.5 million, and nine months above that. Maximum debt to income is 50%. Leverage of 85% requires 48 months of seasoning after a bankruptcy or foreclosure, with shorter seasoning available at lower leverage. Eligible property includes 1 to 4 unit residential, condominiums, townhomes, PUDs, modular homes, and rural property up to 20 acres.

Hard money loans are short term, and interest and points are set on your term sheet. Investor DSCR and alt doc loans carry a prepayment premium in most states, with the structure and period stated on your term sheet. Some states restrict or prohibit prepayment premiums on these loans.