What Are Hard Money Loan Rates in California? (2026 Guide)

Hard money loan rates in California range from 9-14% in 2026—significantly higher than conventional mortgages, but the speed and flexibility make them worth it for the right real estate project. Whether you're planning a fix-and-flip, need bridge financing, or have a time-sensitive opportunity, understanding these rates and how to optimize your costs can save you thousands of dollars.

In this comprehensive guide, we'll break down exactly what you'll pay for a hard money loan in California, what factors influence your rate, and proven strategies to negotiate better terms.

Current Hard Money Loan Rates in California (2026)

California's competitive lending market offers some of the most favorable hard money rates in the nation. Here's what you can expect:

First Position Loans

For loans secured by a first lien position on the property, rates typically range from 8-12%, with most experienced investors seeing rates between 10-12%. These represent the most competitive pricing in the hard money market.

Second Position Loans

Second lien positions carry higher risk for lenders, resulting in rates of 12-14%, with most borrowers paying between 11.99-13.99%.

Rates by Borrower Experience Level

Your experience significantly impacts the rate you'll receive:

• Experienced investors with low-risk properties: 8-10%
• Moderate experience with standard properties: 10-12%
• New investors or higher-risk projects: 12-15%+

The California Advantage

California borrowers benefit from intense lender competition, resulting in rates that are typically 1-2% lower than comparable markets in other states. The state's robust real estate market and high property values give lenders confidence, which translates to better borrower pricing.

Importantly, while conventional mortgage rates have more than doubled since 2020, hard money rates have remained relatively stable with only marginal increases, making them increasingly competitive for short-term financing needs.

Understanding Points and Origination Fees

Interest rate is only part of the equation. Points—upfront fees charged as a percentage of the loan amount—can significantly impact your total cost.

What Are Points?

One point equals 1% of your loan amount. If you're borrowing $400,000 and the lender charges 3 points, you'll pay $12,000 upfront in addition to your interest payments.

Typical California Point Ranges

California hard money lenders typically charge 2-6 points, with most deals falling in the 2-5 point range:

• Conservative, low-risk deals: 1-3 points
• Standard transactions: 2-5 points
• Higher-risk or complex projects: 4-6 points

Real Cost Examples

Let's look at what this means in actual dollars:

• $300,000 loan at 3 points: $9,000 upfront
• $500,000 loan at 5 points: $25,000 upfront
• $750,000 loan at 2.5 points: $18,750 upfront

The Points-Rate Trade-Off

Some lenders allow you to negotiate between points and interest rate. You might reduce your points from 4 to 2 in exchange for a 1% higher interest rate, or vice versa. The right choice depends on your expected hold period—shorter projects favor lower points, while longer holds benefit from lower rates.

Hard Money vs. Conventional vs. Bank Loans: A Comparison

Understanding how hard money stacks up against alternatives helps you make informed financing decisions.

The Bottom Line: Hard money costs more upfront but offers speed, flexibility, and approval certainty that conventional financing simply can't match. For time-sensitive opportunities or properties that don't qualify for traditional financing, the premium is often worth it.

What Determines Your Hard Money Loan Rate?

Six key factors influence the rate you'll receive. Understanding these helps you position yourself for the best possible terms.

1. Loan-to-Value (LTV) Ratio (Biggest Impact)

Your LTV ratio—the loan amount as a percentage of the property's value—has the single largest impact on your rate.

• 60-70% LTV: Best rates, often 1-2% lower than standard pricing
• 70-75% LTV: Standard market rates
• 75-80% LTV: Higher rates with a 0.5-1.5% premium

Example: Putting down 40% instead of the 25% minimum could save you a full percentage point on your rate. On a $500,000 loan held for 12 months, that's $5,000 in interest savings.

2. Borrower Experience

Lenders reward track records:

• Seasoned investors: Preferential pricing on both rate and points
• Documented successful projects: Can reduce rates by 0.5-1.5%
• First-time borrowers: Typically pay a 1-2% risk premium

Bring documentation of your past deals, including before/after photos, final sale prices, and profit summaries. This tangible evidence of competence translates directly to better pricing.

3. Property Type and Condition

Not all properties are priced equally:

• Single-family homes in good condition: Lowest rates (most liquid if foreclosure needed)
• Multi-family or commercial properties: Moderate rates (0.5-1% higher)
• Distressed properties requiring heavy rehab: Higher rates (1-2% premium)
• Location quality: Prime California markets (Los Angeles, Orange County, San Diego, Bay Area) receive better rates than secondary markets

4. Exit Strategy Clarity

Lenders want to know exactly how you'll repay them:

• Clear refinance plan with documented qualification path: Best rates
• Solid flip timeline with comparable sales data: Standard pricing
• Vague or uncertain exit strategy: 1-2% rate premium

Present a professional business plan with realistic timelines, contractor bids, and comparable sales data to demonstrate you've thoroughly thought through your project.

