Hard Money Loans in NYC: How They Work in 2026

Updated 2026-08-19 8 sources

General information about how this works in New York City — not financial, tax, or legal advice, and not an offer of credit. lender.nyc is not a lender or a mortgage broker and is not licensed by NY DFS.

Hard money is short-term, asset-based real estate debt: the lender underwrites the property and the exit first, the borrower’s credit and income second, and prices the loan for speed rather than for cost. In New York City it is the financing layer that sits between an all-cash buyer and a bank, and it exists because closings here are attorney-driven, contract deadlines are short, and a great many buildings will not survive a conventional appraisal or a bank’s condition standards.

What “asset-based” actually means

A bank lends against a documented borrower. A private lender lends against a documented asset. The underwriting question is not “can this person repay from income” but “if this loan goes sideways in month nine, what is the collateral worth, how fast can it be sold, and how much cushion is between the loan balance and that number.”

That is why the diligence looks different. Appraisal or broker price opinion, a scope of work, a title search, an entity file, an insurance binder, and proof of liquidity for the down payment and carry. Tax returns often are not required at all. Loan terms are measured in months, not years, and almost every one of these loans is interest-only with a balloon.

Who actually uses hard money in the five boroughs

The population is narrower than the marketing suggests. In practice it is: investors buying 1-4 family houses in Queens, Brooklyn, the Bronx and Staten Island that need work; buyers taking down estate sales and referee sales where the contract gives 30 to 45 days; owners of small mixed-use buildings bridging a vacancy before a stabilized refinance; developers holding a site through permits; and 1031 exchange buyers who cannot let a replacement-property deadline slip while a bank underwrites.

Manhattan is a smaller share of the volume than outsiders expect, because Manhattan’s housing stock is disproportionately co-op and condo, and co-ops are close to unusable as private-lending collateral.

What NYC-active lenders publish as of August 2026

Every figure below is what the named lender publishes on its own website; none of it is our number, and none of it is a quote you will necessarily receive.

All figures as advertised by each lender on its own website, reviewed August 2026. Kiavi lists New York among its lending states; RCN’s public page names a narrower set of licensed states and does not list New York explicitly, which is exactly the kind of thing to confirm directly before you rely on a lender for a five-borough deal. Rate floors are marketing floors: they attach to the strongest credit, the lowest leverage and the most experienced sponsors, and a first project at maximum leverage prices materially above them.

Note also what the headline rate omits. Points are charged separately, and the two published point ranges above (1.5-2% at West Forest) are on the low end of what NYC deals commonly carry.

Business purpose, not consumer — and where the line sits

Anchor Loans states plainly on its site that it makes loans “for business purposes only and not for personal, family, or household use.” That sentence is the entire regulatory architecture of this market in one line.

Consumer mortgage law — ability-to-repay, TRID disclosures, most state mortgage-origination licensing — attaches to credit secured by a dwelling and extended primarily for personal, family or household purposes. A loan to acquire and resell investment property is not that, so it falls outside most of it. New York’s usury framework similarly treats business loans differently from consumer loans, with the commonly cited thresholds being a 16% civil limit and a 25% criminal limit for smaller loans and broader exemptions above $100,000 and $2.5 million for business-purpose credit.

Two precise points matter more than the general rule. First, the classification follows the use of the proceeds, not the label on the note and not the vesting. Borrowing through an LLC does not by itself make a loan business-purpose; a cash-out against a rental to pay for a wedding is consumer credit wearing an entity costume. Second, it is your own counsel, not the lender’s, who decides whether your loan is properly business-purpose — lenders take a business-purpose affidavit precisely because they want that determination documented and attributable.

This is why a private lender will not touch your primary residence. Not because the collateral is bad, but because lending against an owner-occupied dwelling pulls in a compliance regime their whole operating model is built to sit outside of.

