Private Money Loan Requirements: How Private Lenders Underwrite a Deal
Private lenders don't care much about your W-2. They care about whether they'll get their money back. Every requirement flows from that — and if you understand it, you can package a deal that gets a fast yes.
1. Equity in the Deal
Private lenders want you to have real money or real equity at risk. That can be a cash down payment, existing equity in the property, or equity in another property offered as additional collateral.
2. A Clear, Believable Exit
Private money is short-term, so the lender needs to see how it gets repaid: a sale, a refinance into long-term debt like a DSCR loan, or a construction-to-permanent takeout. Show the math, not just the plan.
3. Sponsor Experience
Experience isn't always required, but it moves leverage and pricing. A short track record sheet — past deals, purchase price, exit, and timeline — goes a long way.
4. Clean Documentation
- Purchase contract or current payoff
- Property photos, scope of work, and budget if there's a renovation
- Comparable sales or rent comps
- Proof of funds for down payment and reserves
- Entity documents
5. Credit — Less Than You'd Think
Credit is reviewed, but it's rarely the deciding factor. Recent foreclosures or open judgments matter more than the score itself.
What Private Money Is Good For
Bridge purchases, fix-and-flip, cash-out on free-and-clear properties, and cross-collateralized deals. See the full list on our private money lenders page, or compare it with hard money.
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