State reference
Does a hard money lender need a licence in California?
California licenses private lending regardless of loan purpose, and the licence takes the best part of a year to obtain.
CALIFORNIA
Licence required, all property types
A licence is required to make these loans in this state even when the loan is business purpose and secured by investment property. This is the group where an unlicensed lender is a straightforward problem.
California is the strictest of the six. A lender making these loans needs either a California Financing Law (CFL) licence from the Department of Financial Protection and Innovation, or a real estate broker licence from the Department of Real Estate. The business-purpose exemption that private lenders rely on in most states does not get them out of it.
The practical consequence for you: CFL licensing has been running 10 to 12 months. A lender who is not licensed cannot simply apply and be ready for your closing, which means an unlicensed lender quoting you a California deal is not a paperwork problem you can wait out.
Who supervises this in California
California Department of Financial Protection and Innovation (DFPI); California Department of Real Estate (DRE). Regulator names change; the CSBS directory is the authoritative list, and NMLS Consumer Access is where you check a specific company.
The exact question to ask
Regulators answer this for free, and a narrow question gets a useful answer where a broad one does not. Send or say this:
Does making a business-purpose loan secured by non-owner-occupied residential property in California require a CFL licence or a DRE broker licence?
Ask the California Department of Financial Protection and Innovation (DFPI); California Department of Real Estate (DRE)
Checking a lender operating in California
- Search the entity on NMLS Consumer Access. In California a lender claiming to be licensed who is not listed has answered your question.
- Confirm the entity is registered and in good standing with the California Secretary of State.
- Search the county recorder's grantee index where the property sits, for liens they have actually recorded. Free, public, and the most under-used check available.
- Ask the regulator the question above.
- Never send money anywhere except a licensed title or escrow company — see advance-fee loan scams.
Questions people actually ask
Do you need a license to be a hard money lender?
It depends entirely on the state and on the purpose of the loan, and this is one of the most commonly misstated facts in the whole vertical. Broadly: business-purpose loans secured by investment property are exempt from most consumer mortgage licensing in many states, while several states license this activity regardless of purpose, and a loan secured by a borrower's own home is a different regulatory animal almost everywhere.
We are not going to publish a fifty-state answer we have not verified state by state - that research is underway and will be published with citations. In the meantime, the reliable move is to check the specific entity on NMLS Consumer Access and ask the state regulator directly. Here is how.
What are the requirements for a hard money lender?
As a matter of law, whatever the state where the property sits requires - which varies from nothing beyond ordinary business registration to full mortgage lender licensing with bonding and examination. As a matter of practice, a legitimate lender will have a registered entity, a real address, named principals, a track record you can verify, and no objection to you checking any of it.
Which states require a license for commercial lending?
Commercial and business-purpose lending licensing is genuinely inconsistent across states, and the answer also turns on whether the loan is secured by a dwelling, who the borrower is, and whether a broker is involved. Rather than guess, verify the entity on NMLS and contact the state regulator - our state regulators guide shows the process.