How to Compare Hard Money Lenders Before Signing 2026
Comparing hard money lenders before you sign a term sheet means lining up rate, points, loan-to-value (LTV), term length, and prepayment terms side by side — not picking whoever closes fastest. Most investors compare from memory after a few phone calls; the ones who compare on paper catch the fees that don't show up until the closing disclosure.
TL;DR
- Compare rate, points, LTV, term length, and prepayment penalty before signing — rate alone hides half the real cost.
- Hard money loans typically run 6 to 24 months at 65% to 75% LTV, with 1 to 5 points due at closing in 2026.
- A term sheet without a locked rate, locked points, and a written draw schedule is a marketing flyer, not an offer.
- Ask every lender the same questions and score the answers on one sheet instead of trusting your memory.
- LoanGuys structures hard money financing with a documented refinance path so you are not stuck at the balloon deadline.
Why this matters
Hard money term sheets look almost identical on the first page. Rate, loan amount, and closing date sit up top in bold, and everything that actually determines your profit margin — draw schedule, extension fees, prepayment penalty — sits in the fine print below.
Investors who sign the first term sheet that lands in their inbox routinely find out mid-renovation that draws take two weeks to fund or that selling early triggers a penalty. LoanGuys sees this pattern often enough that it's worth a checklist before you sign anything in 2026, not after.
How to compare hard money lenders before signing a term sheet
Put every term sheet you receive into one table before you decide. Here's the line-by-line comparison that actually matters:
Interest rate
- What to check: Fixed for the full term or floating after month 6
- Why it matters: A floating rate can erase your renovation margin on a slow flip
Points
- What to check: Due at closing or rolled into the loan balance
- Why it matters: Rolled-in points raise principal and compound interest cost
LTV / LTC
- What to check: Based on purchase price, after-repair value, or total project cost
- Why it matters: A lower LTV means more cash out of pocket at closing
Term length
- What to check: 6, 12, or 24 months
- Why it matters: A short term can force a sale or refinance before the rehab is finished
Prepayment penalty
- What to check: Present, waived, or scaled down over time
- Why it matters: Kills your flexibility if the property sells or refinances early
Draw schedule
- What to check: Number of draws and inspection turnaround time
- Why it matters: Slow draws stall the crew and burn holding costs
Extension options
- What to check: Automatic, negotiated, or unavailable
- Why it matters: No extension option means default risk if the project runs long
Get at least two term sheets before comparing anything. A single quote has no baseline — you're just trusting one lender's math.
Interest rate: fixed beats floating on 6-to-24-month terms
Most hard money loans price for 6 to 24 months, and the rate should stay fixed for that entire window. Some lenders quote a low opening rate that adjusts upward after month 6 — ask directly whether the rate you're being quoted holds for the full term. A fixed rate makes your exit math predictable; a floating rate turns your project into a bet on how fast you can finish.
Points: 1 to 5 points due at closing
Points typically run 1 to 5 points on a hard money loan, charged as a percentage of the loan amount at closing. Some lenders let you roll points into the loan balance instead of paying cash up front — convenient until you realize you're paying interest on the points themselves for the life of the loan. Compare total points quoted, not just the headline rate, before you rank two term sheets against each other.
Loan-to-value: 65% to 75% is the working range
Hard money LTV commonly lands between 65% and 75%, though the basis matters as much as the percentage. Some lenders calculate LTV off the purchase price, others off after-repair value, and others off total loan-to-cost including the rehab budget. Two lenders quoting 70% LTV can hand you very different loan amounts depending on which number that 70% applies to — ask which basis each term sheet uses before comparing dollar figures.
Term length: 6, 12, or 24 months changes your exit math
Term length decides how much runway you have before the balloon payment hits. A 6-month term suits a light cosmetic flip; a 12-to-24-month term fits a heavier rehab, a ground-up build, or a hold-and-refinance strategy. If your exit is a DSCR refinance rather than a sale, a short term with no extension option is a real risk — LoanGuys structures the refinance from hard money into a DSCR loan around the hard money term so the two timelines don't collide.
