Hard money loans are typically used for investment properties, but can you secure one for a primary residence? The answer is yes, but with major caveats. This guide explains how hard money loans work for owner-occupied homes, their risks, costs, and alternatives.
Can You Get a Hard Money Loan for a Primary Residence?
✅ Yes, but it’s rare – Most hard money lenders prefer investment properties (flips, rentals).
✅ Stricter rules apply – Owner-occupied loans face higher scrutiny under federal laws (HOEPA regulations).
✅ Short-term only – Typically 6–24 months (not a long-term mortgage solution).
Why Lenders Hesitate
- Higher consumer protections (primary homes have stricter lending laws).
- Risk of default (owner-occupants may struggle to refinance).
- Regulatory hurdles (Truth in Lending Act, Dodd-Frank rules).
How Hard Money Loans for Primary Residences Work
Loan Terms
- Loan-to-Value (LTV): 50–70% of home value
- Interest Rates: 10–15% (higher than traditional mortgages)
- Fees: 2–5 points (1 point = 1% of loan amount)
- Repayment: 6–36 months (balloon payment due at end)
Approval Requirements
✔ Strong equity (you’ll need 30–50% down)
✔ Exit strategy (proof you can refinance or sell)
✔ Decent credit (some lenders require 600+ FICO)
When Does a Hard Money Loan Make Sense for a Primary Home?
- You Need Fast Cash (Bad Credit, No Traditional Approval)
- Example: You’re buying a foreclosure at auction.
- You’re Flipping Your Own Home
- Example: Buying a fixer-upper, renovating, then refinancing.
- Bridge Financing While Waiting for a Sale
- Example: Your old home hasn’t sold yet, but you need to move.
Risks of Hard Money Loans for Primary Residences
🚨 High Interest Rates (Can double your monthly payments)
🚨 Balloon Payment Risk (If you can’t refinance, you lose the house)
🚨 Predatory Lenders (Some target desperate homeowners)
Better Alternatives for Primary Homes
| Option | Best For | Terms |
|---|---|---|
| FHA Loan | Low credit scores | 3.5% down, 580+ FICO |
| VA Loan | Veterans/military | 0% down, no PMI |
| Home Equity Loan | Existing homeowners | 5–8% interest |
| Private Money Loan | Faster than hard money | Lower rates if from family/friends |
How to Find a Hard Money Lender for a Primary Residence
- Search for “owner-occupied hard money loans” (few lenders offer these).
- Verify licensing (avoid unregulated lenders).
- Compare at least 3 offers (watch for hidden fees).
Reputable Hard Money Lenders (That Sometimes Do Primary Residences)
- LendingHome
- RCN Capital
- AVANTI
Final Verdict: Proceed with Caution
Hard money loans for primary homes are expensive, risky, and short-term. They should only be used if:
✔ You can’t get traditional financing
✔ You have a solid refinance/sale plan
✔ You fully understand the costs
Need a safer option? Explore FHA loans or credit union financing first.
Have experience with hard money loans? Share your story below!