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When you decide to invest in real estate, you may immediately seek out a traditional mortgage lender like a bank or credit union, but they may not have the terms and rates that you need. In this instance, private mortgage lenders like Visio Lending are an excellent option. We can provide property investors, including self-employed borrowers, with competitive interest rates and advantageous loan terms.

Today, we'll discuss how a private lender differs from a traditional financial institution and the benefits of working with private lending companies for your real estate needs. 



What are private lenders?

Private lenders are companies or individuals that loan money but are not part of a bank or are affiliated with a federal government agency, enabling them to offer more flexible loan terms. In this context, the adjective "private" does not connote that the company is privately held. There are private lenders that are publicly traded companies. 

Types of Loans Issued by Private Lenders

The most common types of private loans are personal, business, and real estate.

  • Private personal lenders make a variety of term loans to finance consumer purchases that you might otherwise finance on a credit card. For example, these lenders might provide you with a loan to finance your wedding or a vacation. A personal private loan is a personal finance tool ideal for borrowers with a strong credit history who can afford a monthly payment.
  • Private business lenders offer a variety of different types of financing products to help you grow your business, such as hard money lenders who provide short-term business loans. You might use this type of financing to buy business equipment or to finance your inventory or accounts receivable. Private business money loans are easier to obtain than a loan from a traditional lender.
  • Private mortgage lenders can offer a variety of non-standard mortgage products ranging from extra large home loans to loans for investment properties, including vacation rental properties and commercial properties. Real estate investors have an easier time obtaining private real estate loans than they would a conventional loan from a traditional mortgage lender.

private lenders explained


Visio Lending is a private mortgage lender that specializes in financing single-family rental properties, including vacation rentals. Because we're not part of a bank and don't lend on government programs, we can offer loan products with features and loan terms that meet the unique needs of real estate investors.

What are private mortgages?

A private mortgage is an arrangement between a borrower and a private lender who agrees to fund a business transaction. The borrower pays back with interest through a monthly payment, as they would with conventional loans. All parties involved will agree to the loan term, interest rate, and penalties if a borrower defaults, which is then finalized in a promissory note.

Most private lenders are companies with access to a large amount of funds, but they may also be real estate investors or other industry professionals. Even family members or people with whom you have a personal relationship may be considered private money lenders if they front the initial cost of an investment and are paid back through monthly payments, whose terms will be outlined in a mortgage note. This is also known as a non-arm's-length transaction.

Private loans can be used for a variety of real estate needs, such as upfront purchases or repair costs. You can also get construction and renovation loans if you want to build or renovate a property.

Companies that offer private mortgages can make up their own lending guidelines, including their application process and requirements, though they are still bound to some federal standards in regard to what they can charge. Many private lenders will specialize in certain industries. For example, Visio Lending works exclusively with real estate investors, so we have more in-depth knowledge than lenders who generalize. 

Private Mortgage Lenders vs. Traditional Mortgage Lenders

Private real estate loans are more flexible and customized, as a private lender will have more leeway on what they will accept. Traditional banks have very strict guidelines on who they will lend to and on what terms, as they are bound by regulatory standards, such as the applicable federal rate. They also tend to be more risk-averse, so they won't lend to those with low credit scores or a high debt-to-income ratio. 

Furthermore, the traditional loan from a financial institution is geared more toward residential home buyers rather than income-producing properties, so their underwriting process involves extensive research into your personal finances. This can put self-employed borrowers at risk of being denied, as they won't have the documentation that traditional lenders seek, like pay stubs and W2s.


Private Mortgage Lender Pros and Cons

Private money loans are easier to qualify for and have more flexible loan terms than other loan types. However, a private mortgage also has a higher interest rate and fewer protections than a traditional mortgage.

Further, private lenders create their own guidelines and processes, and therefore have more flexibility compared to traditional lenders. For instance, a private lender could be a family member lending their own money with their own payment schedule. A traditional lender is going to lack flexibility yet have fewer risks. 


pros and cons of private loans



Private Lender Use Cases 

As we have reiterated, a traditional home loan is more affordable and less risky than a private loan. There are, however, some use cases where working with private lenders makes the most sense.

Here are some borrower types who should work with a private lender:

  • Borrowers with poor credit history: Private lenders can lend on their own criteria and determine your financial situation at their discretion.

  • Borrowers looking for personal money:  Often, if you need money for a car or a wedding a family member may be willing to give you the best terms.

  • Borrowers looking to grow their portfolio of rental properties: For professional investors with multiple mortgaged rentals, the requirements for a traditional home loan or financing from a bank may be too stringent.


