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Why Hard Money Lenders Typically Do Not Offer 100% Financing

By November 28, 2019June 29th, 2023Blog, Hard Money Lenders
hard money lenders

It is a question asked quite often by applicants to hard money lenders in Los Angeles – why don’t you offer zero money down, 100% financing?There are numerous responses to this question. Here are just a few

A hard money applicant seeking 100% financing is an indication that the applicant does not have much experience in investing in real estate projects or they may even be seeking their very first hard money loan. Experienced real estate investors understand that hard money lenders in Los Angeles  and elsewhere in California generally offer a 65% loan-to-value for an approved hard money loan.

Another reason why private lenders do not offer 100% financing is because it would expose the lender to borrowers who may not be in a sound financial position thereby increasing the odds of defaulting on the loan.For example, if an applicant asks for 100% financing, how do they expect to make the interest payments during the term of the loan? What cash reserves do they have in the event that unforeseen issues or costs arise during a fix-and-flip project? There needs to be a level of assurance for the hard money lender that the borrower is capable of paying back the loan.

Finally, hard money lenders typically do not offer 100% financing because it forces the lender to take all of the risk. If an unforeseen setback occurs and the borrower defaults, the lender is left holding the whole bag. 

Hard Money Loans Can Be Tailored to Fit Your Project 

Despite the inability to secure a hard money loan at 100% financing, you still have options. For example, it is possible to work with a lender to structure a hard money loan that will cover a substantial portion of your purchase price or that will include money to cover the majority of rehab costs for a fix-and-flip project

If you are looking to work with a hard money lender in Los Angeles or elsewhere in California, contact the highly reputable and trusted hard money experts at PB Financial Group. PB Financial Group, have helped over 2000 clients thus far and can do the same for you. For additional information or to schedule a consultation please contact PB Financial Group at 877.700.3703 or visit to learn more.

PB Financial NMLS #357614/DRE #01522495

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