Hard Money Loans in Florida: Who Uses Them, What They Cost and When They Make Sense

October 1, 2026 · 8 min read · By Onias Derilus, Broker

How private hard money loans work for Florida flips and quick closings, what drives the cost, how Florida usury law and federal rules apply, and what sellers should know about hard money buyers.

Hard money loans in Florida are short-term loans from private lenders, secured mostly by the property itself. Investors use them to buy and fix a house, or to close fast before a bank loan is ready. They cost more than a bank mortgage, and they come with more risk. This guide explains who uses them, how the costs work, what Florida law says about rates, and when one makes sense. It also covers what a seller should know when the buyer is using hard money.

Key takeaways

Hard money lenders focus on the property's value and the exit plan more than your income. In return, you pay a higher rate plus upfront points and fees.

Florida's usury law caps most loans of $500,000 or less at 18% a year in simple interest. Fees and points can count toward that figure.

For larger loans, charging more than 25% a year is a crime in Florida, and more than 45% is a felony.

Federal ability-to-repay rules cover consumer loans secured by a home. Business-purpose loans, such as loans on rental property you will not live in, are exempt from the Truth in Lending Act.

That is why most hard money lenders lend on investment property and avoid loans on a home you will live in.

What hard money loans in Florida are

A hard money loan is a private loan backed by real estate. The lender may be a local investor group, a private fund or a company that only makes these loans. Banks and credit unions are not the usual source.

The key difference is how the lender decides. A bank looks hard at your income, debts and credit history. A hard money lender looks first at the deal. In other words, they ask what the property is worth now, what it will be worth after repairs, and how you plan to pay them back. That plan is called the exit. It is usually a sale or a refinance into a long-term loan.

Because of that focus, these loans can close quickly. However, speed and flexibility are what you pay extra for.

Who uses hard money loans in Florida

Most borrowers fall into a few groups.

House flippers. They buy a dated home, renovate it and sell it. A bank may not lend on a house that needs a new roof or kitchen, so they turn to private money.
Buy, fix and rent investors. They use a short loan to buy and repair. Then they refinance into a long-term rental loan once the home is rented.
Buyers who need to close fast. Some sellers want a quick, certain closing. A short private loan can bridge the gap until other money arrives.
Borrowers who do not fit a bank's box. For example, a self-employed investor with uneven income may use a private lender for a time.

Our guide on how to flip a house in South Florida shows where financing fits in a full flip budget.

What hard money loans in Florida cost

Terms vary a lot from lender to lender, and they change with the market. So treat any number you see online as a rough guide, then get written quotes. In general, expect these cost pieces.

Interest rate

The rate is usually well above a bank mortgage rate. Many loans are interest-only, so the monthly payment covers interest but not principal. The full balance is then due at the end of the term.

Points and fees

A point is 1% of the loan amount, paid at closing. Hard money lenders often charge points, plus fees for processing, underwriting, inspections and draws. Those costs come out of your cash or your profit, even if you pay off the loan early.

Loan size and down payment

Lenders cap the loan at a share of the purchase price, the repair budget or the after-repair value. As a result, you will usually need your own cash for the down payment and closing costs. Repair money is often held back and released in draws as work is finished and inspected.

Term and extension fees

Most terms are short, often measured in months rather than years. If the work runs late, an extension can cost more fees. Therefore, build extra time into your plan from the start.

Florida usury limits on hard money loans in Florida

Florida has firm limits on interest. Under section 687.03 of the Florida Statutes, a loan of $500,000 or less generally cannot charge more than the equivalent of 18% a year in simple interest. The statute counts more than the stated rate. Commissions, discounts and other charges that make you repay more than the principal can count as interest. Advance fees are spread over the stated term when the rate is tested.

For loans over $500,000, the 18% cap does not apply. Instead, section 687.071 sets criminal limits. Charging more than 25% a year is a second-degree misdemeanor. Above 45%, it is a third-degree felony. A debt made in violation of that section is not enforceable in Florida courts.

