hard money loans

Bad Credit Mortgages 2025

In 2025, getting a mortgage with bad credit is still possible, though it typically comes with higher interest rates and stricter terms. Here’s a current overview of what to expect if you’re seeking a bad credit mortgage in 2025:

🔍 What Is a Bad Credit Mortgage?

A bad credit mortgage is a home loan designed for borrowers with low credit scores, often under 620 (though this can vary by lender). These loans compensate for the increased risk with:

  • Higher interest rates

  • Larger down payment requirements

  • More thorough income and asset verification

Who Offers Bad Credit Mortgages in 2025?

Lenders fall into three general categories:

  1. Traditional Banks: May offer FHA or VA loans for poor-credit borrowers

  2. Credit Unions: Tend to be more flexible with members

  3. Specialized Lenders: Focus on subprime or non-qualified mortgages (non-QM loans)

Some notable lenders known for working with bad credit (subject to change, check current terms):

  • Brad Loans

  • Carrington Mortgage Services

  • Angel Oak Home Loans

  • Rocket Mortgage (for FHA loans)

  • Local credit unions

🏦 Types of Bad Credit Mortgages

  1. FHA Loans

    • Backed by the Federal Housing Administration.

    • Minimum credit score: usually 500 (with 10% down), 580+ (with 3.5% down).

    • Good for first-time buyers or those with financial setbacks.

  2. VA Loans (for veterans and active service members)

    • No minimum credit score set by VA, but lenders typically prefer 580–620+.

    • No down payment required in most cases.

    • No private mortgage insurance (PMI).

  3. Non-QM Loans (Non-Qualified Mortgages)

    • For borrowers who don’t meet traditional lending standards.

    • May allow low credit scores, alternative income documentation (e.g., bank statements).

    • Higher interest rates and fees.

  4. Subprime Mortgages

    • Specifically tailored for borrowers with low credit scores (below 600).

    • High rates and risk—should be approached with caution.

    • Often used as temporary financing with intent to refinance later.

  5. Portfolio Loans

    • Issued by lenders who keep loans in-house (not sold to investors).

    • More flexible underwriting.

    • Ideal for unique credit/income situations.

🏠 Mortgage Options for Bad Credit Borrowers

Loan Type Minimum Credit Score Down Payment Notes
FHA Loan 500 (with 10% down) or 580 (with 3.5% down) 3.5–10% Government-backed, flexible guidelines
VA Loan Varies, usually 580+ 0% For veterans/military; no PMI
USDA Loan 640+ (typically) 0% Rural housing; income limits apply
Non-QM Loan Varies (can go below 500) 10–30% Not backed by Fannie/Freddie; higher rates
Owner Financing N/A Negotiable Direct with seller; risky but flexible

📉 Current Credit Score Tiers (2025 general guide)

Credit Score Range Category Mortgage Availability
740+ Excellent Best rates
700–739 Good Competitive rates
640–699 Fair Limited options
580–639 Poor FHA, some VA/Non-QM
<580 Bad Harder, but possible

📊 Current Trends in 2025

  • Higher interest rates compared to previous years due to inflationary pressures.

  • Increased lender scrutiny—even alternative lenders require stable income.

  • More tech-based lending platforms offer prequalification without hard credit pulls.

  • Credit repair & counseling services are often bundled with bad credit mortgage offers.

💡 Tips Before Applying

  • Get pre-approved to know your budget

  • Check your credit reports for errors (from Experian, Equifax, TransUnion)

  • Avoid new credit applications in the months before applying

  • Work with a mortgage broker who specializes in bad credit cases

Tips to Improve Chances

  1. Increase Your Down Payment – 10–20% can offset bad credit.

  2. Work with a Mortgage Broker – They can shop around for flexible lenders.

  3. Check Your Credit Reports – Fix errors before applying.

  4. Consider a Co-Signer – May help reduce interest or qualify you.

  5. Document Income Thoroughly – Lenders want stability.

 

Get Started Here: Fill out our Hard Money Loan Mortgage Refinancing Application

apply for mortgage refinancing hard money

Are Hard Money Loans Punitive?

Are Hard Money Loans Punitive?

Hard money loans are not inherently punitive, but they can feel that way if you’re not prepared for their strict terms and high costs.

Here’s a breakdown to clarify:

🔍 What Makes Hard Money Loans Seem Punitive?

  1. High Interest Rates

    • Typically 10%–15% (or more), vs. 6%–8% for conventional loans.

    • Monthly payments can be steep, especially on larger loans.

