Are you wondering what the differences are between residential vs commercial hard money loans? Look no further because we’re here to help you navigate the details! (And if you have any more questions, feel free to reach out to our friendly and helpful team at (425) 272-9881!

Hard Money Loans 101

Real estate investors acquire properties, they fix them up and either sell them or rent them out to tenants. This sounds like a great strategy to make money (it is!), but the problem is it can be very capital-intensive, which means it can take a lot of money to run a real estate investing business – and that ties up your money for a while (and what if you need that money?)

Worse yet, investors discover that they can only grow so far using their own capital. Even if you don’t mind your money being tied up, you can only do so many deals at once. If you want to grow, you’ll need even more money.

That’s why many investors are turning to hard money loans as a source of capital to help them. A hard money loan is a special loan for investors to help them acquire properties and renovate them.

Commercial vs. Residential

Perhaps you’ve been researching hard money loans and are wondering what the difference is between residential vs commercial hard money loans, and which one is right for you.

The answer is that it depends on a lot of situations, but here are some general rules of thumb to help you…

It partially depends on the end-use of the property. Is the property going to be a place for people to live? Or will you be renting or selling the property for people to work at? In general, if someone is going to be working on the property, what you will need will very likely be classified as a commercial loan. If someone is going to be living there, however, then it could be a residential or commercial loan.

If people are living on the property, then it comes down to the size of the structure. A single family home, or perhaps a duplex or triplex, might only need a small amount of repairs so a smaller loan is necessary. This will end up being a residential loan. However, if it’s a large multi-family unit, such as a condo or apartment building, then it will probably be a commercial hard money loan.

Other factors that could determine whether you need a residential vs commercial hard money loan include whether it’s:

  • a new development or a smaller renovation of an existing property
  • a structure or an set of structures (such as a mobile home park)
  • what the end use will be (such as if you’re renovating a house to be a retirement home for several non-related renters).


Which do you need? A residential or a commercial hard money loan? It depends on a lot of factors so be sure to reach out to us and tell us about your project and we can tell you what kind of loan will help you the most!

Need hard money for your real estate investment? We fund hard money loans. Click here now and fill out the form or call our team at (425) 272-9881.