Why does this matter to a borrower? High points on a short loan can push the effective rate up fast. So ask the lender to show the full cost of the loan in writing. If you have questions about a specific note, a Florida real estate attorney can review it.

Primary residence limits

Many people search for a hard money loan on a home they plan to live in. That is much harder to find, and there is a reason.

Federal rules treat a loan for your own home as consumer credit. Under Regulation Z, a lender must make a reasonable, good-faith finding that you can repay a consumer loan secured by a dwelling. That rule also brings disclosure and paperwork duties. In Florida, a company that makes residential mortgage loans for gain also needs a mortgage lender license from the Office of Financial Regulation.

By contrast, Regulation Z exempts credit that is mainly for a business purpose. The CFPB's official comment says credit to buy or fix rental property that the owner will not live in counts as business credit. However, a property is treated as owner-occupied if the owner expects to stay in it more than 14 days in the coming year. So most private lenders stick to investment property only. If a lender offers to fund your own home, check its license on the OFR website before you sign.

When hard money loans in Florida make sense

A hard money loan can be a good tool when the numbers still work after its full cost. Here are some cases where it may fit.

You found a property a bank will not finance yet, and the repair plan is clear.
The deal needs a fast closing, and you have a firm exit lined up.
You have run the flip math with the loan's rate, points, fees and holding time included.
You have cash reserves to cover delays, overruns and a slower sale.

On the other hand, it may be the wrong tool if your profit depends on a quick sale in a slow segment. In August 2026, Palm Beach County single-family homes went under contract in a median of 40 days, per Miami Realtors. Condos and townhouses took a median of 69 days, with 6.7 months of supply. In St. Lucie County, condos took 82 days. Each extra month on an interest-only loan cuts into your margin.

Questions to ask any lender

What is the rate, and how many points do you charge?
What other fees apply at closing, at each draw and at payoff?
How do you set the loan amount: on price, on cost or on after-repair value?
How long is the term, and what does an extension cost?
Is there a prepayment penalty or a minimum interest charge?

What sellers should know about hard money buyers

Sellers in West Palm Beach, Lake Worth Beach and Port St. Lucie often get offers from investors using private money. These offers can be good. For example, many close faster than a bank-financed buyer, and some take a home as-is.

Still, read the offer closely. A hard money buyer usually still has a financing contingency or an inspection period. Their lender may also order its own valuation. If the value comes in low, the buyer may ask for a lower price. Also, investors base their offer on the after-repair value, minus repairs, costs and profit. So the price is often below what a retail buyer would pay. Our West Palm Beach page explains how local homes are selling right now.

Before you accept, compare the net proceeds from the investor's offer with a full market listing. The gap may be worth the speed, or it may not.

Frequently asked questions

Are hard money loans in Florida legal?

Yes. Private lenders can make these loans, but they must follow Florida's usury law. Lenders who make residential mortgage loans for gain also need an OFR license.

What is the maximum interest rate in Florida?

For most loans of $500,000 or less, it is 18% a year in simple interest. For larger loans, more than 25% a year is a crime under section 687.071.

Can I get a hard money loan for my primary residence?

It is rare. Loans on a home you live in are consumer loans, so federal ability-to-repay rules apply. Most private lenders only fund investment property.

How fast can a hard money loan close?

Often faster than a bank loan, because the lender focuses on the property. The real timeline depends on the appraisal, title work and the lender's own process.

Is a hard money buyer a good buyer for my house?

It can be, if the price and terms work for you. Compare the net from their offer with a regular listing, and check how much time the buyer has to back out.

Sources

This article is general information, not legal, tax or financial advice. Loan terms and laws change, so consult a licensed lender and a Florida attorney about your own situation.

Getting investor offers on your home? Compare them with what the house would bring on the open market. Start with a free home valuation. If you are investing, ask our team for a property and rental analysis before you borrow. Contact Pure Equity.