The Quick Read: A hard money loan with partners closes when the borrowing entity, the guarantors, and the signers are all settled before underwriting starts. The entity is usually the borrower of record. Each guarantor is a separate person who signs a separate guaranty and is reviewed on credit and background.
- The LLC takes title and signs the note. The guaranty is what puts individuals on the hook.
- Most programs in the wholesale network want a personal guarantee, even when an LLC borrows.
- Each guarantor’s credit, identity, and background get reviewed. Credit scores start at 620, with extra conditions below 660.
- Owners with meaningful ownership are the ones lenders usually ask to sign. The cutoff varies by lender.
- Clean entity documents prevent most stalls at closing. A partner who refuses to guarantee causes the rest.
Partner deals fail on structure, not on the property. Two people agree on a flip over coffee, form an LLC, and find out at the term sheet that one of them won’t sign a guaranty. This explainer walks through how a partner hard money file is built, how underwriting treats each person, and where the general rule breaks.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
Lendmire is a DSCR-focused mortgage broker that arranges hard money and DSCR investor loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. Everything below is general information about how these files work. It is not legal advice, and the partner agreement and guaranty terms belong in front of an attorney.
Why Do Partner Deals Need Extra Structure?
Partner deals need structure because several people carry different risk, and the lender has to know who does what. One signer on a solo deal is simple. Three people with different credit, different cash, and different roles is a file with three sets of questions.
Hard money underwriting is asset-based. The lender looks at the property, the plan, and the exit. But the borrower side still gets reviewed, and with partners that review multiplies. Every guarantor needs ID, a credit pull, and a background check. Every owner needs to show up correctly in the entity documents.
Hard money is also business-purpose lending. It is made for non-owner-occupied investment property, 1-4 units, and ground-up construction up to 10 units. Because these are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage. If a partner plans to live in the property, the file has a purpose problem that no entity can fix.
Key Terms Defined
Borrower of record: The person or entity named on the note and the deed. In partner deals this is usually an LLC.
Guarantor: An individual who promises to repay the loan if the borrower doesn’t. A guarantor can be on the hook without owning title.
Co-borrower: A person who signs the note alongside the other borrowers and shares the debt directly.
Authorized signer: The person the operating agreement empowers to sign for the entity. A signer can be someone who isn’t a guarantor.
Recourse: The lender’s right to pursue the guarantor’s personal assets after a shortfall.
Bad-boy carve-out: A limited guaranty that only kicks in for specific misconduct, such as fraud or misuse of proceeds.
Entity First: The Borrowing Vehicle and Its Documents
Most partner deals close in an LLC, and the LLC has to exist and be in good standing before the file goes in. A new single-purpose LLC formed for the deal is common. The lender reviews the formation documents, the operating agreement, the EIN letter, the member list with ownership percentages, and who has signing authority.
Here is where the file stalls. The signer on the application doesn’t match the signer named in the operating agreement. Or the member percentages in the agreement don’t add up to what the term sheet says. Or the LLC was formed in another state and never registered to do business where the property sits. An out-of-state LLC generally has to complete foreign qualification before it can take title. Fix that before the file goes in, not after.
Layered ownership adds a step. If a holding company owns a share of the borrowing LLC, the lender looks through it to the individuals behind it. Have those individuals’ IDs and percentages ready.
Don’t close in a personal name and deed to the LLC afterward. Moving title after a loan can trip the due-on-sale clause. Decide the vesting before the contract, not after.
For a closer look at how entity vesting derails hard money files, see Lendmire’s piece Hard Money Loan Denied Because The Borrower Wants To Close In An LLC.
Borrower, Guarantor, Signer: Who Is Who?
An LLC borrower does not shield its owners from the loan by itself. The NCUA’s examiner’s guide on personal guarantees states that principals are generally not personally liable when the borrower is an LLC, corporation, or trust. The exception is a separate agreement in which they personally guarantee. That separate agreement is exactly what hard money lenders require. The same guide notes that sole proprietors and general partners in a partnership are personally liable by default, with no separate guaranty needed.
Think of it as three different jobs.
| Role | Signs | On the hook for | Underwritten how |
|---|---|---|---|
| Entity borrower | Note, deed of trust | The debt, to the extent of its assets | Formation docs, good standing |
| Individual guarantor | Separate guaranty | The debt, personally | Credit, ID, background |
| Authorized signer | For the entity | Nothing personally, unless also a guarantor | Authority in operating agreement |
| Passive investor | Often nothing | Their capital only, unless lender requires a guaranty | Depends on ownership share |
One person can hold more than one role. In a typical two-partner flip, both sign the guaranty and one signs for the LLC. Closing papers usually carry separate signature pages for each capacity. A partner signing as an LLC officer and as an individual guarantor signs twice, in two different capacities. Mixing those up is a common closing-table error.
