Investing in real estate often requires quick financing, especially when purchasing properties that need renovations. Many investors turn to hard money loans as a solution, given their speed and accessibility compared to traditional bank loans. However, a common question among new and seasoned investors alike is:
“Do hard money lenders require a down payment in St. Louis?”
The short answer is—it depends on the lender and the specifics of the deal. Some hard money lenders may require a down payment, while others offer 100% financing under certain conditions. In this guide, we’ll explore how hard money lending works in St. Louis, when you might need a down payment, and how to secure the best financing for your real estate investment.
Understanding Hard Money Loans in St. Louis
Hard money loans are a form of asset-based financing where the loan approval is based primarily on the value of the property rather than the borrower’s credit score. This makes them particularly appealing for real estate investors who need fast funding without the hurdles of traditional banks.
In St. Louis, hard money lenders like Westre Financial Group provide funding for residential rental property purchases, catering specifically to investors looking for fix-and-flip or buy-and-hold opportunities.
Why Do Investors Use Hard Money Loans?
- Fast Approvals and Funding – Unlike traditional mortgages, which can take weeks or months to process, hard money loans can be approved and funded in days.
- Less Focus on Creditworthiness – These loans are collateral-based, meaning the lender is more concerned with the value of the property than the borrower’s financial history.
- Flexible Terms – Hard money lenders can structure loans differently than banks, offering customized solutions that fit an investor’s project needs.
Do You Need a Down Payment for a Hard Money Loan?
The requirement for a down payment depends on the loan structure and the lender’s policies. Here’s how different factors impact whether or not a down payment is necessary:
1. Loan-to-Value (LTV) Ratio
Most hard money lenders determine loan amounts based on a percentage of the property’s value, also known as the Loan-to-Value (LTV) ratio.
- Some lenders offer 70-80% LTV, meaning you would need to cover the remaining 20-30% as a down payment.
- Others, like Westre Financial Group, offer 100% financing on the purchase price for eligible properties, eliminating the need for a down payment.
2. Property Type and Condition
- If the property is in good condition and has strong comparable sales in the area, a lender may be more willing to offer higher LTV, reducing or eliminating the need for a down payment.
- If the property requires extensive renovations, lenders may require a larger personal investment to ensure the borrower is financially committed to the project.
3. Investor Experience
- Experienced investors with a strong track record of profitable flips or rental properties are more likely to secure favorable terms, including lower down payment requirements.
- First-time investors might be required to put down a percentage of the purchase price to mitigate lender risk.
4. Rehab Costs and Additional Expenses
Some hard money lenders include rehab costs in the loan, while others require borrowers to have separate funds for renovations. In St. Louis, Westre Financial Group does not provide rehab funding, meaning investors need their own capital for repairs. This effectively acts as a form of “down payment” since the borrower must bring money to the table.
5. Local Market Conditions
Lenders assess the real estate market to determine their risk level. In high-demand areas with appreciating property values, lenders may be more flexible. However, in volatile or declining markets, they may require a larger down payment to protect their investment.
How to Get a Hard Money Loan with No Down Payment in St. Louis
If you’re looking for 100% financing on a hard money loan in St. Louis, here are a few steps to improve your chances:
1. Find a Lender That Offers Full Purchase Price Financing
Not all hard money lenders provide 100% financing. Research local lenders like Westre Financial Group, which funds the entire purchase price for qualifying deals.
2. Buy Properties Below Market Value
The more equity you have in a deal, the more likely a lender is to approve zero down payment financing. Look for properties that are priced below their after-repair value (ARV).
3. Prove Financial Stability for Rehab Costs
Since rehab costs aren’t covered by many hard money lenders, showing you have the necessary capital for renovations can improve your approval odds.
4. Work With an Experienced Lender
Choosing a lender with deep market knowledge—such as Westre Financial Group, which has over $143 million in funded loans—can help streamline the approval process and secure the best financing terms.
Final Thoughts: Are Down Payments Required?
While some hard money lenders in St. Louis require down payments, others, like Westre Financial Group, offer 100% financing for property purchases under specific conditions. However, investors should still have funds available for rehab, closing costs, and unexpected expenses to ensure a successful deal.
If you’re looking for fast, reliable, and low-cost hard money loans in St. Louis, Westre Financial Group can help. With no junk fees, 100% purchase price financing, and in-house loan processing, we make real estate investment simple.
Contact us today at (314) 626-4442 or visit our website to start your application.