A hard money loan is a short-term loan secured by real estate, approved mainly on the value of the property rather than the borrower’s credit or income. In Florida, these loans often close in about one to two weeks, compared with the 30 days or more a typical bank mortgage can take. The tradeoff is cost: rates and fees are higher, and you usually must pay off or refinance the loan within a short window.
Florida note: Mortgage lending in Florida is regulated under Chapter 494 of the Florida Statutes, and lenders and loan originators are licensed through the Florida Office of Financial Regulation (OFR). Borrowers can confirm a lender’s license through the NMLS Consumer Access website before applying.
Below is a closer look at how these loans are structured, what they cost, and when they make sense for Florida borrowers.
Why Florida borrowers turn to hard money
Florida’s real estate market moves fast. Investors competing for distressed properties, homeowners trying to buy before their current house sells, and owners of properties that need major repairs often run into the same problem: a bank cannot approve the loan in time, or will not lend on the property at all.
Hard money fills that gap. Because the lender is focused on the property and how the debt will be paid off, the approval process can skip much of the paperwork that slows down conventional lending.
Common situations include:
- Fix-and-flip purchases. Buying a property that needs work, renovating it and selling it within months.
- Bridge financing. Closing on a new property before the sale of another one is final.
- Properties banks avoid. Homes in poor condition, mixed-use buildings or properties with title or occupancy issues.
- Borrowers with nontraditional income. Self-employed owners, retirees or investors whose tax returns do not reflect their full financial picture.
- Equity access. Refinancing to pull cash out of a property for another project.
What lenders look at before approving
Even though credit is not the main factor, a hard money loan still goes through underwriting. Tampa-based Associates Home Loan of Florida, Inc. (NMLS 380601), for example, says it reviews:
- The property. Its location, type, condition, and current or after-repair value.
- Existing liens. Any mortgages or other debts already recorded against it.
- Loan-to-value ratio. How much is being borrowed compared with what the property is worth.
- The borrower. Experience with similar projects and cash reserves.
- The renovation plan. Scope of work and budget, if the loan funds repairs.
- The exit strategy. Whether the loan will be repaid by selling the property or refinancing into long-term financing.
Loan-to-value is often the deciding number. A borrower seeking $150,000 against a property worth $300,000 would be at 50 percent loan-to-value. Lower ratios leave more of a cushion for the lender and can make approval easier.
What a hard money loan really costs
The interest rate is only part of the picture. Borrowers should look at the full cost of the loan, including:
- Points. Upfront fees, each point equal to 1 percent of the amount borrowed.
- Third-party costs. Appraisal, title, closing, and lender fees.
- Payment structure. Many loans are interest-only, which keeps monthly payments lower but leaves the full principal due at the end.
- Balloon payments. A large lump sum due at maturity.
- Extension terms. Fees or conditions if more time is needed to sell or refinance.
Florida note: Florida charges a documentary stamp tax of 35 cents per $100 on notes and an intangible tax of 0.2 percent on new mortgages recorded in the state. These are typically paid at closing, so borrowers should ask for them to be included in the cost estimate.
A plan to sell or refinance is not guaranteed to work on schedule. Repairs can run long, the market can shift and replacement financing may not be available. Building extra time and cash into the budget is one of the simplest ways to reduce risk.
Common mistakes to avoid
- Focusing only on the rate. Points and fees can change the total cost more than a small difference in interest.
- Underestimating the timeline. Florida permitting, contractor schedules and hurricane season can all delay projects.
- Skipping the exit plan. Lenders will ask, and borrowers should know the answer before applying.
- Not reading the extension terms. An extension can be expensive if it is needed.
- Working with an unlicensed lender. Always verify licensing before sharing financial information.
FAQs
How fast can a hard money loan close in Florida?
Many close in about seven to 14 days, depending on the property, documentation and complexity of the deal.
Do I need good credit to qualify?
Not necessarily. Credit is reviewed, but lenders focus more on the property’s value, the available equity, and the plan to repay the loan.
Can I use a hard money loan for my primary residence?
Hard money is generally designed for investment and business purposes. Owner-occupied homes are usually better served by traditional mortgages, which come with more consumer protections and lower costs.
What types of property qualify?
Single-family homes, rental properties, commercial real estate, and renovation or construction projects are common.
Are rates higher than a regular mortgage?
Yes. The short term, faster approval, and higher lender risk mean hard money rates and fees are typically above those of conventional loans.
Bottom line: A hard money loan can be the right tool when speed or property condition rules out a bank, as long as the borrower understands the full cost and has a realistic plan to pay it off. Comparing several licensed Florida lenders, reviewing every term in writing and leaving room for delays will help keep a short-term loan from becoming a long-term problem.
