State reference
Does a hard money lender need a licence in Texas?
The trigger is the purpose of the loan, not the status of the lender.
TEXAS
Not established here - verify
We have not verified a business-purpose licensing requirement for this state, and we are not going to tell you there isn't one on that basis. Consumer- purpose lending is licensed essentially everywhere; business-purpose lending against investment property is exempt in many states but not all. Check with the regulator named below.
Texas draws the line more clearly than most. Lending against commercial and investment property is treated as business lending and is generally not licensed. Lending for consumer purposes, including against a primary residence, is licensed under Texas Finance Code chapter 342 and supervised by the Office of Consumer Credit Commissioner.
The consequence: what decides the answer is the purpose of the loan and the use of the property, not what the lender calls itself. A lender who is relaxed about documenting business purpose in Texas is creating a problem for both of you.
Who supervises this in Texas
Texas Office of Consumer Credit Commissioner (OCCC); Texas Department of Savings and Mortgage Lending. 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:
Is a loan secured by non-owner-occupied investment property in Texas, made for business purpose, exempt from chapter 342 licensing?
Ask the Texas Office of Consumer Credit Commissioner (OCCC); Texas Department of Savings and Mortgage Lending
Checking a lender operating in Texas
- Search the entity on NMLS Consumer Access. In Texas 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 Texas 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.