Financing for Residential Properties
Residential hard money lending and practical financing solutions for real estate investors
Residential hard money loans are short-term, asset-backed loans secured by residential property that give investors fast access to capital for purchases, rehabs, or bailout situations. Instead of relying mainly on income documentation or credit history, underwriting centers on the property’s value and a clear exit—sale or refinance—so deals move quickly when timing matters. This guide lays out how residential hard and private money work in practice, compares them with conventional financing, and maps the core loan programs, eligibility checkpoints, and investor use cases you need to act fast. You’ll find typical LTV and ARV ranges, how DSCR and P&L underwriting support rental transactions, a step-by-step application workflow built for 24‑hour decisions and 5–7 day closings, and clear next steps for submitting a deal. The sections below walk through definitions and mechanics, program comparisons, eligibility checklists and required documents, investor benefits and anonymized case examples, refinance and bridge options, and why Fidelity Funding is a practical partner for California investors.
What are residential hard money loans and how do they work?
Residential hard money loans are short-term, asset-focused loans where the property itself is the primary collateral. Underwriting emphasizes equity and the exit plan—commonly LTV or after-repair value (ARV) and a sale or refinance—to size the loan and set terms. These loans often use interest-only payments with a balloon at maturity, making them well suited to investors who expect a defined exit within roughly 6 to 60 months. Knowing this structure helps you weigh private lending against slower, document‑heavy conventional mortgages.
This collateral-first approach differs from conventional loans, which prioritize borrower credit and full income verification; that distinction explains why hard money can fund deals conventional lenders often cannot. Below we define the criteria that make a loan “hard money” and when that route is the smarter choice for investors.
What defines a hard money loan for residential properties?
A residential hard money loan has three core features: short-term duration, asset-focused underwriting, and faster processing than conventional financing. Lenders evaluate property value—often ARV for rehab projects—repair scope, and the exit plan, allowing approvals on deal viability even when credit or tax returns are incomplete. The trade-off is typically higher cost for speed and flexibility. When a property has clear equity and a realistic resale or refinance path, hard money is appropriate; when the goal is long-term, low-rate financing, a conventional mortgage or refinance may be the better fit.
This property-centered mindset frames the comparison with traditional financing and helps investors choose between speed and long-term cost.
How do private money loans differ from traditional financing?
Private or hard money loans differ from conventional financing mainly in speed, documentation, and underwriting focus. Hard money lenders rely on collateral value and exit strategy rather than lengthy income verification and credit scoring, so approvals are faster. Conventional lenders require extensive paperwork, underwriting windows measured in weeks, and stricter credit thresholds. Hard money underwriting accepts distressed properties, nonstandard occupancy, and self‑employed borrowers using alternative metrics like DSCR or P&L reviews. That flexibility makes private money ideal for auctions, flips, and foreclosure rescues—situations where timing matters more than the long‑term interest rate. For investors, private money is a tactical tool to secure deals that conventional financing might miss.
Next, we list the common loan programs used for residential investment financing and compare their typical attributes so you can match product to use case.
Which residential hard money loan programs does Fidelity Funding offer?
Residential hard money includes several programs that address different investor needs—purchase loans for acquisitions, ARV-based fix & flip loans, refinance and cash-out options for liquidity, bridge loans for immediate carry, foreclosure bailouts to stop imminent sales, second trust deeds for subordinate financing, DSCR and P&L-based loans for rentals and self‑employed borrowers, and land or construction financing for development. Programs are structured around property equity, repair budgets, and exit strategy to deliver practical short‑ to mid‑term financing. Knowing typical LTV/ARV ranges, term lengths, and funding speed helps you pick the right structure for your timeline and risk tolerance.