Who Has to Guarantee? Handling Unequal Partners
Lenders in the network generally want every owner with meaningful ownership to guarantee. What counts as meaningful varies by lender and by file. Some want one or two principals. Some want everyone above a threshold. Nobody in a partner deal gets to assume the answer. Ask early.
Federal credit rules shape part of this. Under Regulation B, the definition of applicant includes guarantors for spousal-signature purposes. A lender can’t demand another person’s signature when the applicant is reviewed on their own. If someone else’s liability is needed to support the credit, the lender can ask for a cosigner or guarantor, but it can’t require that person to be the spouse. So the choice of guarantor rests on the person’s relationship to the business, not on marital status.
Here is how the common unequal-partner situations play out.
The capital-only partner who won’t guarantee. This is the most frequent conflict. The operator wants the passive partner left off. The lender wants anyone with real ownership on the hook. Three paths exist: the partner guarantees, the partner’s stake is cut below the lender’s cutoff, or the operator and another stronger guarantor carry the guaranty alone. Which path works depends on the lender, and the third is only possible if the remaining guarantors clear credit and background on their own.
The weak-credit partner. A guarantor under the 620 floor creates a problem, and below 660 the file picks up extra conditions. If one partner’s score drags the file, a stronger partner may carry the guaranty while the weaker one stays out of the guarantor line. That changes the ownership and the economics, so settle it in the partner agreement.
The spouse question. A spouse doesn’t have to sign merely because of marital status. Local title rules or community-property rules can still call for a spouse’s signature for other reasons. Under Regulation B, a lender may require all officers of a closely held corporation to guarantee a corporate loan, but may not automatically require their spouses to sign too.
Sole proprietors and general partners. Skip the question. Principals in those structures are personally liable without a separate guaranty.
How Is Liability Shared Among Guarantors?
Liability is shared according to what the guaranty says, and most are written so that each guarantor can be pursued for the whole debt. That is joint and several liability. It means the lender can go after the partner with the deepest pockets for everything, regardless of ownership percentage.
Run a fictional case. Two partners own a flip 50/50. One has substantial liquid assets, the other very little. Both sign unlimited guaranties. If the project fails and a shortfall remains after foreclosure, the lender may pursue either one for the full deficiency. The wealthier partner can then seek contribution from the other under their partner agreement, but only if that agreement says so. Proportional or limited guaranties exist, but they are negotiated with the lender and aren’t assumed.
Guaranty types worth knowing:
- Full or unlimited: the guarantor is liable for the whole debt.
- Limited: liability is capped at a stated amount or share.
- Conditional (bad-boy): liability triggers only on specific acts such as fraud.
For small residential investment loans, plan on a full guaranty. Non-recourse is mostly a larger commercial feature. A burn-off, where the guaranty falls away after the loan-to-value drops far enough, has to be negotiated in writing. It is not a default.
How Do Lenders Combine Partner Credit and Experience?
Lenders look at each guarantor separately, then at the group. Credit, identity, and background are reviewed for every guarantor. Experience is what sets leverage on a hard money file, and it is tied to documented completed projects.
Under the program parameters in the wholesale network, fix-and-flip leverage runs up to 93% of project cost at 5 or more completed projects, 90% of project cost at 2 or more, and 85% with fewer than 2. Every tier is capped at 75% of after-repair value. These figures vary by lender, property, and experience, and nothing here is a commitment to lend. The top tier is reserved for experienced investors.
For partners, the practical point is that an experienced partner can lift the whole file. A first-time investor teamed with an operator who has the completed projects often qualifies at a higher tier than the newcomer would alone. First-time investors do qualify at the lower leverage tiers. The lender still wants that experienced partner on the guaranty, which is why pairing without a guaranty doesn’t work.
Hard money is also asset-based, so a weak partner doesn’t automatically sink a file. But the lender can’t ignore a guarantor who fails credit review.
The Document Package, Partner by Partner
Build the package once and give each person their own list.
| Document | Who provides it | Why it’s needed |
|---|---|---|
| Formation documents and good standing | Entity | Proves the borrower exists |
| Operating agreement | Entity | Shows members, percentages, authority |
| EIN letter | Entity | Identifies the borrower |
| Government ID | Each guarantor | Identity check |
| Proof of funds | Each contributor | Shows cash to close and reserves |
| Credit authorization | Each guarantor | Allows the credit pull |
| Entity resolution | Entity | Authorizes the signer |
Proof of funds is its own friction point. Funds have to be documented and traceable to the person contributing them. Lendmire’s piece Hard Money Loan Denied Because The Borrower Cannot Document Funds To Close covers that failure in detail.
In practice, partner files stall on the same few items. Missing signature pages. An authority mismatch between the signer and the operating agreement. An entity out of good standing. A guarantor whose ID doesn’t match the application spelling. Check each one before submission.
