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  • Writer's pictureStratton Equities

Soft Money Lending: What is it?

Updated: Feb 14

Soft Money Lending is a new form of borrowing that exists somewhere in between Hard Money Lending and a traditional mortgage. As a new type of lending program, Soft Money Lending is perfect for first time investors in the real estate market and it can be applied to investment real estate properties.

A soft money loan program is defined as a long-term (5/1 ARM, 7/1 ARM, 30 Year Fixed) real estate investment loan program that closes faster (2-3 weeks) than a conventional loan.

In relation to hard money lending, one of the major differences of soft money loans is that it requires more underwriting, allowing it to have lower rates and greater security. It is based on both the borrower’s credit score and the property’s LTV, and is usually a term loan rather than a bridge loan.

What are the Benefits of Soft Money Loans?

As a new type of lending program, soft money loans are perfect for first-time or seasoned investors who are looking for options that offer long-term financing. It can apply to commercial, multi-family, or investment properties as long as the lending strategy reflects the need for long-term financing.

With its competitively low costs and risks, soft money loans are perfect for those in need of massive loans at an affordable cost and with a generous timeline. They are more flexible than traditional loans as they allow investors to borrow at lower rates with fewer creditory prerequisites and qualifications.

Unlike conventional loans, a soft money mortgage loan requires no income verification from the borrowers - instead, these mortgage programs are based on credit history, real estate investment experience, and liquid assets, which are then processed through underwriting.

Depending on the private money lender, a prospective borrower can get a loan with an interest rate that is as low as 4.375% and have an Loan-to-Value (LTV) of up to 85%, as opposed to the 70% with conventional financing, with no PMI. These types of benefits allow investors to get into the real estate investment world more easily as it lowers the barrier to entry a little bit more. As long as you have a reasonable loan scenario, you can apply for a mortgage loan program to purchase your investment property with a private lender.

Some of the benefits of soft money lending; include lower rates, higher LTVs, and longer lending terms. Depending on your lender, you can get financing for up to 5/1 ARM, 7/1 ARM, or 30 Year Fixed. This is a more lenient format than that of hard money lending, which typically consists of short term financing bridge loans with higher rates, lower LTV’s, and higher costs.

Furthermore, soft money loans do require more underwriting so the application process is not as simple as with hard money lending. Given that soft money loans offer more money at lower rates and longer financing terms, one of the main extra criteria for soft money loan applications is that you need to have a good credit score (at least 650).

Due to the exclusivity of this type of loan program, many lenders do not offer this type of loan product.

When looking for a soft money loan for your real estate investment property, it's important to find a reputable nationwide private money lender that specializes in soft money loans.

How Can You Apply for A Soft Money Loan?

At Stratton Equities, our mission is to make private money lending easy, efficient, and worry-free. We help first time real estate investors, experienced borrowers, and professionals in the mortgage and real estate industry succeed with a simple 3-step process, including Pre-Approval, Processing & Underwriting, and Funding.

Call us at 800-962-6613 or contact us at and apply now at to find out whether you are eligible for loan pre-qualification!

Soft Money Lending by Stratton Equities


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