  2. Large Upfront Fees (Points)

    • 2 to 5 points (2%–5% of the loan amount) are common.

    • These are paid regardless of whether the project succeeds.

  3. Short Terms

    • Usually 6 to 12 months.

    • Not paying back in time can lead to default, extensions (with more fees), or foreclosure.

  4. Aggressive Foreclosure Policies

    • Hard money lenders often act quickly if payments are missed.

    • Since their focus is on the asset, they’re more willing to take it back.

  5. No Consumer Protections

    • These are business loans, so standard consumer lending laws often don’t apply.

    • There’s no “cooling-off” period, and disclosures may be minimal.

🔧 But They’re Not Meant to Be Punitive

Hard money loans are tools, especially for:

  • Real estate investors needing fast funding.

  • House flippers with equity but poor credit.

  • Bridge loans while refinancing or selling.

They trade cost for speed and flexibility. If used strategically, they can be highly effective.

✅ When They Make Sense

Use Case Why Hard Money Works
Fix-and-flip Fast closings, rehab draws
Bridge loan Quick capital before long-term financing
Property with bad title Lenders may work around issues
Poor credit, strong deal Focus is on asset, not borrower

⚠️ When They Can Backfire

  • If you overestimate ARV or rehab budget

  • If market shifts and you can’t sell/refi

  • If you miss payments and trigger default clauses

  • If you’re inexperienced and underestimate holding costs

🧠 Bottom Line

Hard money loans are expensive but not evil. They’re not meant for long-term use, and they work best for experienced investors who can handle risk and move fast. Used correctly, they can unlock opportunities; misused, they can cost you your property.

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 602-999-9499.

What Are Hard Money Lenders 100% Financing

What is a Hard Money Loan?

Hard money lenders offering 100% financing are private individuals or companies that provide short-term real estate loans—usually for investment properties—without going through traditional banks. These lenders focus on the value of the property rather than the borrower’s credit score or financial history. However, 100% financing (where the borrower puts no money down) is rare and usually comes with stringent conditions.

🔍 What “100% Financing” Really Means

In hard money lending, 100% financing does not typically mean that the lender gives you a loan for the entire purchase price with no strings attached. Instead, it often means:

  • You’re getting 100% of the purchase price covered, but only if the loan-to-value (LTV) or loan-to-cost (LTC) ratio is still within their limits.

  • You’re required to bring another asset, cross-collateralize another property, or get a partner with equity.

  • Some lenders might lend 100% of purchase + rehab costs, but the ARV (After Repair Value) must be high enough to justify it—typically under 70% of ARV.

✅ Typical Requirements for 100% Financing

To qualify, you may need to meet one or more of these:

  1. Experienced Investor – First-time flippers rarely get full financing.

  2. ARV-Based Loan – Property must have strong upside after rehab.

  3. Cross Collateral – Another property is used as security.

  4. Seller Financing + Hard Money – Combine both to cover the full price.

  5. Low Purchase Price – Often an off-market or deeply discounted deal.

  6. Rehab Escrow – Funds are released in draws as rehab progresses.

📊 Example Scenario

  • Purchase Price: $100,000

  • Estimated Rehab: $30,000

  • ARV: $200,000

  • Lender offers: 70% of ARV = $140,000

If the total cost ($130K) is below $140K, a lender might finance the whole deal, including rehab, assuming the numbers check out and you meet other conditions.

⚠️ Risks and Costs

  • Higher Interest Rates: Often 10–15%+ annually

  • Origination Fees: 2–5 points

  • Short-Term Loans: Usually 6–12 months

  • Strict Terms: Missed payments can lead to foreclosure quickly

🔎 Final Thoughts

Hard money lenders offering 100% financing are not common, and when they do, it’s only under very specific and usually higher-risk conditions. Be cautious, do your due diligence, and always compare multiple offers.

Hard Money Lenders in Phoenix, AZ

When you are searching for hard money loans near me in Phoenix, Scottsdale, Glendale, Tempe, Mesa, Chandler, or Gilbert, Arizona; Brad Loans is Arizona’s most trusted direct hard money lender!  We specialize in hard money loans for Fix and Flip, refinancing mortgages with bad credit, business loans secured by real estate, real estate purchases, short sales, and other endeavors with quick turnaround in the Phoenix Valley.

BradLoans.com is the most trusted direct hard money lender and private money lender in Arizona! We are the best hard money lender in Arizona with the ability to fund commercial & residential hard money loans many times within a couple of days or less. Our lending rates and fees are reasonable compared to other Arizona hard money brokers or mortgage brokers in Arizona.

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