Hard money lenders in Washington: usury, licensing, foreclosure speed and costs
Washington in one sentence, from the lender’s chair: washington is a collateral-only state for residential hard money — no deficiency after a trustee sale of owner-occupied property — with a Foreclosure Fairness Act process that adds outreach and mediation steps to a five-to-nine-month sale timeline.
| Foreclosure process | Non-judicial |
|---|---|
| Typical time to sale | 5 to 9 months from first notice or filing |
| Post-sale redemption | Washington provides no right of redemption after a trustee’s sale. |
| Deficiency judgment | Barred after the usual sale |
| Usury | Washington’s usury cap — the greater of 12% or 4% above the Treasury bill rate — does not apply to business-purpose loans, so hard money loans for investment purposes are rate-unrestricted; the statute requires the business purpose to be real, and loans to individuals on their residences are scrutinized. |
| Transfer tax | Washington’s real estate excise tax (REET) is graduated — 1.1% on the portion of the price up to about $525,000, 1.28% up to about $1.5 million, and higher above — plus a local REET of 0.25% to 0.5%. |
| Median home price (approx.) | $600,000 · property tax about 0.87% |
Can a lender charge 12% in Washington? Usury and business-purpose exemptions
Washington’s usury cap — the greater of 12% or 4% above the Treasury bill rate — does not apply to business-purpose loans, so hard money loans for investment purposes are rate-unrestricted; the statute requires the business purpose to be real, and loans to individuals on their residences are scrutinized.
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.
Lender licensing
Washington requires a consumer loan company license for loans secured by residential property made to consumers; business-purpose loans to entities on non-owner-occupied property are generally exempt, and the Department of Financial Institutions administers licensing. Licensing is the first thing to verify — see vetting a lender — because advance-fee scams imitate licensed lenders.
If the deal fails: the Washington foreclosure path
Ask any hard money lender what they underwrite after the collateral and they will say the exit — and after the exit, the time it takes to get the property back. Washington runs a non-judicial process: Before issuing a notice of default on an owner-occupied home, the lender must send a pre-foreclosure options notice and, if the homeowner responds within 30 days, meet with them (the “meet and confer” step). The trustee then issues the notice of default (30 days), records the notice of sale at least 90 days before the sale, and sells the property — no sooner than 120 days after the notice of default. Expect 5 to 9 months to a sale in an ordinary case.
Washington provides no right of redemption after a trustee’s sale. After a judicial foreclosure, the borrower may redeem within eight months (twelve if the lender waived the deficiency), and may remain in the home during that time in some circumstances.
Washington bars a deficiency judgment after a trustee’s sale of owner-occupied residential property; the lender’s recovery is limited to the property. Deficiencies remain possible after a judicial foreclosure (at the cost of a redemption period) and in some non-owner-occupied or commercial situations. Full homeowner-side detail on our Washington foreclosure page; the investor-side consequences are in hard money default.
Transaction costs a flip pays twice
Washington’s real estate excise tax (REET) is graduated — 1.1% on the portion of the price up to about $525,000, 1.28% up to about $1.5 million, and higher above — plus a local REET of 0.25% to 0.5%. It is paid by the seller. Entry and exit costs are fixed; holding costs run with time. In Washington, property tax at roughly 0.87% of value (about $5,220 a year on $600,000) is the largest recurring one after interest.
With REET on the seller, Washington buyer closing costs — escrow, lender’s title policy, lender fees and prepaids — typically total 2% to 3% of the price; escrow companies handle closings.
Active markets for fix-and-flip and rentals in Washington
Seattle and King County, Tacoma and Pierce County, Spokane, Vancouver and the Tri-Cities are the investor markets; Seattle flips are high-priced and thin-margin, while Tacoma, Spokane and Vancouver offer lower entry points and steady rental demand.
Market notes describe where activity concentrates, not where profits are guaranteed; margins change with rates, inventory and competition. Underwrite each deal on its own comps.
Frequently asked questions
Is hard money lending legal in Washington?
Yes. Washington’s usury cap — the greater of 12% or 4% above the Treasury bill rate — does not apply to business-purpose loans, so hard money loans for investment purposes are rate-unrestricted; the statute requires the business purpose to be real, and loans to individuals on their residences are scrutinized. Washington requires a consumer loan company license for loans secured by residential property made to consumers; business-purpose loans to entities on non-owner-occupied property are generally exempt, and the Department of Financial Institutions administers licensing.
How fast can a hard money lender foreclose in Washington?
5 to 9 months is the usual range from first notice to sale; Washington uses a non-judicial process. Washington provides no right of redemption after a trustee’s sale.
What does a typical hard money loan cost in Washington?
Rates of 9% to 14% and 1 to 4 points are the national range. As an illustration only: $510,000 borrowed at 11% with 2 points for nine months is about $52,275 in interest and points, plus fees and carrying costs. See rates, points and LTV.
The playbook
- How hard money lenders evaluate ARV — and how to estimate it yourself
- 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
Other Washington pages: first-time home buyer programs in Washington · foreclosure in Washington.