Closing Day With Multiple Parties
Closing is usually in the LLC’s name, with separate guaranty agreements signed by each guarantor. The closing package typically includes the note, the security instrument, the guaranties, the entity resolution, and the disbursement authorization. Title work, lien review, insurance, and the settlement statement all clear before funds move.
Business-purpose hard money loans are outside the consumer mortgage disclosure regime. Still, read the settlement statement line by line. Reconcile the numbers to the term sheet and to each partner’s contribution before anyone signs.
Remote signing is where partner deals get messy. Whether an out-of-state partner can sign through a mobile notary, and whether a power of attorney is accepted, depends on the lender and the title company. Ask both early. Don’t assume.
Keep draws under the entity. Invoices, contractor payments, and draw requests should run through the LLC account, not a partner’s personal account.
Edge Cases Where the Rule Breaks
Purpose controls, not the entity. Under the CFPB’s Truth in Lending guide, credit extended primarily for a business or commercial purpose, and credit to someone other than a natural person, is exempt from Regulation Z. But the ABA Banking Journal points out that a consumer-purpose loan to an individual stays covered even if an LLC guarantees it. An LLC doesn’t turn a personal-residence loan into a business loan.
Business purpose is not compliance-exempt. Guarantors and co-applicants on business-purpose loans can still bring Regulation B and credit-reporting rules into play, as this law-firm commentary from Hunton explains.
Circuit splits on spousal guarantees. One federal appeals court held that guarantors aren’t applicants under the credit rule, so the spousal-guarantor limit works differently there. The Federal Reserve’s Consumer Compliance Outlook describes the decision, but the article is dated and courts have split. Check current law with counsel before relying on it.
Partner default or bankruptcy. A guarantor’s bankruptcy can trip a loan covenant, and a dispute among partners can end in foreclosure. The partner agreement should say who can buy out whom and on what terms.
Partner Agreement Terms to Settle Before Applying
The lender’s documents govern the lender’s risk. The partner agreement governs yours. Put these in writing before the term sheet:
- Ownership percentages and who contributes what.
- Who guarantees, and whether guarantors can seek contribution from the others if one pays.
- Who has signing authority and who controls the bank account.
- Who approves change orders and budget changes.
- How profit is split and what happens if a partner exits mid-project.
- What happens on default or a partner’s bankruptcy.
An LLC does not protect a guarantor from the debt. Forum commentary on this point is anecdotal, so confirm with an attorney, but the logic holds: a guaranty doesn’t automatically pierce the veil, yet the guarantor is on the hook for the debt itself. The LLC still separates you from the property for ordinary property liability.
After Closing: Exit and Release
Most hard money terms run 6-18 months, interest-only, with no prepayment penalty. Longer runway isn’t available on the current program, so the exit has to be planned at closing. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. The same guarantor structure usually carries through, so setting up the entity and ownership cleanly the first time pays off twice. For the exit side, see Lendmire’s complete DSCR loans guide.
Releasing a guarantor after closing isn’t automatic. On-time payments don’t remove the guaranty. A release has to be negotiated and documented, usually tied to a refinance or payoff.
Frequently Asked Questions
Does every partner have to personally guarantee a hard money loan?
Not always. Lenders in the network generally want owners with meaningful ownership to guarantee, and the cutoff varies by lender and by file. A passive investor with a small stake may be left off. Settle this before applying, because a partner who refuses at the last minute can end the deal.
Can an LLC be the borrower so my name isn’t on the loan?
The LLC can be the borrower of record and take title, subject to lender program eligibility. Your name still appears as guarantor, and you remain personally liable for the debt if the loan defaults. The LLC changes who holds title, not who stands behind the loan.
Does my spouse have to sign the guaranty?
Not merely because of marital status. Federal credit rules bar a lender from requiring a spouse’s signature on that basis alone. Title rules or community-property law can still call for a spouse’s signature for other reasons, so ask the lender and the title company.
What credit score do guarantors need?
Programs in the network start at a 620 minimum, with additional conditions below 660. Underwriting stays asset-based, so the property, the plan, and the exit carry weight too. Figures vary by lender, property, and experience, and nothing is a commitment to lend.
Can a first-time investor partner with an experienced one?
Yes, and it often improves the file. Leverage tiers are tied to documented completed projects, so an experienced partner on the guaranty can lift the tier. The lender still reviews both guarantors, and the experienced partner has to be willing to sign.
If You’re Closing With Partners
If you are buying, rehabbing or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
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References
1. NCUA Examiner’s Guide – Personal Guarantees
3. ABA Banking Journal compliance Q&A
4. Hunton business-purpose article
5. Federal Reserve Consumer Compliance Outlook (2015)
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is a DSCR Loan Better Than a Bank Commercial Loan on a Fourplex? · Should 10+ Doors in LLCs Move to a Blanket DSCR Loan? · How Long Each Step of a DSCR Refinance Takes to Pay Off Hard Money
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.