Dutch vs. Non-Dutch Loans Explained
What Real Estate Investors Need to Know Before Closing
When reviewing private or hard money loan terms, investors often see the phrase “Dutch” or “Non-Dutch” attached to points and fees. While the wording is simple, the impact on your cash-to-close, leverage, and deal structure can be significant.
At LVF Funding, we believe informed investors make stronger decisions—so here’s a clear breakdown.
What Does “Dutch” Mean in Private Lending?
A Dutch loan means the lender’s points, origination fees, and often prepaid interest are deducted from the loan proceeds at closing.
Example:
- Approved loan amount: $200,000
- Lender charges: 3 points ($6,000)
- Funds wired to borrower: $194,000
Why Investors Use Dutch Loans
- Lower cash required at closing
- Faster closings
- Ideal for fix & flip, bridge loans, and time-sensitive acquisitions
Consideration
Because fees are deducted from the loan, the effective cost of capital is higher, and you receive less usable cash at closing.
What Does “Non-Dutch” Mean?
A Non-Dutch loan means points and fees are paid out-of-pocket by the borrower at closing, not deducted from the loan proceeds.
Example:
- Approved loan amount: $200,000
- Lender charges: 3 points ($6,000)
- Borrower brings $6,000 to closing
- Funds wired to borrower: $200,000
Why Investors Prefer Non-Dutch
- Maximum leverage
- More working capital for rehab
- Lower effective cost of funds
- Ideal for JV structures, heavy rehabs, and 100% funding models
Consideration
Requires more cash at closing—but preserves full loan proceeds.
Dutch vs. Non-Dutch: Quick Comparison
| Feature | Dutch | Non-Dutch |
|---|---|---|
| Fees deducted from loan | Yes | No |
| Cash needed at closing | Lower | Higher |
| Net loan proceeds | Reduced | Full |
| Effective cost of capital | Higher | Lower |
| Best used for | Fix & Flip, Bridge | JV, Rehab-Heavy Deals |
How LVF Funding Helps Investors Choose the Right Structure
Many lenders allow deals to be structured Dutch or Non-Dutch—and the right choice depends on:
- Your cash position
- Rehab budget
- JV partner structure
- Speed vs. leverage priorities
At LVF Funding, we don’t just place loans—we structure them strategically to match your deal goals.
813-921-4481
www.lvffunding.com
Thinking About Your Next Deal?
If you’re reviewing terms or unsure which structure works best, we’ll walk you through the numbers and help you optimize leverage without overextending capital.
Contact LVF Funding today to structure your next private or hard money loan the smart way.