Are There Alternative Financing Programs, Like Hard Money Loans or Grants, Outside Standard Mortgages?
Yes. Hard money loans are the most common alternative. They come from private or non-bank lenders and are approved mainly on the property's value rather than your income and credit. They close faster and cost more, and they're meant to be short term. Grants and equity-sharing agreements exist too, but they're separate programs, not something a typical mortgage lender offers.
Last updated September 29, 2026What is a hard money loan?
Financing from outside the standard mortgage system, usually a private investor or a non-bank lending company. Approval rests mainly on the value of the property you pledge, not on your credit score or debt-to-income ratio. That's why these loans can close quickly, and also why they cost more: the lender takes on more risk with less documentation.
People commonly use them for short-term needs, like buying a fixer-upper, bridging the gap between two transactions or closing on a purchase before standard underwriting could.
Why do hard money loans cost more?
The lender moves faster, checks less and takes more risk, and it charges for that. Hard money rates are typically well above standard mortgage and home equity rates, and the loans often carry extra points or fees at closing. Weigh the full cost, not just the speed, and have a plan for how you'll pay the loan off.
What if I want to refinance out of a hard money loan later?
That's the usual exit, and timing matters. For a cash-out refinance under Fannie Mae's guidelines, at least one borrower generally has to have been on title for six months, and a first mortgage being paid off has to be at least 12 months old, measured note date to note date. A hard money loan on the property counts as that first mortgage. There are exceptions, so ask a lender about seasoning before you take the hard money loan.
If the property is a manufactured home, it generally needs a permanent foundation and real-property title to move into standard financing.
What about grants and equity-sharing agreements?
Down payment grants and home equity-sharing agreements are out there, usually through public agencies or specialized companies. Lenders in our network commonly focus on cash-out refinances and home equity loans rather than offering grants or equity-sharing directly, so treat those as a separate conversation.
It depends on your situation:
- You need to close fast and can pay more for a short time: a hard money loan may work as a bridge.
- You plan to refinance into a standard loan: check the six-month and 12-month seasoning rules first.
- Your property is a manufactured home: confirm it's on a permanent foundation and titled as real property.
- You're looking for a grant or an equity-sharing deal: that's usually outside standard mortgage and home equity products.
| Who lends | Private or non-bank lenders, secured by the property |
|---|---|
| Cost | Higher rates than standard mortgages, often with extra points or fees |
| Term | Short term |
| Cash-out refinance seasoning (Fannie Mae) | Six months on title; the loan being paid off at least 12 months old |
| Manufactured homes | Permanent foundation and real-property title for standard financing |
Related questions
Sources
- https://www.rocketmortgage.com/learn/hard-money-loans
- https://www.nav.com/blog/how-do-hard-money-loans-work-343006
- https://www.onemainfinancial.com/personal-loans/resources/hard-money-loan
- https://www.amerisave.com/glossary/hard-money-loans-what-they-are-and-how-they-work-in
- https://www.herringbank.com/learn/hard-money-loans
- https://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/manufactured-homes
- https://singlefamily.fanniemae.com/originating-underwriting/mortgage-products/manufactured-housing-product-matrix
- https://www.rd.usda.gov/media/file/download/usda-rd-sfh-manufactured-home-loans-08152025.pdf
- https://hanovermc.com/post?id=49
- https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions
- https://www.homebridgewholesale.com/bulletin/fannie-me-update-to-cash-out-seasoning-requirement
- https://www.biggerpockets.com/forums/49/topics/1100951-seasoning-for-cash-out-refinance-on-a-hard-money-loan
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.