The Quick Read: An LLC can hold title and sign the note on a hard money loan, but the LLC does not remove personal liability for the debt. Across Lendmire’s wholesale network, the LLC is the borrower of record, while one or more owners typically sign a separate personal guaranty. The lender underwrites the guarantor’s credit and background, not just the entity.
- The LLC owns the property and signs the note; the guarantor signs a separate contract.
- Guarantor credit typically starts at 620, with added conditions below 660.
- Decide vesting before the purchase contract, not after closing.
- Entity documents must match the title, note, insurance, and term sheet exactly.
- Terms run 6-18 months, interest-only, so the exit plan matters as much as the title.
This guide is written for business-purpose investors on non-owner-occupied 1-4 unit property. Program details vary by lender, property, and experience, and nothing here is a commitment to lend.
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.
Key Terms Defined
Vesting: How title to the property is held, such as in an LLC’s name or an individual’s name.
Borrower of record: The party that signs the note and owes the debt.
Guarantor: A person who signs a separate promise to repay if the borrower does not.
Authorized signer: The person the operating agreement allows to sign for the LLC.
Recourse: The lender’s ability to pursue assets beyond the collateral, including a guarantor’s.
Due-on-sale clause: A loan term that lets the lender demand payoff if title transfers.
Foreign qualification: Registering an LLC to do business in a state other than where it was formed.
Who Is Who: Borrower, Title Holder, Guarantor, Signer
The LLC holds title and borrows. The guarantor stands behind the debt. Those are two separate roles, signed on two separate documents, and mixing them up is a common source of confusion.
| Role | What they sign | What they owe | What the lender reviews |
|---|---|---|---|
| LLC (borrower) | Note, mortgage or deed of trust | The loan | Entity documents, good standing |
| Guarantor | Personal guaranty | The loan, if the LLC fails | Credit, identity, background |
| Authorized signer | Closing documents for the LLC | Nothing personally, by role alone | Authority in operating agreement |
| Title holder | Deed (as the LLC) | Nothing beyond the LLC | Vesting matches the loan |
One person can fill every role. In a multi-member LLC, they often split.
Why Do Lenders Want an LLC on Title?
Lenders want entity title for two reasons: it keeps the loan clearly business-purpose, and it separates the property’s operating liability from the owner’s personal assets. Neither reason removes the guarantee.
On the business-purpose side, hard money loans are designed for non-owner-occupied investment property. Federal consumer-credit rules carve out credit extended primarily for business purposes, and they also exempt credit extended to anyone other than a natural person, as CFPB Regulation Z § 1026.3 sets out. The RESPA rule borrows the same business-purpose test, per 12 CFR 1024.5. An LLC does not magically create a business-purpose loan, though. The lender still looks at how the property will be used, and an owner who plans to occupy it defeats the exemption.
What Does the LLC Protect, and What Doesn’t It?
An LLC generally shields you from the property’s operating liabilities, such as a tenant’s injury claim, but it does not shield you from a debt you personally guaranteed. The guaranty is a separate contract, and it names you.
The NCUA Examiner’s Guide on personal guarantees states the default plainly: principals are not personally liable for an LLC’s debt unless they sign a separate guarantee. The same page notes that guarantees are standard practice in investor real estate lending. NCUA oversees credit unions, so treat it as an analogy, but the mechanics are the same across lenders.
Two points follow from this:
1. The lien runs with the property. A lender holding a mortgage or deed of trust can enforce it against the collateral no matter how title is vested. Entity title does not keep the lender away from the building.
2. The guaranty reaches you, not everything you own for every purpose. Signing a guaranty makes you liable for that one loan beyond what the LLC holds. It does not by itself open the door to unrelated creditors, provided the LLC is run as a real, separate entity.
Consider a modeled default. An LLC borrows on a flip, the project stalls, and the sale nets less than the payoff. With no guaranty, the lender’s recovery stops at the property and whatever the LLC owns. With a guaranty, the lender may pursue the shortfall against the guarantor personally. Same property, same LLC, very different outcome.
