Factors That Affect Interest Rates on Hard Money Loans

Real estate investors and house-flippers alike turn to hard money loans for numerous reasons, including speed, flexibility, and convenience. Although hard money loans are commonly known to have higher interest rates than commercial loans, there are many factors that affect interest rates on hard money loans.

What Are the Benefits of Hard Money Loans?

Many real estate investors sign with hard money lenders when they need specific funding for their projects. When one operates in the real estate industry, they must run on a tight schedule, meaning their financial options must be efficient and timely.

Hard money loans are outstanding for investors because they’re typically approved and processed relatively quickly, with few requirements. Most banks require what seems to be endless documents with only a slight chance of approval.

Credit Score

As with many lenders in today’s financial industry, the interest rate of your hard money loan may be affected by your credit score.

Although your investment property is more important in determining your interest rates, lenders also look at your credit score. However, at Val-Chris we have lent to clients with credit scores in the 400s and 500s.

Amount of Requested Loan

The amount of funding you’re requesting also affects your interest rate on hard money loans. If you’re looking to borrow $500,000 compared to $100,000, you may have a higher interest rate on your $500,000 request because your lender is taking a more considerable risk.

Term Length

The length of your term is associated with the cost of the loan, so once your loan is decided the length of the term is set.

Type of Property

The type of property you’re investing in may also affect your interest rates. Lenders may prioritize your investment properties over other factors.

If you’re investing in a property that is considered “low risk” like a residential property, as opposed to higher risk land like a farm, your interest rates may be lower.


The real estate market is constantly changing, which heavily influences your interest rate on your hard money loan. Be sure to research the market before making your financial request.

You can find many hard money lenders in Orange County that will assist you in your real estate ventures. They will also help you determine which of your personal factors will affect the interest rates on your hard money loans.

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