Hard money lending in Ohio

This page covers four things about borrowing hard money in Ohio: whether the lender needs a licence, what actually decides whether your rate is lawful, how federal preemption interacts with it, and how long deals take here. Every figure shows the statute or dataset it came from.

Does a lender need a licence in Ohio?

Ohio is the most explicit of any state we have sourced. A residential mortgage loan made to a borrower for the purpose of investing in a dwelling to lease, rent or resell for profit is a business-purpose loan and is not subject to the Residential Mortgage Lending Act - unless the borrower or an immediate family member will occupy the dwelling, or one unit of a two-to-four-unit property. That occupancy carve-out is the trap: put a family member in one unit of a duplex and the licensing rules come back.

What decides whether a rate is legal in Ohio

Almost every site publishing on this topic gives you one number per state. That number is close to meaningless on its own. A rate that is lawful for one lender in Ohio can be unlawful for another on the same day, on the same property, because four separate questions decide which body of law applies to your loan.

Purpose

Many states remove the usury defence entirely for business-purpose loans. Washington is the clean example: under RCW 19.52.080 a borrower on a loan made primarily for a commercial, agricultural, investment or business purpose may not claim a defence of usury. This is why every hard money lender makes you sign a business-purpose affidavit.

Borrower

Several states exempt entity borrowers from some or all of the cap. In New York a corporation or LLC cannot assert the 16% civil usury defence at all, though the 25% criminal ceiling still applies. This is the other half of why lenders insist on title vesting in an LLC.

Lender

Licensed lenders frequently operate under their own rate statute rather than the general cap. California is the sharpest case: a loan made or arranged by a licensed real estate broker and secured by real property is exempt from the constitutional rate limit outright, under Civil Code §1916.1.

Lien position

If it is, federal law may preempt the state rate limit entirely under 12 U.S.C. §1735f-7a. A great many hard money loans are first-lien residential, so this gate is live far more often than borrowers realise.

Rate limits in Ohio

The 8% cap stops applying once the principal passes $100,000.

Ohio Rev. Code §1343.01(A) lets parties stipulate for interest at any rate not exceeding eight per cent per annum. Division (B) then disapplies that ceiling in a list of cases, and the one that matters most for hard money is size: a party may agree to a higher rate where the original principal exceeds $100,000.

That threshold does a lot of work here, because a large share of hard money loans clear it comfortably. Below it, the 8% ceiling is a real constraint and you should expect the lender to be relying on one of the other exemptions rather than on rate alone.

There is also a separate ceiling for a loan secured by a mortgage, deed of trust or land installment contract on real estate that does not otherwise qualify for exemption: the rate may not exceed eight per cent above the discount rate on ninety-day commercial paper at the Federal Reserve Bank in the Fourth Federal Reserve District at the time the instrument is executed.

Ohio is also the state with the clearest licensing carve-out we have found - see the licensing section above.

• Ohio Rev. Code §1343.01

Federal preemption, and the distinction nearly everyone gets wrong

Two different provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980 are routinely written about as if they were one. They are not, and only one of them normally touches a hard money loan.

Section 501 — 12 U.S.C. §1735f-7a

Preempts state limits on the rate, discount points, finance charges and other charges on a loan secured by a first lien on residential real property, made after 31 March 1980, that meets the federally related mortgage loan definition. This one can apply to hard money, because a great many hard money loans are exactly that. States had until 1 April 1983 to opt out.

Section 521 — 12 U.S.C. §1831d

Lets federally insured state-chartered banks charge the rate allowed where the bank is located, and export it. Hard money lenders are generally not banks, so this provision usually has nothing to do with your loan, despite how often it is cited in articles about private lending.

Who supervises this in Ohio

Ohio Department of Commerce, Division of Financial Institutions. Regulator names change; the CSBS directory is the authoritative list, and NMLS Consumer Access is where you check a specific company for free.

How long deals actually take in Ohio

Hard money is priced by the month, so the exit timeline is the cost driver. Median days on market below is measured from Redfin's county-level sales data for single-family homes (May 2026). The term column adds a five-month renovation and 45 days for your buyer to close, which is the part borrowers routinely leave out of the term they request.

Before you sign in Ohio

1. Confirm the licence, or confirm on the record that none is required for this loan type. How to verify a lender.
2. Establish which of the four gates your loan goes through, because that decides which rate limit applies.
3. Score your term sheet against the 14 red flags.
4. Price the loan on total cost, not rate. True-cost calculator.