The LLC, the guarantee, and the single-purpose entity

Expect to take title in an entity. West Forest Capital states on its New York page that it lends to LLCs rather than to individuals. Lenders want this for reasons that have nothing to do with your asset protection: entity vesting supports the business-purpose characterization, it makes the collateral cleanly transferable, and it lets them take a pledge of the membership interests as additional security.

Then expect to guarantee it personally anyway. Manhattan Bridge Capital’s public description of its loans notes personal guarantees from the principals. The LLC limits your liability to third parties; it does not limit your liability to the lender who made you sign.

Many lenders want a single-purpose entity — one LLC holding one property, with no other assets, liabilities or operating history. It isolates the collateral from your other deals, and it makes a foreclosure or a deed-in-lieu clean. It also means a new entity, a new EIN, a new operating agreement and a new bank account for every project, which is real friction on a fast close. Form it before you go into contract.

The New York cost stack

New York is an attorney-state, deed-recording, tax-heavy jurisdiction, and the closing costs are not incidental.

Mortgage recording tax is the big one, and it is charged on the loan amount, not the purchase price. Per Form MT-15 (rev. 1/25), Table 4, the combined NYC rate is 2.05% below $500,000 and 2.175% at $500,000 or more on a one-to-three-family house or residential condo unit. Of that, 0.25% is the special additional tax, which under Tax Law § 253 falls on the lender where the security is a structure with no more than six residential units — leaving the familiar 1.8% / 1.925% borrower share. On a building of more than six units, expect to carry that 0.25% yourself. On a $1.2M loan that is roughly $23,000 paid at closing before you have touched the building. High leverage is therefore more expensive in New York than the rate spread alone implies, because the tax scales with the loan, not the equity.

The tax does not apply to co-op share loans, because a co-op interest is personal property rather than real property and no mortgage is recorded against land. That single exemption is one of the few genuine cost advantages co-ops have.

Add to that: title insurance on the lender’s policy, a title search and municipal searches, the lender’s attorney fee (you pay it), your own attorney, survey where applicable, and an appraisal.

Collateral NYC private lenders take — and what they don’t

Comfortable: 1-4 family houses, condominium units, small multifamily, mixed-use with a retail base, and vacant land or development sites for the lenders who do ground-up.

Difficult or excluded:

• Co-ops. The collateral is shares plus a proprietary lease — personal property perfected by a UCC-1 filing and a stock pledge, not a mortgage. The co-op corporation must sign a recognition agreement consenting to the lender’s lien, and boards routinely refuse for a short-term investor loan. Most private lenders simply do not have the product. West Forest Capital does list co-ops among financed property types, which is unusual enough to be worth verifying against a specific building’s rules.
• Rent-regulated buildings, where the value story depends on raising rents. Since the 2019 HSTPA and its later amendments, renovation-based increases are capped by statute, so a “renovate and reposition” thesis on stabilized units does not underwrite the way it did a decade ago.
• Owner-occupied anything, for the reasons above.

Speed is the actual product

You are not buying money. You are buying certainty of close on a date. Kiavi advertises “closings in as few as 7 days”; West Forest Capital advertises typical funding in three to five business days with same-day pre-approvals.

That is worth paying several points for when the seller is an estate, when you are the backup on a deal that just fell out of contract, or when a 1031 identification clock is running. It is worth nothing at all when you have ninety days and clean documented income — in which case you are simply paying a premium for a service you are not consuming.

How to read a term sheet

The rate is rarely the expensive part. Read for these:

Model the deal at 1.5 times your expected hold. If it only works at the advertised term with no extension, it does not work — NYC schedules slip, and the carry is what eats flippers here.

Where this goes wrong

The failure pattern is consistent: the borrower budgets for the purchase and the rehab and not for the carry, the points, the mortgage recording tax and the two extensions that a DOB objection forces. Interest-only debt is cheap per month and brutal per quarter when the project is stalled. Underwrite the delay, not the plan.

This page is informational and is not financial, tax or legal advice. Verify every published figure with the lender directly, and have New York counsel review any loan document before you sign it.