The Truth Behind Several Hard Money Lending Myths—What to Know

If you’re in need of financing, or have done your research about it, then you’ve probably heard of hard money lending. It’s becoming much more popular these days, due to the differences between hard money and conventional loan offers. Some of the more stark differences include much faster closing for hard money lenders over conventional lenders, strong flexibility, and insightful insider knowledge. 

Unfortunately, there are quite a few myths surrounding hard money loans that prevent the average consumer from making informed decisions. To clear the air, here are some of the common myths and the truth behind them:

Myth: You Don’t Need Documents To Get A Loan

In truth, hard money lenders are more lenient than conventional ones. This is especially true of documentation. That doesn’t mean, however, that you won’t need any documents at all to borrow money! 

All hard loan lenders require a certain amount of documentation so that they can evaluate risks and set loan terms. They also need documentation to protect the borrower and themselves from legal challenges! As such, be sure to come prepared before meeting up with any lender.

Myth: Only The Desperate Go For Hard Money Loans

It’s true that hard money lenders are more likely to overlook issues in a potential borrower’s financial history. This, in turn, attracts a lot of people with poor credit scores and other such issues! But there are also borrowers that have credit scores high enough to be considered bankable but still opt for hard money loans. They are actively choosing a hard money loan over a conventional loan, usually due to the closing speed and flexibility! Clever investors see hard money as a great tool for growing their business—it’s not just a desperate act to get some easy cash!

Myth: There’s Too Much Risk In Hard Money Loans

Always remember that a hard money lender is often using their own money to lend to borrowers. Because of this, they are unlikely to approve truly risky deals! Not only that, but since money lenders are usually operating where they are situated, they are likely to have a lot of experience and wisdom in handling their local markets. 

For example, for Dallas hard money loans, you’re probably dealing with people from Dallas. This inside knowledge allows them to know what is simply too risky or what is worth the risk. 

Don’t forget that conventional lenders quickly approve you as long as you and your project look promising on paper. On the other hand, hard money lenders take time to ensure that your project will be successful for the both of you!

Myth: Hard Money Loans Cost You Too Much

While it is true that hard money loans cost more than conventional loans due to their closing costs and higher interest rate, there are many advantages that outweigh these costs. For example, hard money loans can provide you with shorter terms and quicker approvals. These shorter loan terms mean that you pay less lifetime interest on your loan. Not only that, but in comparison to the 50-65% most banks offer, hard money lenders often loan you 80-90% of your total project costs!


Hard money loans suffer from a lot of misconceptions. Remember that you can always do more research before you decide to ensure it’s the option for you. Now that you know the truth, you are more likely to make a sound financial decision. 

Are you looking for reputable private lenders for real estate in Dallas? Contact DFW Investor Lending today! We’re owned and operated by investors, but we are also residential real estate appraisers. Let us help you out today!