Why hard money loan terms vary
Two borrowers can get quoted very different terms from the same lender. The factors that move the numbers:
- Property type and condition — a light-rehab single-family deal prices differently than a gut renovation or land purchase
- Borrower track record — a first flip vs. a tenth flip changes both rate and required reserves
- Exit strategy — sale, refinance, or hold changes how much term-length flexibility you need
- Local market liquidity — slower resale markets push lenders toward longer terms and lower LTV
- Loan basis — purchase price, after-repair value, or total project cost produce different loan amounts at the same LTV percentage
- Credit profile and liquid reserves — thin reserves or recent credit issues typically mean fewer points negotiated and lower leverage
Is the lowest rate always the best hard money loan?
No — the lowest rate is not automatically the best hard money loan once you factor in points, draw speed, and prepayment terms. A slightly higher rate with fast draws and no prepayment penalty often costs less over a 6-to-12-month project than the lowest headline rate paired with slow inspections. Rank term sheets on total cost through your expected exit date in 2026, not on rate alone.
What red flags mean walk away from a term sheet?
A term sheet with no locked rate, no stated draw schedule, or a prepayment penalty running the entire term is a red flag worth walking away from. Vague pricing language with no stated range, or fees that appear only in a separate sheet you have to request, both signal a lender that isn't ready to put terms in writing. Investors comparing hard money lenders in 2026 should treat any refusal to itemize fees as disqualifying, not as a minor annoyance.
Can you negotiate points on a hard money loan?
Yes — points on a hard money loan are negotiable more often than borrowers assume, especially past a first deal with a lender. Borrowers with a completed track record, strong liquid reserves, or a repeat relationship routinely negotiate down from the 1-to-5-point range quoted to new borrowers. Ask directly whether points drop on the second or third deal before assuming the quote is fixed.
Compare hard money terms with LoanGuys
Get a term sheet built around your project and exit strategy, not a generic quote.
FAQ
How do you compare hard money lenders before signing?
Compare rate, points, LTV, term length, prepayment penalty, and draw schedule side by side using at least two term sheets. Rate alone hides most of the real cost difference between lenders.
What is a typical hard money loan term in 2026?
A typical hard money loan runs 6 to 24 months, matched to the renovation timeline and planned exit. Shorter terms suit light cosmetic flips; longer terms suit heavier rehabs or new builds.
What LTV can you expect on a hard money loan?
Most hard money loans land between 65% and 75% LTV, though the basis changes the actual loan amount. Confirm whether a lender uses purchase price, after-repair value, or total project cost before comparing offers.
How many points do hard money lenders charge?
Points typically run 1 to 5 points due at closing on a hard money loan. Rolling points into the loan balance instead of paying cash raises the total interest cost over the term.
Is a hard money loan more expensive than a DSCR loan?
Hard money loans generally carry higher rates and points than DSCR loans because they are short-term and rehab-focused rather than long-term rental financing. Many investors acquire and renovate with hard money, then refinance into a DSCR loan once the property is stabilized.
What should a hard money term sheet include before you sign?
A complete term sheet includes a locked rate, stated points, LTV basis, term length, draw schedule, and prepayment terms in writing. Any term sheet missing one of these should get a follow-up question before signing.
Can you extend a hard money loan past the original term?
Extension options vary by lender. Some offer automatic short extensions, others require renegotiation, and some offer none at all. Confirm the extension policy before signing, especially on a 6-month term with a tight rehab timeline.
Do hard money lenders check credit?
Most hard money lenders weigh the property and exit strategy more heavily than credit score, though credit and liquid reserves still affect the rate and points offered. Borrowers with thinner credit files typically negotiate fewer points on a first deal.
One last thing
The term sheet detail investors skip most often isn't the rate — it's the draw turnaround time. A lender quoting the lowest rate but taking two weeks to fund each draw can cost more in holding costs and crew delays across a 2026 renovation than a half-point difference in rate ever would. Ask for the average draw turnaround in writing before you sign, not after the first draw request is already stalled.
