Questions to Ask Hard Money Lenders
1. What types of loan programs do you offer?
2. What are your interest rates and loan fees?
3. What is your maximum LTV or LTC?
4. What does your underwriting process look like?
5. What happens if my project takes longer than expected?
6. What is your experience lending in my market?
When you’re preparing to finance a real estate investment with a hard money loan, choosing the right lender is just as important as choosing the right property. Hard money lenders vary widely in their speed, flexibility, transparency, and lending terms.
That’s why asking the right questions upfront can protect you from delays, unexpected fees, or deals falling apart right before closing. Below are the essential questions to ask hard money lenders to help you make a confident, informed decision.
Why Asking the Right Questions Matters Before Working With a Hard Money Lender
Hard money lending operates differently from traditional bank financing. Instead of relying primarily on credit scores or tax returns, hard money lenders focus on the property's value and the borrower’s exit strategy.
However, every lender has their own process, requirements, and pricing—and not all of them are transparent about it.
By asking the right questions early on, borrowers can:
Compare lenders effectively
Avoid unexpected costs
Ensure the lender fits their project timeline
Confirm the lender’s experience in their specific market
Prevent costly surprises during underwriting or closing
Before moving forward with any lender, make sure they can confidently and clearly answer the questions below.
6 Essential Questions to Ask Hard Money Lenders
Ready to get started with hard money lending? Here are six essential questions to ask hard money lenders:
Question #1: What types of loan programs do you offer?
Why this matters: Learning the lenders’ offerings ensure that they fit your project type, whether it’s a bridge loan, fix and flip, construction, or commercial real estate.
Why you need to ask this question: Not all lenders offer the same loan types. Some specialize in fix-and-flip projects, while others focus on bridge loans, ground-up construction, or commercial real estate.
Asking this question ensures the lender’s programs match your investment needs, and that they have experience funding the type of project you're pursuing.
Question #2: What are your interest rates and loan fees?
Why this matters: This question helps you understand the full cost of the loan, including rates, points, underwriting fees, extension fees, and more.
Why you need to ask this question: Pricing is one of the biggest factors borrowers should clarify. Beyond the interest rate, be sure to ask about:
Points
Origination fees
Underwriting or processing fees
Extension fees
Any minimum interest requirements
Getting a clear breakdown allows you to compare lenders accurately and avoid hidden costs.
Question #3: What is your maximum LTV or LTC?
Why this matters: Understanding the lender’s leverage helps you plan your down payment, rehab budget, and required cash reserves.
Why you need to ask this question: Loan-to-value (LTV) and loan-to-cost (LTC) ratios determine how much leverage you can get. Some lenders will fund up to 70–75% of the purchase price, while others include rehab costs or ARV (after-repair value) in the calculation.
Question #4: What does your underwriting process look like?
Why this matters: This question prepares you for what documents you’ll need, how long approval will take, and what criteria the lender uses to make decisions.
Why you need to ask this question: The underwriting process can vary dramatically from lender to lender. Some only have a minimal documentation process, while others have more detailed requirements.
Ask about:
Document list
Credit or background checks
Time to approval
Whether they use appraisals, BPOs, or internal valuations
Question #5: What happens if my project takes longer than expected?
Why this matters: Get to know the fine print, like extension terms, fees, and minimum interest. The answer to this question also allows borrowers to gauge the lender’s flexibility and proactive measures.
Why you need to ask this question: Real estate projects don’t always go according to plan. Delays can happen due to inspections, permitting, contractor schedules, or market conditions.
A good lender should be able to explain:
Extension options
Extension fees
Whether they require minimum months of interest
Their process for modifying a loan
Lenders who are flexible and transparent here make a significant difference in protecting your deal.
Question #6: What is your experience lending in my market?
Why this matters: A lender familiar with your local market understands property values, regulations, and typical timelines—all of which contribute to smoother closings.
Why you need to ask this question: Local expertise matters. A lender who regularly funds projects in your city or state understands local values, timelines, and regulations.
They can often approve loans faster and with fewer complications. This is especially important in competitive or unique markets where speed is critical.
Red Flags to Watch Out For
Not all lenders operate with the same level of professionalism or transparency. As you evaluate your options, watch for these warning signs:
Vague or inconsistent answers.
If a lender can’t clearly explain their process, terms, or pricing, that’s a sign of inexperience. Or worse, hidden fees.No written terms or term sheet.
Everything should be documented before you commit. A lender unwilling to provide a written outline of terms is a major red flag.Unrealistically low advertised interest rates.
If a rate seems too good to be true, it usually is. These ads frequently lead to much higher costs once fees and requirements are added.No license (if applicable).
Major real estate states like California require licensing to originate loans secured by real estate property. Unlicensed lenders can pose legal and financial risks.
Slow communication or unclear contact points.
Fast communication is essential in hard money lending. If you’re chasing the lender just to get answers, imagine what happens during closing.