Title Rules in Order
Get the sequence right and the title work is routine. Get it wrong and the file stalls or, worse, triggers a problem after closing.
1. Form the LLC before you sign the purchase contract. The LLC should be the buyer on the contract. If the contract is in your personal name, you will need a written assignment to the LLC, and the lender will want to see it.
2. Match every document. The LLC’s exact legal name should appear on the contract, the loan application, the note, the mortgage or deed of trust, the insurance policy, and the appraisal. One stray “Inc.” or missing “LLC” causes delays.
3. Prove signing authority. The title company will want evidence the signer can bind the entity, typically through the operating agreement and an authorizing resolution if more than one member exists.
4. Qualify the LLC in the property’s state if needed. If the LLC was formed elsewhere, lenders and title companies generally expect it to register to do business where the property sits before taking title. This is a practitioner point, not a statute cite, and requirements differ by state. It is also a timing issue, because title insurance may not issue to an entity that is not in good standing there.
5. Vest at closing, not afterward. This is the step investors most often try to skip.
Can You Deed the Property to Your LLC After Closing?
Usually not without risk. Closing in your personal name and deeding to an LLC later can trigger the loan’s due-on-sale clause, and the federal safe harbor does not clearly cover LLC transfers.
The Garn-St Germain Act makes due-on-sale clauses enforceable and lists specific protected transfers. An LLC transfer is not among them, as a FedLaws summary explains. The regulation’s living-trust protection, found at 12 CFR 191.5, is aimed at borrower-occupied homes, which is not the typical investor rental.
In practice, lender responses vary. Some consent, some call the loan, and some require a refinance. The safe approach is to vest correctly at purchase. If you already closed personally, a refinance into the entity is the cleaner fix than hoping nobody notices.
Entity Document Checklist
Most hard money lenders ask for the same core set. Missing or mismatched items are why files stall.
| Document | Why files stall |
|---|---|
| Articles of organization | Name differs from contract |
| Operating agreement | Unsigned, or percentages don’t match term sheet |
| EIN letter | Entity name or EIN mismatch |
| Good-standing certificate | Expired, or wrong state |
| Authorizing resolution | Signer not named |
| Guarantor ID and ownership detail | Holding-company owners not disclosed |
If a holding company owns part of the borrowing LLC, expect the lender to look through to the individuals behind it. Have their IDs and ownership percentages ready.
A brand-new LLC with no credit history is not an obstacle. The guarantor’s profile does the credit work, and a first-time investor can qualify at the lower leverage tiers.
Personal Guarantees in Depth
A guaranty can be unlimited, limited, or conditional, and the form you sign matters more than the word “guaranty” on the cover page. Read the actual document, because the scope is negotiated.
| Type | What it generally covers | Typical use |
|---|---|---|
| Unlimited | Full debt, plus collection costs | Common default form |
| Limited | A capped amount or share | Partner deals, stronger files |
| Conditional | Triggered only by listed events | Bad-act carve-outs |
A conditional guaranty usually springs into effect on specified conduct, such as fraud, misapplied insurance proceeds, or voluntary bankruptcy of the borrower. That is different from an ordinary payment default. Ask which events trigger personal recourse and which stay with the collateral.
Some commercial loans are labeled non-recourse yet carry these carve-outs. Hard money loans generally carry a guaranty, so plan on one unless the lender tells you otherwise.
Partner and Multi-Member Deals: Who Must Sign?
There is no single rule. The NCUA guide on business entity types says a lender should look for guarantees from principals holding a controlling interest, with room for exceptions when strong mitigating factors exist. Lenders in the network apply that idea with their own ownership thresholds.
A practical decision tree:
- Sole member: that person guarantees.
- Two or three active partners: each meaningful owner is commonly asked to sign. Some lenders accept one or a few members, depending on the operating agreement and lender policy.
- Silent money partner with a small stake: often not required to guarantee, but disclosed in the ownership documents.
- Layered ownership: the lender looks through to the individuals.
