REI EDUCATION

Real Estate Loan Comparisons

Various real estate investment loan products have their own unique features, benefits, and requirements. The charts below compare the most common real estate financing options so you can easily see how they stack up across key factors. Use this guide to find the right financing solution for your investment strategy!

Hard Money vs. Conventional

FEATURES		HARD MONEY		CONVENTIONAL LOAN

Interest Rate		About 9 - 12 % (8 - 13 range)		About 6 to 7% on a primary home; add 0.5 to 1% for investment property
Interest Rate		About 9 - 12 % (8 - 13 range)
Points / Fees		2 - 4 points upfront		0 - 1 point, plus about 2 - 5% closing points
Points / Fees		2 - 4 points upfront		0 - 1 point, plus about 2 - 5% closing points
Payment Structure		Interest-only, balloon due at maturity		Fully amortizing (principal + interest)
Payment Structure		Interest-only, balloon due at maturity		Fully amortizing (principal + interest)
Loan Term		6 - 24 months		15 - 30 years
Loan Term		6 - 24 months		15 - 30 years
Minimum Credit Score		No minimum to 680		620 minimum; 700+ for best rates
Minimum Credit Score		No minimum to 680		620 minimum; 700+ for best rates
Time to Close		5 - 14 days		30 - 45 days
Time to Close		5 - 14 days		30 - 45 days
Primary Residence Eligible		No		Yes
Primary Residence Eligible		No		Yes
Best For		Flips, rehab projects, fast acquisitions		Long-term primary home or stabalized rental
Best For		Flips, rehab projects, fast acquisitions		Long-term primary home or stabalized rental

Hard Money vs. HELOC

FEATURES		HARD MONEY		HELOC

Interest Rate		About 9 - 12 % (8 - 13 range)		Variable (prime + margin), roughly 7 - 10%
Interest Rate		About 9 - 12 % (8 - 13 range)		Variable (prime + margin), roughly 7 - 10%
Points / Fees		2 - 4 points upfront		0 - 1%; usually small fees only
Points / Fees		2 - 4 points upfront		0 - 1%; usually small fees only
Payment Structure		Interest-only, balloon due at maturity		Interest-only draw period, then amortizing repayment
Payment Structure		Interest-only, balloon due at maturity		Interest-only draw period, then amortizing repayment
Loan Term		6 - 24 months		About 10-year draw + 10 to 20-year repayment
Loan Term		6 - 24 months		About 10-year draw + 10 to 20-year repayment
Minimum Credit Score		No minimum to 680		680+ typical
Minimum Credit Score		No minimum to 680		680+ typical
Time to Close		5 - 14 days		2 - 6 weeks
Time to Close		5 - 14 days		2 - 6 weeks
Primary Residence Eligible		No		Yes
Primary Residence Eligible		No		Yes
Best For		Flips, rehab projects, fast acquisitions		Tapping equity you already have; reusable credit line
Best For		Flips, rehab projects, fast acquisitions		Tapping equity you already have; reusable credit line

Hard Money vs. DSCR

FEATURES		HARD MONEY		DSCR LOAN

Interest Rate		About 9 - 12 % (8 - 13 range)		About 6.5 to 8.5%
Interest Rate		About 9 - 12 % (8 - 13 range)		About 6.5 to 8.5%
Points / Fees		2 - 4 points upfront		$2,000 to $4,000 total fees
Points / Fees		2 - 4 points upfront		$2,000 to $4,000 total fees
Payment Structure		Interest-only, balloon due at maturity		30-year amortizing; 10-year interest-only
Payment Structure		Interest-only, balloon due at maturity		30-year amortizing; 10-year interest-only
Loan Term		6 - 24 months		10 - 30 years
Loan Term		6 - 24 months		10 - 30 years
Minimum Credit Score		No minimum to 680		About 660 to 700+ typical
Minimum Credit Score		No minimum to 680		About 660 to 700+ typical
Time to Close		5 - 14 days		21 - 45 days
Time to Close		5 - 14 days		21 - 45 days
Primary Residence Eligible		No		No
Primary Residence Eligible		No		No
Best For		Flips, rehab projects, fast acquisitions		Long-term rentals; refinancing out of a flip
Best For		Flips, rehab projects, fast acquisitions		Long-term rentals; refinancing out of a flip

The Right Loan
Depends on Your Goals

Each financing option has its strengths. Consider your timeline, property type, credit profile, and investment goals to choose the best fit for your real estate strategy.