What’s the difference between a hard money loan and bank loan?

Many people have this question, especially if they’ve never gotten a hard money loan before. So I’m going to tell you the biggest differences between a hard money loan and a bank loan.


What’s the biggest difference?

The speed. A Hard Money Loan is known for its fast approval and it’s fast funding timelines. The time from when you apply for the loan initially, until the time that it funds, is MUCH faster than a bank. Sometimes we can even fund in 24 hours!

Typically a bank loan is going to take you anywhere from 4 to 6 weeks to get closed, and sometimes longer depending on the transaction, especially if it’s a commercial property that’s underlying the loan.

What’s the second biggest difference between a hard money loan and a bank loan?

Your requirements needed for a hard money loan. The requirements for approval are far less than they are for bank loan.

A hard money loan is called that because it’s based on a hard asset. It is going to be the approval process for that loan is going to be based on the actual asset itself: e.g. the property characteristics and the value. A bank loan is based on the credit score of the borrower and the income of the borrower. Banks are going to look at the tax returns for the borrower’s income or they are going to look at the payment history on the credit report.

Hard money lenders typically don’t look at that credit reports or income. So it’s a totally different process with regard to how you get approved for the loan itself.

In summary, a hard money loan is a lot faster, from the time you apply until the time you’re funded. A hard money loan has far less requirements than a bank loan because it is based on the “asset”versus your income or your credit.

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About the author

Corey Curwick Dutton, MBA Park City, Utah - 2005 MBA Graduate with 10 years experience in Business Management including International Management. Corey is a Private Money Lender and Loan Officer. In her spare time Corey enjoys writing on topics in the private money lending industry. She also enjoys hobbies such as mountain biking and skiing in the great outdoors of Utah.