Hard money and commercial loans, answered plainly

Hard money is short term, asset based debt. It is underwritten mostly on the property: value today, value finished, and how the loan gets repaid.

A commercial loan is longer term debt underwritten on stabilized income and the borrower’s balance sheet. It is materially cheaper and the process is longer. Neither is better. Hard money on a stabilized building is expensive, and bank debt on a short fuse contract is not realistic.

If the property is not currently producing the income that supports permanent debt, because it is being renovated, built, repositioned or leased up, that is hard money. If it is stabilized and occupied, or the business occupying it is buying the building, that is a commercial loan and it should be shopped. Our four routing questions sort it.

Hard money, meaning loans we fund with our own capital, is Texas only: Houston, Dallas and Fort Worth, Austin, San Antonio and the secondary markets in between. Rural and tertiary Texas is considered with adjusted leverage. Commercial financing is brokered in all 50 states, subject to program availability and state law.

Rehab, bridge or ground up outside Texas? Send it anyway. We place those with debt funds and bank bridge desks instead of funding them ourselves.

A business purpose loan is credit extended for business, commercial or investment use rather than personal, family or household use. That distinction keeps these loans outside the consumer mortgage rules: the Truth in Lending Act, RESPA, the loan estimate and closing disclosure regime and the ability to repay rules do not apply. It also means the property cannot be your home. Every borrower signs a business purpose certification at closing.

Yes, with adjusted leverage. Experience is priced, not required. A borrower with no completed projects typically starts around 80 to 85% of purchase with 100% of rehab rather than 90%, and needs cash for the down payment, closing costs and a real contingency. Partnering with an experienced operator or a licensed general contractor on the first project or two usually restores full leverage.

On the direct side we look for a mid score around 660 and up for best leverage, and we go lower with more equity, more experience or more cash. Credit is a factor, not the decision. What stops a file is a recent foreclosure, an open bankruptcy, an unresolved judgment or a mortgage late inside the last twelve months. DSCR loans weigh credit more heavily. Brokered commercial weighs net worth and liquidity more heavily.

Not on hard money or DSCR. No debt to income calculation, no W-2s, no tax returns. We verify identity, entity, cash to close and reserves, background, and the property. Brokered commercial is different: banks, agencies and SBA lenders ask for returns, a personal financial statement and business financials. We tell you which world you are in before you gather anything.

Plan on the difference between the purchase price and our advance, plus closing costs, plus interest carry, plus a contingency. On a 90% purchase and 100% rehab structure that is usually 10% of the purchase price plus roughly 3 to 5% in closing costs and fees. We also want to see reserves after closing, typically enough to carry the property for several months if the project runs long, because projects run long.

Pricing moves with leverage, experience, asset type and term. Expect origination points paid at closing, an interest rate meaningfully above conventional, a fixed administrative fee (currently $1,595), and third party costs: appraisal or BPO, title, insurance and legal. Everything is itemized on the term sheet before you spend a dollar. There is no application fee and no upfront diligence deposit just to look at a deal.

Rehab and construction funds are held back and released as work is completed, not at closing. You submit a draw request against the approved budget, an inspection confirms the work, and we reimburse. You pay interest only on funds actually drawn, so an efficient schedule saves real money. Most projects run three to six draws, and more are available on larger budgets.

Almost never the lender. It is title defects, a property nobody can get into for the appraisal, and documents arriving in batches a week apart. Hard money moves at the pace of clean title and a responsive borrower. Brokered commercial moves at the pace of the program: bridge and bank debt are the shortest, agency and SBA longer, HUD longer still. We will tell you what your file realistically looks like once we have read it.

Yes, and on most programs you should. Business purpose loans are ordinarily closed to an entity (an LLC, LP or corporation) with a personal guarantee from the principals. If you do not have an entity yet, forming one is straightforward and does not usually hold up the file.

Yes. A cash out bridge or DSCR refinance on an unencumbered investment property is one of the cleanest files we see, and often the cheapest way to fund the next down payment. Leverage depends on the asset and the documented use of proceeds, which has to be a business or investment use.

Tell us early. Extensions are routinely available on bridge and rehab loans, usually for a fee, provided the project is progressing and interest is current. What we cannot fix is a borrower who goes quiet at month eleven of a twelve month note.

No application fee and no upfront diligence deposit to review a deal. Once you accept a term sheet you fund third party costs directly: appraisal or BPO, and sometimes a feasibility or budget review. Those are paid to the vendors, not to us, and you get the reports. Origination points and the administrative fee are paid at closing out of loan proceeds.

Constantly, and on protected terms. Your fee is written into the term sheet and disclosed at closing, your borrower is registered to you, and we do not market to your client or solicit their next deal. See the broker page for how the relationship is documented.

Yes. Portfolio DSCR loans blanket several rentals under one note with release provisions so you can sell individual assets, and portfolio bridge facilities work for an investor acquiring in volume. Portfolios usually price better than the same properties financed one at a time.

On the direct side: single family, 1 to 4 unit residential, townhomes, warrantable condos, multifamily up to roughly 20 units, small mixed use, infill lots and teardown sites. On the brokered side: multifamily, retail, office, industrial and flex, hotels, self storage, mobile home and RV parks, healthcare and senior living, mixed use, special use and land.

No. Your file is read and packaged by our own capital markets desk, and we take it to the lenders we think will quote it. Marketplace platforms are one of several channels we can reach lenders through, and we use them the way we use any other channel: on a specific file, when they are the best route to a specific lender. We tell you before your details go anywhere outside Matador. You submit once, to us.