Watch one trap. Partners sometimes assume each guarantor owes only their ownership share. Under an unlimited joint guaranty, each may be liable for the whole balance. Settle that in writing among yourselves before closing, and ask whether a limited guaranty is on the table.
After You Sign: What the Guarantor Carries
The guaranty stays with you until the loan is paid off or refinanced. That affects more than the one deal.
- Other borrowing. Some entity-level loans with a guaranty show on personal credit and some do not. It depends on the lender, so do not count on either result.
- Judgment risk. If a deficiency is pursued and a judgment is entered, it can attach to the guarantor’s personal assets.
- Release. A guaranty is generally released when the loan is repaid in full. Refinancing into long-term financing typically replaces the old guaranty with whatever the new lender requires.
Since hard money terms run 6-18 months, interest-only, many investors refinance once the property is stabilized. Lendmire arranges that path into long-term DSCR financing, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Keeping the same LLC on title and the same individual as guarantor keeps the paperwork consistent. Lendmire’s complete DSCR loans guide explains how that second step works.
What Leverage Looks Like on an LLC File
Entity vesting does not change the leverage math. Across the network, fix-and-flip loans run up to 93% of project cost at 5+ completed projects, 90% at 2+, and 85% with fewer than 2, with every tier capped at 75% of after-repair value. Bridge purchases without rehab reach up to 80% of purchase price. Refinances run up to 65% of value. Loans go up to $5,000,000, larger by exception. All of this varies by lender, property, and experience.
Collateral is non-owner-occupied residential, 1-4 units, with ground-up construction to 10 units. Credit starts at 620, with added conditions below 660, and underwriting stays asset-based: property, plan, and exit.
Common Mistakes
- Signing the contract personally, then forming the LLC afterward.
- Letting the operating agreement and term sheet disagree on ownership percentages.
- Assuming the LLC makes the loan non-recourse.
- Skipping foreign qualification when the LLC was formed out of state.
- Closing personally and deeding to the LLC later.
- Guarantying without reading whether the form is unlimited or limited.
Is the guaranty worth signing? If the deal’s exit is clear and the leverage tier fits your experience, it is the normal cost of entity borrowing. If you are reaching for a tier your track record does not support, the issue is the deal structure, not the paperwork.
Tax treatment varies; consult a qualified professional. This article is not legal advice either, so speak with a qualified attorney or CPA about your own entity and guaranty terms.
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. It arranges these loans as a broker through select lenders in a network spanning 41 markets, including Washington, D.C.
Frequently Asked Questions
Do I need an LLC at all to get a hard money loan?
Not always, but most lenders prefer or require entity vesting on investment property. The LLC supports business-purpose classification and separates operating liability from your personal assets. Closing personally is sometimes possible, though it leaves the property’s liability with you directly.
If my LLC is the borrower, do I still sign personally?
Typically yes. The LLC signs the note, and one or more owners sign a separate guaranty. Whether every member signs depends on ownership percentages and the lender’s policy.
Does a guaranty mean the LLC no longer protects me?
Only as to that loan. The guaranty makes you liable for that debt beyond the LLC’s assets, but it does not by itself erase the separation between you and the entity for other claims, assuming the LLC is properly maintained.
Who gets underwritten, the LLC or the guarantor?
The guarantor. Credit, identity, and background are reviewed on the person, with a 620 minimum score and added conditions below 660. The property, plan, and exit are reviewed alongside.
Can I move the property into my LLC after closing?
It is risky. A transfer after closing can trigger the due-on-sale clause, and LLC transfers are not clearly protected. Decide vesting before the contract, or plan a refinance into the entity.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
3. NCUA Examiner’s Guide – Personal Guarantees
4. 12 U.S.C. § 1701j-3 (Garn-St Germain)
5. FedLaws – Garn-St Germain exceptions
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a Hard Money Lender Counts Your Current Income · How to Transfer an LLC-Owned Property Into a New LLC for Hard Money · Hard Money Contingency and Reserve Rules for High-Volume Flippers
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.