How To Get A Hard Money Bridging Loan With Bad Credit Think real estate

If you are a borrower looking for financing options for your investment property, your only options are to go to conventional institutions (banks), mortgage companies and direct private lenders.

However, if you are a real estate investor with bad credit, many of the traditional sources of finance would not be valid options. Most banks and mortgage companies do not offer mortgage loan programs for people with low credit scores. Fortunately, in the world of private money lenders, a hard money bridging loan is a perfect option for receiving financing and even correcting your credit score.

There are so many loans out there and a lot of them rely heavily on whether or not they will give someone a loan based on their credit score. Fortunately, this is not true for hard money loans.

What are the requirements for a hard money bridging loan?

A hard money loan is based on your assets, not your FICO score. You still need to provide a credit score, but there is no minimum FICO score for the borrower. Instead, hard money lenders focus on the asset’s loan-to-value (LTV) ratio. These loans also don’t have a lot of underwriting, so there is no need to worry about bankruptcies, foreclosures, collections, etc. They are typically capped at 65% LTV or less, with rates ranging from 9.00% to 11.99%, and are always a 12-24 month bridging loan. Real hard money loans are never term loans.

As mentioned earlier, the focus is on assets and equity rather than credit. It is possible to look beyond bad credit, foreclosures and past bankruptcies, whether there is enough equity in the property and the borrower can repay the loan. The emphasis is more on the value of the property. For these loans, the financial controls are less rigorous and faster than traditional loans. Hard money lenders don’t have to follow the same rules and guidelines that more traditional bank lenders must follow. Thus, a Hard Money Bridge Loan can be approved at a much faster rate. A traditional bank loan can take anywhere from 45 to 90 days, but at Stratton Equities, the leading national non-QM direct money lender, a hard money loan can be funded in two weeks.

Due to the quick turnaround time and lower financial requirements at the surface level, the lender takes more risk. Therefore, the repayment periods are significantly shorter than traditional loans. While a traditional loan may have a repayment period closer to 20 to 30 years, a hard money bridging loan needs to be paid off in just a few years. So, if a borrower has bad credit, the lender takes a higher risk and therefore wants the money to be paid back in a shorter time frame.

How To Fix Your Credit Score With A Private Lender?

Unlike a term loan, which requires a minimum credit score of 650, a true hard money bridging loan has no minimum credit score requirement and can even fix your credit score.

If you are a real estate investor who owns investment property with a significant amount of equity (over 50%), you can use a hard money bridging loan, withdraw the money, and use it to pay off debt. or clean up your credit.

Once your credit score is above 650, you can go back to the private lender and apply for a term loan (eg, no documentation loan).

How to apply for a bridging loan?

Hard money bridging loans are reserved for investment property, due to predatory lending and costly regulations. If you are looking for owner-occupied property, you are not eligible for a hard money bridging loan.

Some states also have non-judicial foreclosure laws, which have been passed due to the high risks. These laws protect the lenders and thus make them more comfortable in financing these high risk loans since these loans are not sold in the secondary market and the lender owns the note. Moreover, these types of loans with low FICO scores are not eligible in rural areas.

If you have bad credit, contact Stratton Equities to learn more about your loan options and what will work best for you.

At Stratton Equities, our mission is to make private mortgage lending easy, efficient and hassle-free. We help other experienced investors, borrowers and professionals in the mortgage and real estate industry succeed through a simple 3-step process, including pre-approval, processing and underwriting and financing.

Call us at 800-962-6613 or contact us at [email protected] and apply now at to find out if you are eligible for prequalification ready!

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