Other Money Resources Are Not Available. A borrower may not qualify for an institutional mortgage loan for reasons ranging from low borrower credit scores or too much borrower debt. Further, the property itself may not support the type of loan the borrower wants: Many institutional lenders will not loan amounts under $500,000 and will not lend second lien money even if there is significant equity in the property.

In these cases private mortgage lenders may be the only available resource. Institutional lenders are concerned with both the appraised value of the property and borrower and property credit; however, private mortgage lenders are concerned only with the appraised value, as long as it represents a fair market price. Hence, if a property is producing or can produce sufficient income to pay the note and the value of the property will provide sufficient equity, the borrower's credit is not an issue for the private mortgage lender.