Can You Really Get 90% Hard Money Loans in Arizona?

Many lenders set conservative limits to reduce their risk, but 90% Hard money loans in Arizona still exist. Learn how to find them and what the approval process entails, so you can maximize your opportunity.

When people refer to 90% Hard money loans in Arizona, they usually mean one of two things; the loan to value (LTV) or after repair value (ARV).

The LTV is calculated by taking the amount borrowed and dividing it by the value of the asset. For example, if a property is appraised at $100,000 and the amount borrowed to purchase it is $90,000, the calculation would be 90,000 ÷ 100,000, which works out to 0.9, or 90%. LTV is used frequently to determine the amount offered by a lender.

On the other hand, ARV is occasionally used in lending, namely with distressed property. Naturally, it references what a property is expected to be worth after a flipper has competed work. Calculating it can be a bit of a challenge because you need to know what the property is worth at the onset, determine which repairs will be made, and then determine what the value of the repairs are. This is usually done with a comparative analysis; by looking at the value of similar properties in the area with the same features which have sold in the past 6-12 months. As an example, if a property will likely sell for $200,000 and you borrow $180,000, this would be 90% as well. However, few lenders will use this as the basis for calculating the amount offered, and on the occasions they do, most max out well before 80% ARV. Despite lenders not using this to determine the amount offered often, it’s essential to know the ARV in order to determine the amount you stand to profit from a fix-and-flip. Lenders like to know the ARV because it shows you’ve done your homework and that their investment is solid, but it is only an estimate, not a guarantee of value.

If You Can Demonstrate Lenders Risk Less with You, You’ll Get More

To summarize, 90% Hard money loans in Arizona aren’t really seen in ARV, but you can sometimes find them with LTV. It’s a substantial amount which means there’s little room for error. Because of this, lenders will want to know why your project is going to be a win-win situation. They’ll consider your experience, your plans, your calculations, and your credit will matter to some degree as well. That’s not to say you can’t get funds with rotten credit—you can, but there’s a balance between the risk you present and how much funding you’ll receive. One way to mitigate this and make sure you get enough funding, particularly if you’re new to fix-and-flips or don’t have a strong track record, is to make sure you’re purchasing properties for significantly less than they’re worth. This is easy to do when homes go up for auction, when a significant amount of work needs to be done, or when a seller needs to move fast.

An experienced broker can help you find out what you qualify for.

If you’re interested in 90% Hard money loans in Arizona, talk with a broker who has been in the industry for a while and can give you information about what amount you’ll likely qualify for or what you can do to make sure your project looks solid and appealing to investors. That way, you can maximize your loan amount and get all the funding you need.