5. Loan Position

• First position loans: 8-12% (typical 10-12%)
• Second position loans: 12-14% (higher risk of being subordinate to another lender)

6. Loan Term Length

• Shorter terms (6-12 months): Sometimes qualify for lower rates
• Longer terms (18-24 months): May carry a 0.25-0.5% premium

Most fix-and-flip loans fall in the 9-12 month range, balancing realistic project timelines with competitive pricing.

Hidden Costs Beyond the Interest Rate

The interest rate and points are your largest expenses, but several other fees add to your total cost. Here's what to expect:

Standard Fees

• Underwriting fees: $125-150
• Document/processing fees: ~$125
• Appraisal fees: $300-600 (varies by property type and size)
• Title and escrow fees: $1,500-3,000
• Draw fees: For renovation loans, typically $150-300 per draw inspection
• Broker fees: 1-3% if using a mortgage broker
• Legal and administrative costs: $500-1,500

Prepayment Penalties

Many hard money lenders charge minimum interest periods or prepayment penalties. Common structures include:

• Minimum 6-month interest requirement (even if you pay off in 3 months)
• Declining prepayment penalties (e.g., 3% if paid within 6 months, 2% within 12 months)
• No prepayment penalty (increasingly common in California's competitive market)

Always clarify prepayment terms before signing—they can significantly impact your costs on quick flips.

Total Cost Example

Let's calculate the true cost of a typical California hard money loan:

$400,000 loan at 11% interest for 12 months:

• Interest (interest-only payments): $44,000
• Points (3%): $12,000
• Fees (appraisal, underwriting, processing): ~$2,000
• Total cost: ~$58,000 (14.5% effective annual cost)

This is why calculating the effective APR—not just the stated rate—matters when comparing lenders.

How to Negotiate Better Hard Money Loan Rates

Hard money rates aren't set in stone. Here are six proven strategies California investors use to secure better terms.

Strategy 1: Shop Multiple California Lenders

California's highly competitive hard money market works in your favor. Get quotes from at least 3-5 lenders before committing.

Why it works: Lenders know you're shopping around, and many will sharpen their pencils to win your business. Use competing offers as leverage: "Lender A offered 10.5% with 2 points—can you match or beat that?"

Strategy 2: Increase Your Down Payment

Lowering your LTV is the single most powerful rate negotiation tool.

Example: On a $500,000 property value:

• 75% LTV ($375,000 loan): 11.5% rate
• 65% LTV ($325,000 loan): 10% rate
• Savings: 1.5% = $4,875 annually on $325,000

Even if you have to liquidate other investments or bring in a partner to increase your down payment, the rate savings often justify it.

Strategy 3: Demonstrate Experience and Professionalism

Create a professional borrower package that includes:

• Track record of successful projects (with photos and profit/loss statements)
• Clear exit strategy with market comps and realistic timelines
• Professional contractor bids and scope of work
• Personal financial strength (even if not required, it reduces perceived risk)

This professionalism signals you're a low-risk borrower worth competitive pricing.

Strategy 4: Negotiate Points vs. Rate

Ask lenders about their rate/point trade-offs. Common options:

• Option A: 11% rate with 4 points
• Option B: 12% rate with 2 points

Quick calculation: On a $400,000 loan held for 9 months:

• Option A: $33,000 interest + $16,000 points = $49,000
• Option B: $36,000 interest + $8,000 points = $44,000

For this scenario, Option B saves $5,000. The math shifts based on your hold period—run the numbers for your specific situation.

Strategy 5: Build Lender Relationships

Repeat borrowers often receive preferential pricing—sometimes 0.5-1% better than new customers.

Long-term strategy: Even if your first deal doesn't have the absolute best rate, successfully completing a project and returning for a second loan often unlocks better pricing. Many successful investors work with 2-3 preferred lenders who know their track record.

Strategy 6: Perfect Your Property Package

Reduce perceived risk by presenting a thorough, professional package:

• Property analysis: Recent comps, neighborhood data, market trends
• Renovation plan: Detailed scope of work with contractor bids
• Financial projections: Conservative profit projections showing clear margin
• Timeline: Realistic project schedule with milestones

The less the lender has to guess or worry, the better your pricing.

California-Specific Market Considerations

California's unique real estate landscape creates specific advantages and considerations for hard money borrowers.

