Hard money lenders in Pennsylvania: usury, licensing, foreclosure speed and costs
Pennsylvania in one sentence, from the lender’s chair: pennsylvania’s transfer tax — 2% statewide, over 4% in Philadelphia, split by custom — is the hard money investor’s silent cost on every flip, and a six-to-fourteen-month judicial foreclosure with a six-month fair-value deficiency deadline shapes how lenders price default risk.
| Foreclosure process | Judicial |
|---|---|
| Typical time to sale | 6 to 14 months from first notice or filing |
| Post-sale redemption | Pennsylvania has no statutory right of redemption after the sheriff’s sale. |
| Deficiency judgment | Allowed, with limits |
| Usury | Pennsylvania’s 6% general limit (Act 6) does not apply to business loans above $10,000, to loans above $50,000, or to loans secured by real estate other than residential owner-occupied property under certain thresholds; hard money lenders operate under the business and loan-size exemptions with contractual freedom on rate. |
| Transfer tax | Pennsylvania’s realty transfer tax is 2% in most of the state (1% state plus 1% local), customarily split equally between buyer and seller; Philadelphia’s local rate is higher, bringing the total there above 4%. |
| Median home price (approx.) | $270,000 · property tax about 1.49% |
Pennsylvania usury law and the business-purpose loan
Pennsylvania’s 6% general limit (Act 6) does not apply to business loans above $10,000, to loans above $50,000, or to loans secured by real estate other than residential owner-occupied property under certain thresholds; hard money lenders operate under the business and loan-size exemptions with contractual freedom on rate.
Usury statutes are amended and interpreted by courts; this is an orientation, not a legal opinion. Any loan structured near a cap should be reviewed by a lawyer licensed in the state.
Do hard money lenders need a license in Pennsylvania?
Pennsylvania requires a mortgage lender license under the Mortgage Licensing Act for loans secured by residential property, and the Department of Banking and Securities applies it to many business-purpose loans on one-to-four family property unless the lender makes very few loans; commercial property lending is exempt. Licensing is the first thing to verify — see vetting a lender — because advance-fee scams imitate licensed lenders.
How fast a lender gets the property back in Pennsylvania
In Pennsylvania the lender’s path after a default is judicial. Pennsylvania foreclosures are filed in the court of common pleas. Before filing, the lender must send the combined Act 6 and Act 91 notices giving the homeowner at least 30 days to cure the default and to apply for HEMAP assistance through a counseling agency. After judgment, the sheriff advertises and sells the property; Philadelphia and several other counties require a conciliation conference before the case proceeds. Budget 6 to 14 months from the first formal step to the sale — the number that explains much of the state’s hard money pricing.
Pennsylvania has no statutory right of redemption after the sheriff’s sale. The homeowner may cure the default (up to three times in the life of the loan) until one hour before the sale by paying the arrears and costs.
After a sheriff’s sale where the lender bought the property, Pennsylvania’s Deficiency Judgment Act requires the lender to petition the court to fix the fair market value of the property; the borrower is credited with that value, not the sale price, and any deficiency is the remainder. For the borrower’s protections and the full process, read the Pennsylvania foreclosure page; for the lender-borrower dynamics at default, this guide.
Transfer taxes, property taxes and closing costs in Pennsylvania
Pennsylvania’s realty transfer tax is 2% in most of the state (1% state plus 1% local), customarily split equally between buyer and seller; Philadelphia’s local rate is higher, bringing the total there above 4%. Budget the transfer cost at purchase and again at sale, then Pennsylvania’s property tax at about 1.49% a year ($4,023 on the $270,000 median) prorated for the months you hold.
The buyer’s 1% (or 2% in Philadelphia) share of the transfer tax makes Pennsylvania one of the costlier states to close in; total buyer costs commonly run 4% to 5% of the price including title and lender fees.
Pennsylvania investor markets
Philadelphia is a major national investor market — row houses at low prices with high block-by-block variance — with Pittsburgh, Allentown, Harrisburg, Lancaster, Reading and Scranton as active secondary markets; out-of-state rental investors are a large presence in both big cities.
Treat this as a starting list for research, not a recommendation. Every metro above has neighborhoods where flips lose money.
Frequently asked questions
Is hard money lending legal in Pennsylvania?
Yes. Pennsylvania’s 6% general limit (Act 6) does not apply to business loans above $10,000, to loans above $50,000, or to loans secured by real estate other than residential owner-occupied property under certain thresholds; hard money lenders operate under the business and loan-size exemptions with contractual freedom on rate. Pennsylvania requires a mortgage lender license under the Mortgage Licensing Act for loans secured by residential property, and the Department of Banking and Securities applies it to many business-purpose loans on one-to-four family property unless the lender makes very few loans; commercial property lending is exempt.
How fast can a hard money lender foreclose in Pennsylvania?
Typically 6 to 14 months from the first formal notice or filing to the sale, under a judicial process. Pennsylvania has no statutory right of redemption after the sheriff’s sale.
What does a typical hard money loan cost in Pennsylvania?
Rates of 9% to 14% and 1 to 4 points are the national range. As an illustration only: $229,500 borrowed at 11% with 2 points for nine months is about $23,526 in interest and points, plus fees and carrying costs. See rates, points and LTV.
The playbook
- Hard money exit strategies: sell, refinance, or hold — and the plan B
- Hard money default: what happens, how fast, and how to avoid it
- Private money vs hard money: individuals, funds and what each expects
- Hard money for land and commercial property: lower leverage, longer exits
Other Pennsylvania pages: first-time home buyer programs in Pennsylvania · foreclosure in Pennsylvania.