The table below compares common residential hard money programs so you can quickly see which fits your situation.
| Loan Program | Typical LTV / ARV | Typical Term | Interest Range | Funding Speed |
|---|---|---|---|---|
| Purchase Loans | Up to program‑dependent LTV, depends on deal | 6–60 months | Varies by program | Rapid, days to 2 weeks |
| Fix and Flip Loans | Up to 90% ARV in some cases | 6–18 months | Varies by project | Fast (often within days) |
| Refinance / Cash-Out | Up to ~75% LTV for cash‑out scenarios | 12–60 months | Varies by borrower/property | Moderate to fast |
| Bridge Loans | LTV based on short‑term collateral value | 1–12 months | Varies | Very fast for urgent needs |
| Foreclosure Bailouts | Based on equity and timeline | Short‑term until exit | Varies | Urgent funding required |
| DSCR Loans | Underwritten to debt service coverage | 12–60 months | Varies | Fast if docs ready |
| P&L Based Approvals | Based on landlord income and P&L | 12–60 months | Varies | Fast for self‑employed borrowers |
| Second Trust Deeds | Subordinate financing percentages vary | Short to mid‑term | Varies | Moderate |
This comparison highlights which programs suit quick acquisitions, rehab projects, liquidity needs, or rental underwriting. After choosing a program, prepare targeted documentation and a clear exit plan to shorten approval times.
Fidelity Funding offers these residential and commercial options for investors, owners, and flippers, with many approvals issued within 24 hours and closings possible in 5–7 days for straightforward deals. Core programs include purchase loans, refinance and cash‑out loans, fix & flip financing (including high‑ARV options), bridge loans, foreclosure and bankruptcy bailouts, seller carry‑backs, and land and construction loans. To move a deal forward, you can submit a deal, call our team, or fill out the form to start a conversation.
What are fix and flip loans for residential properties?
Fix and flip loans finance acquisition plus rehab costs using ARV-based underwriting and draw schedules tied to rehab milestones so funds are released as work is completed. Underwriters calculate loan allowances from projected ARV less repair costs and required equity; some programs can reach up to 90% of ARV in eligible scenarios, giving experienced flippers higher leverage. Typical structures include short terms, interest‑only payments during rehab, and repayment at sale or refinance. Underwriting focuses on repair scope, contractor timelines, and resale projections—details that determine profit and speed to market.
Because ARV is central to flip math, the next section explains foreclosure bailouts and how quick financing can stop a sale and create a viable exit.
How do foreclosure bailout loans help distressed property owners?
Foreclosure bailout loans are short‑term loans that stop foreclosure actions by covering arrears, buying time to sell or refinance, or enabling a structured exit. Speed is crucial because courthouse timelines are often tight. These loans are approved based on available equity and a realistic exit—controlled sale, refinance, or short hold—so documentation emphasizes title status, arrears, and the remediation budget. Lenders fast‑track title and payoff verifications to meet urgent deadlines. Presenting clear payoff figures and a concise exit plan helps move approvals quickly and avoid missed milestones.
After reviewing programs and mechanics, the next major topic covers eligibility and the streamlined application process investors use to reach rapid approvals and closings.
What are the eligibility requirements and application process for residential hard money loans?
Eligibility centers on property equity, deal viability, and a credible exit plan rather than traditional income verification, so lenders can approve based on collateral and projected property value. Common items requested include proof of ownership or the purchase contract, a preliminary title report, a repair scope and budget, ARV comps or estimates, and P&L or DSCR documentation where applicable. The underwriting flow typically runs from initial submission and asset review to conditional approval, document completion, and closing—optimized for speed when the package is complete and title is clear. Knowing which documents shorten underwriting helps you prepare a fast‑track submission.
Below is a checklist-style table showing common requirements, who they apply to, and typical evidence that satisfies each item.
| Requirement | Who It’s For | Typical Evidence / Documents |
|---|---|---|
| Equity & Valuation | All borrowers | Purchase contract, ARV comps, appraisal or broker price opinion |
| Title Status | All borrowers | Preliminary title report, payoff statements, clear ownership docs |
| Repair Scope & Budget | Rehab borrowers | Contractor bids, line‑item budgets, draw schedule |
| Income Verification | DSCR / P&L programs | Lease schedules, rent rolls, P&L statements, bank statements |
| Foreclosure Details | Bailout borrowers | Notice of default, arrears ledger, reinstatement figures |
This table clarifies which documents speed underwriting and which items tend to delay funding so borrowers can prepare a complete package for fast review.
- Initial Submission: Provide basic deal details—property address, purchase contract or mortgage info, and repair budget—to start asset review.
