Getting a loan from a private lender is different from borrowing from a bank. Banks check your credit score, tax returns, and income. They want proof that you can repay the loan. Private lenders look at something else—property value. But why?

Texas hard money lenders care more about the asset than your financial history. If the property holds enough value, they see it as a safe deal. But there’s more to it than just numbers. Let’s break it down.

Collateral is the Key

Collateral means something valuable that backs a loan. With hard money loans, the property itself is the collateral. If the deal goes bad, the lender can sell the property. This is why they care more about its value than a borrower’s job history.

Think of it like this—if a property is worth $300,000 and the loan is $200,000, the lender knows they have a safety net. Even if the borrower stops paying, the property holds enough value to recover the loss.

Loan Approval is Faster

Hard money lenders in Texas approve loans in days, not weeks. They don’t waste time checking tax records or credit reports. Instead, they look at the asset’s worth. This makes things move much faster.

Flippers and investors love this speed. They often need quick funding to grab a deal before someone else does. Private lending gives them that advantage.

Property Value Determines Loan Amount

The amount a borrower can get depends on how much the property is worth. Lenders use a simple formula called Loan-to-Value (LTV) ratio.

For example, if a lender offers 70% LTV, that means they will lend up to 70% of the property’s value. If a house is worth $500,000, the loan might be around $350,000.

A borrower’s paycheck has nothing to do with this number. The property itself drives the decision.

Condition and Location Matter Too

Lenders don’t just look at price tags. They check the property’s condition and location. A rundown house in a bad area may not get a high loan offer. But a well-kept home in a good neighborhood could secure more funding.

Location is key. A lender wants to know they can sell the property easily if things go wrong. That’s why properties in high-demand areas get better loan deals.

Why Banks Say No, But Private Lenders Say Yes

People with low credit scores or self-employed workers often struggle to get bank loans. Even if they make good money, banks see them as risky.

Private lenders don’t follow the same strict rules. They give loans based on real estate value, not personal finance history. This opens doors for investors and business owners who need funds fast.

Short-Term Loans, Not Long-Term Commitments

Private loans are short-term. Most last between 6 to 24 months. Since they don’t stretch for decades, lenders don’t worry about steady paychecks. Their focus stays on the property’s potential.

Borrowers usually pay off these loans by selling the property or refinancing with a traditional bank loan.

The Risk and Reward for Borrowers

Private loans are easier to get, but they come with higher interest rates. Lenders take on more risk, so they charge more. Borrowers need to weigh the cost against the benefits of fast funding.

For real estate investors, the speed and flexibility often make it worth it. They can grab great deals, renovate properties, and sell them for profit before the loan term ends.

Conclusion – Need a Reliable Private Lender?

At Proactive Commercial Lending Group, we focus on making real estate deals happen. We know speed matters. Our loans are backed by property value, not slow paperwork. That means faster approvals and fewer roadblocks.

Looking for funding? We offer flexible loan options for investors, flippers, and business owners. Contact us today and let’s talk about your next deal.