The easy answer to the question of whether you have to provide a deposit or money upfront to a private lender is generally going to be no! Most hard money loans will not require a deposit. However, there are some situations where a deposit may be inevitable. Much like a traditional mortgage or even a personal loan, you don’t want to work with a company that charges fees or money upfront. Yes, we know this is a different situation than when a company makes you pay a deposit. However, it’s still going to fall into the same framework of the question and comes up quite often when consumers ask us what they need to submit an application and ultimately qualify.
Private Lenders With No Upfront Fees
When an applicant asks us this question we first tell them to elaborate on the situation. Is the online company looking for money to submit an application? Are they asking for cash up front and guaranteeing a future approval or hand off to another hard money lender in Texas? In this case you don’t want to move forward in a situation like that. In most states including Texas it’s against the law to ask for upfront fees for personal loans. Even with that, why would you want to work with a company that makes you give them cash just to process your paperwork? 
It’s always best to work with a private money lender that doesn’t charge any upfront fees. Settle on a company you feel comfortable with and one that has a decent reputation not only in Texas, but on a national level. There are other ways you can be comfortable with your lender. Do they have good reviews online with current and updated licensing information? You can research Dallas lenders by doing a simple search online for the top private money lenders in Dallas. The same goes for regional cities big in small like Fort Worth and Plano.
Can A Loan Company Ever Ask For Money Upfront?
Now, there are legitimate situations where a hard money lender may require a deposit or money down to ensure final approval. Consider a situation where a bank requires 10% down on a 500k conventional loan. That bank is going to require far more documents and verification. But they’re still going to ask for a certain percentage down. The same is true with applicants who apply for fix and flip and stated income loans. On that note you can apply with a San Antonio based hard money lender with an LTV of around 70%. While many mortgage lenders are rolling out program for consumers will little to no credit history, there’s still going to be a need to put down a certain amount as down payment. You many not be able to get a same day underwriting or 24 hour document approval. But you can ensure a fair and safe process by following all Texas lending regulations. These are mostly in place for mortgage lenders and personal loan companies but the rules also apply to hard money lenders. You also need to be aware of the many city ordinances all throughout the state. Each city and county will have different rules in place. But the large portion of oversight will still fall upon the State and Federal regulators.