- Asset Review & Valuation: We review comps, ARV estimates, and title to determine preliminary loan sizing and any conditions.
- Conditional Approval: We issue a term sheet or conditional approval outlining LTV/ARV, required documents, and timeline expectations.
- Documentation & Closing: Submit final documents (title, contractor bids, insurance), satisfy conditions, and schedule closing—often within days when the package is complete.
Having accurate ARV comps, a clear repair scope, and current title documents ready typically enables approvals within 24 hours and closings in as little as 5–7 days for straightforward deals. To begin rapid underwriting, submit a deal, call our team, or complete the form.
What property types qualify for hard money financing?
Eligible property types usually include single‑family homes, small multifamily properties (commonly up to four units), distressed properties suitable for rehab, and certain land or construction situations with added scrutiny. Because underwriting is asset‑focused, vacant or nonstandard‑condition properties are often acceptable when a solid rehab plan and exit strategy exist. Raw land or complex construction projects may need specialized programs and extra documentation. Zoning issues, environmental concerns, and structural defects can add requirements or exclusions—disclosing these upfront speeds the review. Present realistic contractor timelines and budgets to demonstrate feasibility for rehab or development loans.
How fast can you get approved and funded for a residential hard money loan?
Initial approvals can be very fast—often within 24 hours—when you provide a clear purchase contract, accurate ARV comps, a repair budget, and clean title information. Full closings commonly occur in 5–7 days for straightforward cases. Speed is conditional: title defects, incomplete repair estimates, or complex encumbrances will slow funding, while a complete package and realistic exit plan accelerate it. You can fast‑track funding with a recent preliminary title report, detailed contractor bids with timelines, proof of funds for down payment, and organized lease or P&L records for rental underwriting. Meeting these documentation expectations reduces friction and raises the chance of meeting urgent timelines.
Gather title documents and repair bids early and communicate a clear exit plan to ensure a rapid close; the next section explains how investors turn fast capital into scalable advantages.
How can real estate investors benefit from residential hard money financing?
Hard money financing gives investors leverage to scale faster, seize time‑sensitive acquisitions, and complete rehab projects without waiting for conventional underwriting—valuable in competitive markets and auctions. Short‑term structures like interest‑only payments and flexible draw schedules preserve cash flow during rehab while the exit strategy—sale or refinance—repays the loan. DSCR and P&L underwriting let investors acquire or refinance rentals when traditional income docs are limited, enabling self‑employed buyers and small landlords to grow portfolios. Rapid funding also supports rescue scenarios—foreclosure bailouts—that protect equity and create options to sell or refinance.
Below are practical use cases showing typical loan structures and expected outcomes.
| Use Case | Typical Loan Structure | Expected Outcome / Benefit |
|---|---|---|
| Fix & Flip | ARV‑based loan, draw schedule, short term | Fast rehab and resale, accelerated ROI |
| Buy‑and‑Hold Rental | DSCR or P&L underwriting, mid‑term loan | Acquire cash‑flowing property without tax returns |
| Foreclosure Bailout | Short‑term payoff loan | Prevent trustee sale, create exit time |
| Bridge to Refinance | Short bridge, then conventional refi | Preserve deal, shift to lower‑cost long‑term debt |
- Leverage to Scale: Hard money increases purchasing power for multiple, simultaneous acquisitions.
- Speed to Win: Fast approvals let investors close competitive offers and auctions.
- Flexible Underwriting: DSCR and P&L options expand eligibility for self‑employed and rental‑focused investors.
Fidelity Funding aligns programs with investor goals—favoring property equity over strict credit or tax returns—to support time‑sensitive deals. If you have a time‑sensitive transaction, submit a deal, call our team, or fill out the form to discuss structure, leverage, and timelines.
What are the typical loan‑to‑value ratios and terms for investment properties?
