Hard Money Loans For Flipping Homes: 3 Ways To Get Approved Quickly

Make a profit out of flipping homes with the help of hard money loans. Hard money loans usually have loan terms of less than a year and typically charge interest rates between 12 to 18%. Unlike FHA insured loans, hard money loans are much easier to get, as you don't necessarily need good credit to be approved or a certain income. To help speed the loan application process along, apply these 3 tips.

Put Up a Large Collateral or Asset

Hard money loan lenders are typically not that interested in your credit score or the amount of income you pull in every year. Instead, they tend to focus most of their attention to the amount of collateral and assets you have in your name.

You'll have to put up an asset or a collateral in order to qualify for the loan; however, you'll definitely be able to speed the entire process along if the value of the asset you put up exceeds the loan amount you are requesting. This is because there will be no doubt that you can easily pay off the loan by the end of the term.

If you don't have a large asset or collateral to put up, the hard money lenders will typically structure their loans off of a loan to cost (LTC) or loan to value (LTV) ratio. This is based on the quick-sale value of the property you are eying. The LTC ratio falls between 70 to 80% and the LTV ratio falls between 60 to 70%. LTC refers to the loan amount approved based on the cost of the renovations that the loan will be used for whereas LTV refers to the loan amount approved based on the estimated value of the property.

Provide Details Regarding the Cost and Type of Renovations

Being able to give the hard money lenders more information to what you are planning to do can also ease their concerns and speed your application along.  If you are going to use the loan to flip homes, give the lenders a more detailed view of how much money you'll spend renovating and repairing different areas of the home. You might even want to get estimates written up.

The type of renovations you're favoring may also have an effect on how quickly your loan will be approved. Some renovations are typically more profitable than others. Renovating the kitchen or the bathrooms typically result in higher average returns.

Come Up with an Exit Strategy

To put the lenders at ease, also come up with an exit strategy. Because hard money loans are typically short-term, most hard money lenders want to be assured that you are prepared.

Some common exit strategies include applying for a traditional mortgage once your credit score has improved over the next several years, flipping the property for a profit, settling for a subprime mortgage or applying for another hard money loan. You should lie out your exit strategy in writing for the review of the lenders. If the lenders feel you have made the necessary preparations required, your loan will go through the application process a lot more smoothly.


The hardest part about flipping homes is finding the money to do it. If you're successful, you could easily make a huge profit from a single project. Hard money loans make sure you have the funds needed for the renovations and repairs that are needed, and are highly recommended because they are easy to get and simple to apply for. There are very few requirements that must be met, and you can get the money you need in record time. Check out a lending company like Lima One Capital to find out if you qualify for a loan.