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Private Lending

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Understanding This Mortgage Option

Explore private real estate lending, where terms may focus heavily on the property, project, collateral, and exit strategy rather than standardized mortgage guidelines.

Often Considered By

  • Investors with time-sensitive or nonstandard real estate projects
  • Borrowers whose transaction does not fit traditional program guidelines
  • Short-term acquisition, renovation, or bridge-financing scenarios

Potential Highlights

  • Underwriting may emphasize collateral value and a credible exit strategy
  • Terms can be structured around a specific project and timeline
  • Closing timelines may be shorter when documentation and valuation are ready

Points to Consider

  • Rates, points, fees, and default terms can be substantially higher than traditional financing
  • Short maturities may create refinance, sale, or market-timing risk
  • Availability, licensing, consumer protections, and loan terms vary by lender and transaction

What Is Private Lending?

Private real estate lending generally refers to financing provided outside standardized agency and government-backed mortgage channels. The lender may be a private company, fund, or individual, and the underwriting can focus heavily on the property, project economics, borrower experience, and repayment plan.

The term covers many different structures. It should not be assumed that every private loan has the same documentation, pricing, timeline, or consumer protections.

The Exit Strategy Matters

Private loans are often shorter-term and may be used for an acquisition, renovation, bridge period, or property that does not currently qualify for conventional financing. The lender typically wants a clear and credible way the balance will be repaid, such as a property sale or refinance.

If that exit depends on future value, construction progress, market conditions, or later qualification, delays can create significant risk.

Review the Complete Agreement

Borrowers should compare the interest rate, points, origination and servicing fees, draw charges, extension options, prepayment terms, default interest, maturity date, recourse, guarantees, and collateral provisions.

Private financing can be useful in the right scenario, but the higher cost and shorter timeline deserve careful review with qualified mortgage, legal, tax, and financial professionals.

Questions About This Loan Type?

Understand How This Option Fits Your Plans

Mortgage options are not one-size-fits-all. Talk through your goals, timing, and financial picture before deciding which path makes sense for you.

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