3 Myths About Hard Money Loans, Debunked

Hard money loans have offered a world of relief to borrowers who urgently need money. They’re usually used for real estate transactions, with the terms based primarily on the value of the property used as collateral instead of the borrower’s creditworthiness. This loan is an excellent option for those with less than stellar credit scores who have had difficulty securing loans from traditional institutions like banks.

Despite all the benefits that hard money loans have to offer, they’re still surrounded by many myths and misconceptions. These rumors have prevented borrowers who would genuinely benefit from these loans from pursuing them. Here are the top three myths about hard money loans:

Bad Credit or Inability to Prove Income Disqualifies You for the Loan

Many people believe they cannot qualify for a hard money loan because they have bad credit, foreclosure, or bankruptcy or cannot document their income. The good news is that you can qualify for a hard money loan even if these three scenarios apply to you. Hard money lenders don’t have an income verification requirement to approve loans, making it more accessible to borrowers who need money. 

All Hard Money Lenders are Loan Sharks

Another popular misconception about hard money lenders is that we are all loan sharks that take advantage of vulnerable borrowers. Naturally, this isn’t true. While this isn’t to say that hard money lenders who are loan sharks don’t exist, we operate by a code of ethics to ensure we provide exceptional service to our borrowers. 

You’ll also want to separate good lenders from the bad by reading their reviews. If they don’t have any, you’ll need to move on to someone with legitimate reviews that you can trust. Good reviews indicate that you’re dealing with a trustworthy, ethical lender that isn’t a loan shark. Still, be aware of fake reviews from lenders that ask for upfront fees before giving you a loan. 

Hard Money Loans are Hard to Get

Despite what the name might imply, hard money loans aren’t difficult to get. The reason they’re called hard money loans is that they are loans against “hard assets,” such as real estate, not based on credit or income. In fact, they’re even easier to get than traditional loans, so don’t be fooled by the difficulty suggested by the name. 

Since lenders don’t need to see your credit report, you don’t have to waste time trying to increase your credit score or scrambling to document your income. All you have to do is fill out a loan, meet the lender’s requirements, and submit it. That’s why hard money loans are a great option for those who are tied up by bankruptcy or similar statuses, as you still have a shot at getting a loan from a reliable lender.


Hard money loans are anything but, as they make loans more accessible to those with bad credit. By learning the truth behind these myths, you’ll see just how beneficial hard money loans can be, allowing you to pursue projects that were previously out of your reach!

DFW Investor Lending is a team of Dallas hard money lenders owned and operated by investors like you. We also have hard money lenders in Fort Worth, Arlington, Plano, and other places throughout Texas. What sets us apart is that we are also residential real estate appraisers with thousands of appraisals and hundreds of rehab projects under our belt. Apply online today!