Why California Has Lower Hard Money Rates

Several factors contribute to California's competitive rates:

1. High lender concentration: More competition drives better borrower pricing
2. Strong real estate market: Consistent appreciation reduces lender risk
3. High property values: Larger loans justify lower percentage fees
4. Sophisticated investor base: Volume of repeat borrowers creates relationship pricing

Regional Rate Variations

While California generally offers favorable rates, some variance exists:

• Los Angeles/Orange County: Most competitive rates (highest lender density)
• San Diego/Bay Area: Similar to LA/OC, very competitive
• Inland Empire: Slightly higher rates (0.25-0.5%) but still favorable
• Secondary markets: May see rates 0.5-1% higher than major metros

California-Specific Considerations

• Earthquake insurance: May be required in certain zones, adding to holding costs
• Environmental regulations: Can affect renovation timelines and costs
• Permitting complexity: Varies dramatically by city; factor into timeline planning
• Prop 19 implications: Recent property tax changes affect some investment strategies

Frequently Asked Questions

What credit score do I need for a hard money loan in California?

Hard money lenders focus primarily on property value and your exit strategy rather than credit score. Many California lenders approve borrowers with scores in the 500s or even lower, though better credit (680+) may help you negotiate slightly better rates—typically 0.25-0.5% improvement. The property's equity and your experience matter far more than your FICO score.

Can I refinance a hard money loan to lower my rate?

Yes, refinancing to conventional or DSCR financing is one of the most common exit strategies. Once you've completed renovations and the property is stabilized (either rented or ready for sale), you can refinance to a conventional loan at 6-8% or a DSCR loan for rental properties. This is the standard approach for bridge loans and BRRRR (Buy, Rehab, Rent, Refinance, Repeat) investors. Plan your refinance 30-45 days before your hard money loan matures.

Are hard money loan rates tax-deductible?

Interest on hard money loans for investment properties is typically tax-deductible as a business expense, just like conventional mortgage interest. However, tax treatment depends on how you're using the property, your investment structure (individual vs. LLC), and your specific tax situation. Always consult with a CPA who specializes in real estate investments to maximize your deductions and ensure compliance.

How much can I borrow with a hard money loan in California?

Most California hard money lenders offer loans from $50,000 to $5 million or more, with some specialized lenders going even higher for large commercial projects. Loan amounts are typically capped at 65-75% of the property's after-repair value (ARV), though some lenders go up to 80% LTV. Your borrowing capacity depends on the property's value and your equity rather than your personal income—one of hard money's key advantages.

Do hard money lenders charge prepayment penalties in California?

It varies by lender. Many California hard money lenders charge a minimum interest period (commonly 6 months) or declining prepayment penalties if you pay off early. Common structures include:

• No penalty after 6 months, 3% if paid earlier
• No penalty after 12 months, declining scale before
• No prepayment penalty at all (increasingly common in competitive California market)

Always ask about prepayment terms before signing—this can significantly impact your total cost if you plan a quick 3-4 month flip.

What's the difference between interest rate and APR on a hard money loan?

The interest rate is what you pay on the principal balance, while APR (Annual Percentage Rate) includes the interest rate plus all fees—points, origination fees, underwriting costs, etc.—expressed as an annual percentage. On hard money loans, APR is typically 3-5% higher than the stated interest rate due to significant upfront costs. Always compare APR, not just interest rates, when evaluating lenders. A 10% rate with 5 points may cost more than an 11% rate with 2 points.

Make Your Hard Money Rate Work for You

Understanding California hard money loan rates—from the typical 9-14% range to the points, fees, and factors that determine your specific pricing—puts you in control of your financing costs. While hard money will always cost more than conventional financing, the speed, flexibility, and approval certainty make it an invaluable tool for the right real estate opportunities.

Remember these key takeaways:

• Shop multiple lenders: California's competitive market rewards those who compare options
• LTV is leverage: Your down payment size has the biggest impact on your rate
• Calculate total cost: Interest rate + points + fees = your true cost
• Demonstrate professionalism: Track record and presentation quality directly impact pricing
• Build relationships: Repeat borrowers consistently get better terms

The difference between a mediocre hard money deal and a great one often comes down to preparation, negotiation, and choosing the right lender for your specific project.

Ready to explore hard money financing for your California investment property? Apply now or speak with our team about current rates for your specific project. With competitive rates, transparent pricing, and a streamlined approval process, we help California investors move quickly on the opportunities that matter.

Learn more:

• Complete guide to hard money loans
• Fix-and-flip financing strategies
• Apply for financing

Last verified: January 19, 2026. Hard money loan rates fluctuate based on market conditions, property characteristics, and borrower qualifications. Rates shown represent typical California market ranges as of publication date. Contact us for current pricing specific to your project.