Typical LTV and ARV ranges depend on purpose: fix & flip programs can under certain conditions finance up to 90% of ARV, cash‑out refinances commonly cap around 75% LTV, and DSCR or P&L loans are sized to income metrics or profit statements rather than strict borrower credit. Terms generally span 6–18 months for flips and 12–60 months for refinances or rental stabilization. Repayment commonly uses interest‑only monthly payments with a balloon at term. Fees and interest vary by program and borrower profile, so model scenarios for ROI and debt service to determine net returns. Accurate ARV, repair budgets, and an exit timeline are the variables that most affect acceptable LTV and term.
Understanding these ranges helps you decide between short‑term hard money and longer‑term conventional financing; the next section covers refinance and cash‑out mechanics.
How do DSCR and P&L based loans support rental property investments?
DSCR loans underwrite to the property’s income by comparing net operating income to required debt service, allowing approval when the property generates sufficient cash flow even if the borrower’s personal tax returns are limited. For example, a property with $30,000 NOI and $24,000 annual debt service yields a DSCR of 1.25—indicating adequate income to support the loan. P&L‑based approvals let self‑employed borrowers qualify using profit‑and‑loss statements and bank records instead of W‑2s or traditional tax returns, broadening access for entrepreneurs and portfolio investors. Use DSCR for stabilized rentals; use P&L for self‑employed buyers who can document steady business income.
These income‑focused options expand investor eligibility and reduce reliance on personal credit when property economics are sound.
How does residential refinance and cash‑out financing work for property owners?
Cash‑out refinance replaces an existing mortgage with a larger loan to extract equity for new purchases or rehab, with LTV caps set by program risk appetite and property type. This provides liquidity without selling an asset and can be preferable when you plan a longer hold and want lower long‑term rates versus short‑term hard money. Bridge loans and second trust deeds are short‑term alternatives when a full refinance isn’t practical—bridge loans cover immediate acquisition or carry, while second trust deeds provide subordinate financing to fill gaps. Choose cash‑out refinance for planned, longer‑term capital deployment and bridge or seconds for tactical, short‑term needs based on timing, cost, and strategy.
Below is a quick guide to when each option fits.
Cash‑Out Refinance Benefits:
- Provides liquidity for new purchases or rehab projects.
- Can replace higher‑cost short‑term financing with a structured loan.
- Supports portfolio growth by recycling equity instead of selling assets.
Bridge / Second Trust Use Cases:
- Bridge loans are ideal for immediate closing needs or short ownership gaps.
- Second trust deeds provide subordinate financing or enable seller carry‑backs.
- Both are short‑term tools intended to be replaced by a refinance or sale.
In short: use cash‑out refinance for planned, longer‑term deployment and bridges or seconds for short tactical needs—prepare appraisals, title, and exit plans to speed approvals.
What are the benefits of cash‑out refinance loans for investors?
Cash‑out refinancing converts equity into available capital so you can fund new purchases or rehabs while keeping an existing asset. It can lower overall financing cost when you move from short‑term hard money to a longer‑term loan with better rates, and it supports portfolio growth by redeploying equity. Consider closing costs, term resets, and whether the new debt service fits projected cash flow. For example, extracting 60% of a property’s value at a sensible refinance rate can free substantial capital for new investments when compared to expected returns.
Understanding these trade‑offs helps determine whether cash‑out or a bridge loan is the right path for near‑term liquidity.
When is a bridge loan or second trust deed loan appropriate?
Bridge loans work when you need immediate capital to close or to carry a property until a refinance or sale completes; they prioritize speed over long‑term cost efficiency. Second trust deeds are useful when subordinate capital is required—such as filling a down payment gap or enabling a seller carry‑back—while a primary loan remains in place. Both are tactical tools: bridges for timing gaps, seconds for layered financing that preserves a primary lending relationship. Evaluate cost versus timing: use bridge or second trust deeds when securing the deal outweighs temporary financing cost.
The next section explains why working with a licensed, locally experienced lender matters for California investors.
Why choose Fidelity Funding for residential hard money loans in California?
Fidelity Funding combines program breadth with an operational focus on speed and practical underwriting. We hold regulatory identifiers that build trust—NMLS: 340265 and California BRE License: 01898127—and we serve borrowers primarily in California with an understanding of local market dynamics and foreclosure timelines. We frequently deliver approvals within 24 hours and closings in 5–7 days for straightforward deals, offer flexible terms from 6 to 60 months, and size loans against property equity and repair‑driven ARV calculations rather than rigid credit thresholds. These capabilities reduce friction for time‑sensitive deals and provide clear pathways for flips, bailouts, DSCR purchases, and cash‑out refinances.
