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What Are The Differences Between A Traditional Loan And A Hard Money Loan?



If you have ever applied for a mortgage with a bank, you know it can be a long and sometimes difficult loan process. It seems traditional lenders want an inordinate amount of information from you.

General loan requirements include your loan applications, minimum credit scores, bank statements, income verifications, borrower and property financials, etc., etc. etc.

Once you think you have satisfied all of the bank’s requests, they come up with a new one as well as additional conditions for approval!  Even if you meet all of the traditional lender’s strict lending requirements, the process can still feel exhausting.

In contrast, when you apply for a real estate loan with a hard money lender, the loan process is overall more streamlined and efficient.  Hard money loans require less paperwork and third party reports. This is a welcome change for those who don’t want to be burdened with a lengthy loan process or don’t have the credit scores or lengthy financial records to qualify for a traditional loan.  Such loans are ideal for borrowers who don’t qualify for a mortgage under traditional lender requirements or for those properties requiring some fixing as they don’t qualify for a bank loan.

General hard money borrowing requirements are considerably looser than conventional financing.  As the risk is greater for the private investor, rates are generally higher and the borrower is required to come in with 20-30% equity or down payment if a purchase.

Here at Sun Pacific Mortgage we have 2 main loan qualifications:

#1. Decent equity for a refinance or at least 25% down payment on a purchase and  

#2. An ability to repay the loan.  

If you are thinking of refinancing or purchasing property and are having difficulty at a bank or other Lending institution, then give us a call at 707-523-2099!

Hard Money Loan of the Month – November


By Ken Walker, Lead Loan Originator

Just the other week a couple called needing a loan to buy their houses out of a Family Trust.  There were family disputes occurring and this needed to occur fast otherwise they would be forced to sell the houses.

They were unable to get a conventional loan due to unpaid tax liens against their businesses and difficult to prove income due to being self employed.

The loan amount needed was $475,000 against two separate properties in Sebastopol, California.

Within five days all needed items were received and we had loan approval!  As this was a low loan-to-value (40%) we were able to get this approved with an interest rate of only 8% (hard money averages 9-12% interest).

We specialize in loans that have been turned down elsewhere and one of our favorite mottos is “If we say it can be done, we’ll get it done!”

Call our office at 707-523-2099 if you need some creative financing help for your real estate purchase or refinance.

Be Prepared For Seasonal Changes In The Market!


Our loan preapproval process is based primarily on 2 things:

  1. Loan to value and
  2. Ability to repay (far more flexible than conventional underwriting)


We loan up to 75% of the value of the property and in some instances as high as 80%.  We do Jumbo Loans commonly.

Below are some recently funded loans for a better idea of how we can help you or a friend. Call us today at (707) 523-2099 or drop us an email with any questions or scenarios!

Recently Funded:

Santa Rosa, California (Sonoma County)
Loan Program: Owner Occupied Purchase Bridge
Loan Amount: $261,000
Days To Fund: 14 days
Why Turned Down Elsewhere: Difficult to prove income

Oakland, California (Alameda County)
Loan Program: Non-Owner Refinance
Loan Amount: $805,000
Days To Fund: 19 days
Why Turned Down Elsewhere: Owned many investment properties

Sebastopol, California (Sonoma County)
Loan Program: Owner Occupied Refinance
Loan Amount: $555,000
Days To Fund: 25 days
Why Turned Down Elsewhere: Property a fixer

Novato, California (Marin County)
Loan Program: Investment Property Purchase
Loan Amount: $420,000
Days To Fund: 15 days
Why Turned Down Elsewhere: Had a Bankruptcy

Napa, California (Napa County)
Loan Program: Owner Occupied Business Purpos
Loan Amount: $215,000
Days To Fund: 6 days
Why Turned Down Elsewhere: Couldn’t get financing for a new home while having an existing mortgage on old home.

Garberville, California (Humboldt County)
Loan Program: Commercial Property Purchase
Loan Amount: $415,000
Days To Fund: 29 days
Why Turned Down Elsewhere: FICO score had issues

What Credit Score Is Needed To Buy A Home?

Many potential home buyers believe that they need a score over 780 to qualify.  In today’s world, this is no longer true.

One of the more common misconceptions keeping potential home buyers from beginning their search has been the fear that their credit score is too low.

According to a recent study by The Wharton School of Business, the good news is that over 50% of all approved loans had a FICO Score under 750.

Taken from a recent KCM blog post (full article link below), this depicts nicely what the real scoop is:

Below is a breakdown of the FICO Score Distribution of all closed (approved) loans in August from Ellie Mae’s latest Origination Report.


The chart above illustrates the point that low credit scores are not a reason to avoid seeking a mortgage.  More than half of all loans in August were awarded to individuals with credit scores as low as 600.

At Sun Pacific Mortgage we welcome not only low credit scores, but bankruptcies, imperfect properties, difficult-to-prove income and a host of other issues that the conventional lender won’t consider.  We finance jumbo loans, bridge and short term loans, owner occupied purchases and refinances, investment purchases, commercial and land.

Call today with any questions or scenarios and we’d be happy to help!

(707) 523-2099


Original Keeping Current Matters blog link:  http://www.keepingcurrentmatters.com/2016/10/17/dont-disqualify-yourself-over-half-of-all-loans-approved-have-a-fico-score-under-750/

Hate Turning a Borrower Down?


We get loans brokered or referred to us by mortgage professionals who had to tell the borrower “no” for whatever reason. Most that call us need quick action and approval – because they are running out of time. You actually do want to help – and have had underwriting fail you.

Sun Pacific Mortgage is uniquely qualified in that our underwriting is based on 2 things – loan to value and ability to repay. Even our “ability to repay” is far more flexible than conventional underwriting.

We loan up to 75% of the value of the property and in some instances as high as 80%. We do Jumbo Loans commonly

Call us today at (707) 523-2099.