Last updated: August 2026
Quick answer
Hard money and conventional mortgages can differ in how lenders evaluate borrowers, properties, documentation, and overall loan scenarios. Conventional loans generally follow established agency or investor guidelines, while private lenders may use different underwriting criteria depending on the loan program and transaction.
The better fit depends on factors such as credit, income and assets, available equity, property characteristics, loan purpose, documentation, costs, and repayment plans.
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What sets hard money and conventional mortgages apart
Conventional mortgage programs have defined underwriting requirements related to factors such as credit, income, assets, debt obligations, and property eligibility. Some homeowners may find that their circumstances do not align with a particular conventional program.
Private-money financing may use different underwriting criteria depending on the lender, property, loan purpose, and proposed structure.
For homeowners whose circumstances do not align with a particular conventional program, private-money financing may be another option to consider for a first mortgage, second mortgage, or a refinance.
| Factor | Private money / hard money | Conventional mortgage |
| Underwriting | Criteria vary by lender, program, borrower, property, and loan purpose | Generally follows established agency, investor, and lender guidelines |
| Credit | May be considered alongside other borrower and property factors | Generally considered as part of applicable underwriting requirements |
| Income and assets | Documentation requirements vary by program and transaction | Typically documented according to applicable program requirements |
| Property and collateral | Can play an important role in the loan structure | Property eligibility and appraisal also affect qualification |
| Debt obligations | Debt obligations and other financial information may be considered based on the applicable program and underwriting requirements | DTI and other obligations are generally considered under applicable program requirements |
How the application process compares
The application and documentation process can differ between conventional and private-money financing.
Conventional lenders generally document information such as income, assets, employment (where applicable), credit, and existing debts in accordance with the loan program’s requirements.
Private-lender documentation requirements can vary depending on the loan purpose, borrower, property, and proposed structure. Property value and collateral may be considered alongside borrower and financial information as part of the overall review.
In either case, borrowers should expect the lender to request sufficient information to evaluate the loan in accordance with applicable underwriting and regulatory requirements.
Credit score requirements
Credit history and credit score can influence conventional mortgage qualification and may affect available loan options. Exact requirements vary by program and transaction.
Private lenders may also review credit as part of the underwriting process. Credit requirements and their effect on qualification can vary by lender, loan program, borrower profile, collateral, and overall loan structure.
Debt-to-income and loan-to-value ratios
Debt-to-income ratio (DTI)
Conventional mortgage programs generally consider the debt-to-income ratio as part of the borrower’s ability-to-repay assessment, although allowable ratios can vary by program and underwriting method.
A private lender may evaluate debt obligations as part of the borrower’s overall financial profile, subject to the applicable consumer loan program, underwriting criteria, and regulatory requirements. Specific requirements remain subject to underwriting.
Loan-to-value (LTV)
Both conventional and private lenders may consider property value and loan-to-value when evaluating a mortgage. How LTV affects qualification and loan structure depends on the specific program and transaction.
Income documentation and qualification
Conventional mortgage programs generally require income used for qualification to be documented and evaluated under the applicable program guidelines.
Documentation varies based on the borrower’s income type and circumstances. Fannie Mae, for example, requires lenders to establish that qualifying income is stable and reasonably expected to continue.
Marquee Funding Group may evaluate income, assets, credit, equity, property information, loan purpose, and other borrower and transaction factors in accordance with the requirements of the proposed loan program.
When might a homeowner explore private-money financing?
A homeowner may explore private-money financing when their circumstances do not align neatly with a conventional mortgage program or when they want to evaluate a different loan structure.
Depending on the loan program and transaction, scenarios that may warrant exploring private-money financing include:
- Credit circumstances that may limit conventional options
- Self-employment or nontraditional income circumstances
- An estate, trust, or other property-related situation that may warrant evaluating alternative financing structures
- A property with characteristics that may complicate certain conventional programs
- A first mortgage, second mortgage, or refinance scenario that warrants reviewing alternative financing structures
Depending on the circumstances, loan purpose, and applicable qualification requirements, private-money financing may be one option to evaluate alongside conventional financing.
When might a homeowner consider a conventional mortgage?
Conventional financing may be worth considering when a homeowner’s credit, income, assets, debts, property, and loan purpose align with the requirements of an applicable mortgage program.
Borrowers should evaluate the complete terms, costs, documentation requirements, and repayment obligations when comparing conventional financing with other options.
Choosing the right financing path for your situation
There is no single right answer for every homeowner or every financial situation. The appropriate financing option depends on factors such as your credit and financial profile, income and assets, existing obligations, property characteristics, loan purpose, documentation requirements, costs, and repayment plans.
Costs, fees, repayment terms, and other loan features can differ substantially between conventional and private-money financing. Homeowners should compare the complete terms and disclosures for any loan they are considering. Private-money loans are secured by real property and involve repayment obligations.
Depending on the loan terms, failure to make required payments or repay the loan when due may result in additional interest, fees, default, and could ultimately place the property securing the loan at risk of foreclosure.
Talk through your options with Marquee Funding Group
If a conventional mortgage does not fit your circumstances, it may be worth exploring whether another financing structure is appropriate.
Marquee Funding Group can review your scenario and discuss private-money financing options that may be available for a first mortgage, second mortgage, or refinance, subject to underwriting and applicable requirements.
Submit your loan scenario to discuss available financing options with Marquee Funding Group. All loans are subject to underwriting, approval, and applicable regulatory requirements.
FAQs: Hard money vs conventional mortgage financing
Conventional mortgages generally follow underwriting guidelines set by lenders, investors, or agencies and consider factors such as credit, income, assets, debts, and the property. Private-money loans may use different underwriting criteria depending on the lender, borrower, property, loan purpose, and proposed structure.
Credit requirements vary by lender and loan program. A private lender may consider credit alongside factors such as home equity, property value, income or assets, existing obligations, documentation, and the proposed loan structure. There is no single credit requirement that applies to every private-money loan.
Qualification for either type of mortgage depends on the borrower, property, loan program, documentation, and proposed transaction. Conventional programs generally evaluate factors such as credit, income, assets, debts, and property eligibility in accordance with applicable program guidelines. Private lenders may use different underwriting criteria and consider factors such as credit, financial information, available equity, property characteristics, loan purpose, and the proposed structure. All loans remain subject to underwriting and approval.
A homeowner may consider private-money financing when they want to evaluate a loan structure outside a particular conventional program or when factors such as their overall financial profile, property characteristics, existing liens, loan purpose, or proposed transaction affect their available financing options. Qualification and documentation requirements vary by loan program and transaction.