How to Get a Private Mortgage

Private mortgages have a very similar process to those from traditional lenders. You'll complete an application and undergo a credit check. The private mortgage lender will then inform you as to how much you can borrow from them and on what terms. You'll sign a contract, which will tell you your interest rate, how much you will need to pay each month, and how long the loan will last.

As with traditional lenders, the private mortgage lender will place a lien on your property, meaning that they can repossess it should you fail to pay. Your private lender will also have the right to demand full payment on your outstanding balance if you fail to make your payments. As they are not bound by the same standards as banks, you have fewer protections should your financial situation change and you're no longer able to pay off your loan. This goes both ways, however: a private mortgage is also riskier for the lender, so they will charge higher rates.

Find a Private Mortgage Lender

You will need a private mortgage lender who can offer a streamlined application process, low interest rates, and fast closing time. Given that you have less protection when applying for a private mortgage, review the lender carefully. Visio Lending is one of the largest, most reputable lenders in the US. Our closing time is also as short as weeks, not months. Finally, we are transparent about our rates, so you will not have any surprises. 

Agree on the Terms

As private money lenders are more flexible, you can negotiate the terms such as the length of your loan, interest rates, and down payment. However, each of these factors affects the others, so make sure you understand how changing any of them will influence the affordability of your loan.

Consult a Real Estate Expert

It's generally important to work with a real estate attorney for any real estate transaction — but this is especially true for private mortgages, as you need to ensure the stipulations match your needs.

Assemble Your Paperwork

While a traditional lender requires extensive documentation and insight into your personal finances, private money lenders such as Visio require only the essentials. Visio Lending requires the following:

  • One form of ID for each borrower and guarantor
  • Voided check
  • A title company contact
  • Insurance declarations page
  • Entity Documents
  • Condo HOA contact information (if applicable)
  • Current lender information (for refinances)
  • Purchase contract and any addendums (for purchases)

Even if you’re borrowing from a friend or family member, ensure you have the right documentation, such as a promissory note and a mortgage deed that entitles the lender to take the property that secures the loan in case the borrower defaults or passes away. Also, you’ll need to register the loan and deed with the IRS and local authorities.

Apply for a Loan

Once you're ready to seek financing, you can start the application process. 



Why Choose Visio Lending for Your Private Mortgage

Direct, Private Money for Rental Properties

Visio Lending has originated over $2.8 billion in private mortgages for rental properties, more than anyone else in the United States. Our leading loan products, proven process, and substantial experience simply cannot be matched. Let’s take a deeper dive into what makes us a superior private mortgage choice for investors:

  • Direct lender: While most lenders resell someone else’s loan product, Visio is one of very few direct lenders to real estate investors. By cutting out the middlemen (yes, plural, as in more than one of them), you get a better loan product and a smoother borrowing experience.

  • Insurance: Insurance on a rental property is quite different from your personal home. Even many insurance agents who don’t regularly deal with rental properties don’t understand the nuances. Visio’s internal experts can help you properly insure your rental property investment.

  • Vacation Rentals: Visio is one of the leading financiers in the U.S. of vacation rental properties. Underwriting these properties for permanent mortgage finance is more of an art than a science. Nonetheless, Visio has developed a proven methodology to underwrite these properties to get you the best terms possible while also writing a responsible private mortgage loan. 



Our Private Mortgage Features

We offer private mortgages with: 

  • Full 30 year terms, no balloons

  • Streamlined qualification process emphasizing property cash flow

  • No tax returns or employment verification required

  • Up to 80% LTVs

  • Simple haggle-free pricing you can depend on

  • Protect your identity and other assets by borrowing in a corporate entity

Contact Us to Start Your Loan

Private Lender FAQ

As stated above, private lenders loan money but are not part of a bank or affiliated with a government agency, which means that they can offer more flexible loan terms.


If you look hard enough, you can find a private mortgage lender that will finance just about any property type. Most private lenders have some exclusions such as manufactured homes, log cabins, geodesic homes, group or board homes, etc. But for each of those exclusions, you typically can find a specialized lender that has a program for that product category.


Private real estate loans are ideal for self-employed borrowers who cannot fully document stable personal income to meet the stringent requirements of banks and agency lenders. They are also for investors looking to rapidly grow a portfolio of rental properties and have maxed out their agency financing. 


Private lenders can provide more customized loan options, and they have looser requirements for borrowers. If you want to purchase a well-performing property but don't meet the stipulations for a traditional bank loan, you can still get the funding you need. You can also negotiate your terms more than with a corporate bank. Also, private mortgage lenders can fund more properties in a single loan because they're not beholden to Fannie Mae guidelines. This makes them useful if you want to expand your portfolio quickly.

Will a private mortgage work for you? You can contact us today to learn more about Visio Lending's options. We look forward to helping you fund the real estate investment of your dreams.