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Karpe Real Estate Center
Private Lending for Central California Real Estate - Bakersfield, Fresno, Central Valley, Sacramento | Est. 1926
California Hard Money Lending Guidelines
California has lots of hard money lenders that offer short-term loans secured by real estate. Here are the typical private money lending guidelines for most lenders in California as of September 2023:
- The interest rates for hard money loans in California range from 9% to 12%.
- For a 2nd mortgage in California, most hard money lenders charge 11% to 14%.
- Most California hard money lenders charge an origination fee (aka points) between 2% and 3%.
- The maximum loan-to-value (LTV) for 1st mortgages is 70%.
- The maximum combined loan-to-value (CLTV) for 2nd or 3rd mortgages is 65%.
- Hard money 2nd mortgages are quite common in California, and some lenders even consider 3rd mortgages.
- The loan amounts range from $100,000 to $20,000,000.
- The loan term for most California hard money lenders is 1 year, but some lenders will go up to 2 years, and some go up to 5 years.
- Most lenders have a 3 month minimum term (interest guarantee).
- The payments for most hard money loans are interest-only, and the entire principal amount is due at the end of the loan term.
- Some hard money lenders in California amortize all of their loans over 20 years.
Hard money lending is mainly for investment properties, but California has some unique laws that enable hard money loans to be secured by a borrower’s primary residence.