Does Hard Money Lenders require a Down Payment? Check Complete Guide

If you haven’t taken a private loan before, you might not be aware of the eligibility for securing the loan. A common question is do the borrowers have to pay their own money when taking a loan of this type. Well, the answer differs from one lender to another. There are numerous hard money lenders in Illinois who follow different methods of lending money. Here check out all the details.

Do the hard money lenders take down payments?

In most cases, the hard money lenders ask for 10 to 25% of the purchase price. When you have a good experience and high credits, then you can put less money down. While in case of a low credit score, you will have to put more money down than a qualified investor.

Hard money down payment basics

Most of the hard money lenders in Illinois will require a down payment of some type. The amount needed is calculated based on the borrower’s credit score, experience, and property valuation. It is common for the lenders to ask for 30% of the total loan amount as a down payment depending upon the property’s location.

Is down payment necessary?

Private loans are funded by a group of private investors who take risks with this type of loan. The lenders worked on the assumption that the borrower will pay back the loan, including the interest, within the given time. When this does not happen, the lender loses money. So when the borrower puts down some money as a down payment, it reduces the lenders’ risk and offers them some kind of protection.

Remember, every lender has its criteria for underwriting the loans, and it depends upon the amount of risk he is ready to accept. Thus, this is why the borrower with no down payment struggles to get a hard money loan.

Contact the best hard money lender. If you are considering taking a loan, then you can find numerous hard money lenders in Illinois. But to get proper professional support, you must contact Private Capital Investors. We are here to help you find the best rates and deals for your loan. Our professionals will work closely with you to guarantee you get the desired loan amount in the shortest time possible.