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Family Office Lender. No 3rd-party appraisal (typically). Soft Money Terms in 1st or 2nd Lien Position.
Multifamily Bridge Loans only. Interest Rates are 8.5% for 4-year term, 8.25% for 2 years, 7.95% for 1 year.
California Hard Money Stats
According to private lending data provider, Analytics Logics, the average interest rate for hard money loans in California is 10.50%. Lenders are charging an average origination fee (points) of 1.90%. The average loan-to-value (LTV) for hard money loans in California is 64%, and the average loan amount is $828,922. These stats are the average of all the loans which were funded between April 1, 2023 and September 15, 2023 by the many private lenders who use Liquid Logics’ loan origination software to manage their lending operations.
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 hard money 1st mortgages is 70%.
- The maximum combined loan-to-value (CLTV) for hard money 2nd or 3rd mortgages is 65%.
- 2nd mortgages are quite common in California, and some lenders even consider 3rd or 4th lien position.
- 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.
Hard Money Loan Transactions in Orange County
Equity Cash-Out Loan for 3-Unit Rental Property in Santa Ana, California
Diversified Mortgage, one of California’s oldest and lowest-priced private lenders, funded a $595,000 1st lien position hard money equity cash-out loan secured by a 3-unit residential rental property in Santa Ana, Orange County, CA. The property value was estimated to be $1,260,000 so our loan-to-value was 47%. The subject property was owned free and clear of any debt at closing. It was fully occupied and cash-flowing. The triplex was in decent condition and didn’t need any major repairs. The cash out was needed for purposes unrelated to the subject property. The Borrower had fair credit. They plan to continue leasing the property and eventually refinance as an exit strategy. The interest rate was 7.95% with amortized payments and we charged 3% origination points. The loan term was set at 48 months. This hard money loan was funded in March 2023.
ARCH Loans, a private lender, funded a $1,750,000 1st lien position hard money loan for the acquisition of a single-family home in Corona Del Mar, California. Corona Del Mar is a coastal city in Orange County. We funded 100% of the purchase price. This project will be a full tear-down and ground-up build. Our Borrower was seeking a hard money loan only for the acquisition, and he will fund the entire construction budget out of pocket. This was a first-time client with ARCH. The Borrower has been working in this market for many years and has a great outlook on the community. The term on this loan is 6 months. The exit strategy will be to complete the ground-up build and list the home for sale immediately upon completion. We were able to conduct an appraisal, underwrite, and fund within one week. This SFR hard money loan was funded in November 2018.