Hard Money vs Traditional Loans – What Philly Investors Need to Know
Philadelphia’s dynamic real estate market presents golden opportunities — if you move fast. But timing is everything, and the loan product you choose often dictates your speed, flexibility, and upside.
This guide breaks down the pros and cons of hard money vs. traditional loans, especially for fix & flip, BRRRR, and rental investors active in zip codes like 19125, 19130, and 19104.
What Is a Traditional Loan?
Bank Underwriting Basics
Full income documentation required
Debt-to-income (DTI) ratio checks
45–60 day closing timeline
Pros for Long-Term Investors
Lower interest rates (6–7%)
Fixed payments over 15–30 years
FHA/VA eligibility
Limitations for Investors
Slow processing
Income/employment required
Limited rehab flexibility
What Is a Hard Money Loan?
Fast Funding for Philly Flippers
Approval in 30–60 minutes
No income docs or credit score limits
Closings in as few as 7 days
Asset-Based Lending Explained
Collateral is king — property value and ARV drive approval
Flexible draws for rehab phases
Ideal for speculative deals and distressed assets
Compare hard money loan programs in Philly – Explore Loan Types
Key Differences – Hard Money vs Traditional in Philadelphia
| Feature | Hard Money Loan | Traditional Loan |
|---|---|---|
| Approval Time | Minutes | Weeks |
| Closing Timeline | 7–14 days | 30–60+ days |
| Income Docs Required | No | Yes |
| Rehab Flexibility | High | Low |
| Credit Requirements | Flexible | Strict (620+ FICO) |
| Interest Rate | 8–12% | 6–7% |
| Ideal Use Case | Flip, Build, Rental Bridge | Primary or long-term hold |
Need fast rehab funds?
When to Choose Hard Money in Philly
Buying distressed properties in Fishtown
Closing fast on auctions or off-market deals
Building spec homes in 19104 or 19130
Refinancing flips with value-add upside
When Traditional Lending Might Work Better
- Long-term rental holding with stable tenants
- Properties already stabilized and cash-flowing
- 30-year DSCR or conventional refi after renovation