How does Fidelity Funding ensure fast closings and flexible terms?
We streamline underwriting by focusing on collateral value and leveraging experienced underwriters and local title/closing partners to speed verifications and schedule closings. To help ensure a fast close, deliver a complete repair scope and contractor bids, provide a recent preliminary title or payoff figures, and present a clear exit strategy so underwriting can size the loan against ARV or DSCR metrics. Our flexible programs—ARV‑based fix & flip loans, DSCR and P&L approvals, and various bridge and bailout options—let us match loan structure to your plan while keeping timelines predictable. Transparent document checklists and steady communication support the predictable 24‑hour approvals and 5–7 day closings we advertise when the package is complete.
These operational practices create the conditions for successful investor outcomes. The final subsection offers anonymized examples that demonstrate the approach.
What success stories demonstrate Fidelity Funding’s investor support?
Short, anonymized examples show how rapid funding changed outcomes: a foreclosure bailout where immediate funds stopped a trustee sale, enabling a controlled sale three weeks later and preserving substantial equity; and a fix & flip loan that provided ARV‑based funding with a draw schedule, allowing an on‑time rehab and profitable resale within the loan term. Both examples highlight fast approvals, practical repair oversight, and clear exit plans rather than borrower credit history. They reflect our focus on property equity, flexible documentation (including DSCR and P&L approvals where appropriate), and a program mix that supports purchases, refinances, bailouts, and construction deals.
If you have a time‑sensitive transaction or need rapid capital for an investment property in California, Fidelity Funding can review your deal—submit a deal, call our team, or fill out the form to begin the approval process.
Frequently Asked Questions
What are the typical interest rates for residential hard money loans?
Rates vary by lender, program, property condition, and borrower profile. Generally, expect rates in the mid‑single digits to mid‑teens—commonly around 7% to 15%—with higher pricing for riskier situations. Compare lenders and review total loan cost, since faster funding and flexible underwriting can justify higher rates for time‑sensitive deals.
Can I use a hard money loan for new construction projects?
Yes—hard money can finance new construction, though lenders typically require more project detail than for existing properties. Provide a clear construction plan, budget, timeline, contractor qualifications, and exit strategy. Some lenders offer dedicated construction programs; ask about those options when you inquire.
What happens if I can’t repay a hard money loan on time?
If you can’t repay on time, the lender may begin foreclosure on the collateral. Hard money is short‑term, so lenders expect a defined exit (sale or refinance) to repay the loan. If you anticipate difficulty, contact your lender immediately—options like extensions or restructuring may be possible but are not guaranteed and depend on the situation.
Are there any prepayment penalties with hard money loans?
Prepayment terms vary by lender and loan agreement. Some loans include prepayment penalties to protect lender interest income, while others allow early payoff without penalty—especially on short‑term structures. Review the loan agreement carefully and discuss prepayment terms before signing.
How can I improve my chances of getting approved for a hard money loan?
Present a strong investment plan: a clear exit strategy, accurate property valuations, and a detailed repair budget when applicable. Provide complete documentation—proof of ownership, title reports, contractor bids—and, when possible, show investor experience or a solid track record. A well‑organized package shortens underwriting and strengthens approval odds.
What types of properties are typically ineligible for hard money loans?
While hard money is more flexible than traditional lending, certain properties may be ineligible: raw land without a development plan, properties with severe structural problems, assets that violate local zoning, or properties with unresolved legal issues like liens or title disputes. Disclose potential issues up front and consult the lender about specific eligibility rules.
Conclusion
Residential hard money loans give investors quick access to capital so they can close deals, complete projects, and protect equity when timing is crucial. By focusing on property value and flexible underwriting, these loans support strategies from fix‑and‑flip to foreclosure bailouts and DSCR purchases. Understanding program options, documentation needs, and exit planning helps you choose the right financing for your goals. To explore financing tailored to your next investment, reach out to our team or submit a deal today.
