Understanding Private Lending Vs. Conventional Lending

When you're buying or investing in real estate, the right loan type can make-or-break your investment. Whether you're a first-time buyer or a seasoned pro, understanding the difference between private money lending and conventional lending is key to securing the right financial strategy for your goals.

We see a lot of investors and buyers come to us at Keyswag Lending for customized Loan Options. That's because we understand that every situation is unique-and so is every loan.

What Is Conventional Lending?

Let's start with conventional lending. Conventional loans are the traditional mortgage products issued by banks, credit unions and government-backed agencies. They're ideal for borrowers with strong credit, verifiable income and a steady employment history.

You'll typically find lower interest rates with these loans, but you'll need to provide full income and credit verification. Conventional Loans are usually fixed-rate or adjustable-rate options and are used for primary residences or long-term investments.

That's not to say conventional loans are the best fit for everyone. Because they follow strict underwriting guidelines, they may not be suitable for investors who need to close deals quickly or buyers with less-than-perfect credit.

If you're curious about our conventional loans process-we can simplify every step.

2. What Is Private Lending?

Private lending, on the other hand, is real estate financing provided by private investors or non-institutional lenders. They're commonly used by real estate investors for short-term, high-speed deals.

Private lending offers quick approval-often within days-and flexible loan terms and documentation requirements. That makes it ideal for flips, renovations or urgent closings.

We offer a range of hard money/bridge loans tailored for real estate pros and time-sensitive projects.

Key Differences Between Private and Conventional Loans

So what's the main difference between private and conventional lending? Here are the key distinctions:

• Source: Private individuals or companies vs. banks and financial institutions
• Approval Basis: Asset-based vs. income, credit, debt-to-income ratio
• Speed: Fast (1-10 days) vs. slower (30-45 days)
• Interest Rates: Higher (7-12%+) vs. lower (3-7% on average)
• Documentation: Low-doc or no-doc vs. full-doc required
• Loan Terms: Short-term (6-36 months) vs. long-term (15-30 years)

If you're unsure which option is best, check out our interactive Loan Rate Calculator or our Mortgage Calculator to run scenarios based on your needs.

Pros and Cons of Private Lending

Private loans can offer tremendous advantages-but they're not for everyone. Here's the upside and potential drawbacks:

Pros: Quick closing times, minimal paperwork, ideal for low-credit or high-leverage situations, flexible structuring options.

Cons: Higher interest rates, shorter repayment timelines, more risk for long-term buyers.

Use private lending when you need speed and are planning a fix-and-flip, cash-out refinance or time-sensitive purchase.

Pros and Cons of Conventional Lending

Conventional loans offer stability and long-term benefits-but come with more red tape. Pros include lower interest rates, longer repayment terms, more predictable monthly payments and being good for primary and secondary homes. Cons include slower to fund, strict documentation and credit requirements and not ideal for fast closings or complex investment projects.

How to Choose the Right Option

The right financing depends on your goals, credit profile and project scope. Ask yourself: Do I need to close quickly? Is this an investment property or a primary residence? Am I optimizing for rate or speed? What's my credit and income documentation like?

Choose private lending if you need funds fast, are working on an investment property or don't qualify traditionally. Choose conventional lending if you have time to wait, want low rates and meet bank requirements.

Whether you're investing in Seattle or buying your first home in Riverside, Keyswag Lending is here to guide you through that process.

Final Thoughts: Why Partner with Keyswag Lending?

At Keyswag Lending, we know that every homebuyer and real estate investor is different. That's why our loan experts are equipped to handle both traditional homebuyers and investors. We offer a wide range of lending options: bank-rate mortgages, fast-close private funding and everything in between.

What sets us apart?

• Extensive experience in both lending models (and the expertise to show for it)
• Custom Loan Options tailored to your short- and long-term goal
• Dedicated local experts in multiple Service Areas‍
• No surprises: transparent rates, no hidden fees and fast decisions

You can learn more about our story, values and the clients we've helped succeed on our About Us page.

We'd love to get started with you. Contact Keyswag Lending today and we'll match you with the right loan for your needs. Whether you're flipping a property, buying your dream home or building your real estate portfolio—we're here to support you every step of the way.