Hard Money Loan

Fast, asset-based financing for real estate investors who can't afford to wait on traditional lending.

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Everything you need to know about the Hard Money Loan in under 3 minutes

What is the Hard Money Loan?

A hard money loan is a short-term, real estate-backed loan funded by private lenders — not banks. Approval is based primarily on the property's value, not your credit score or income history. That means you can close in as little as a few days, making it ideal for time-sensitive deals like fix-and-flips, foreclosure auctions, or distressed property purchases where a traditional 30–45 day approval simply isn't an option. The trade-off is cost: rates run higher than conventional loans, and terms are short (typically 6–36 months), so you need a clear exit strategy — whether that's a sale, refinance, or rental income.

What are the benefits?

Speed to close — Funding in as little as 3–7 days versus 30–45 days with a bank.
Property-first approval — Qualification is based on the asset's value, not your credit profile or W-2s.
Flexible credit requirements — There's generally no minimum credit score; deal strength matters more.
Interest-only payment options — Keep monthly carrying costs low while your renovation is underway.
Access to distressed properties — Finance properties that traditional lenders won't touch due to condition.
Negotiable terms — Private lenders can customize loan structures that banks can't offer.

What are the requirements?

Property used as collateral (residential, commercial, or investment)
Loan-to-value (LTV) ratio typically 65%–80% of property value or after-repair value (ARV)
Down payment of 20%–35% in most cases
Clear exit strategy (sale, refinance, or rental income)
Basic property appraisal or valuation
Proof of funds for down payment and closing costs
Real estate investment experience (preferred by most lenders, required by some)
Origination fees of 1–3 points due at closing

Today’s Hard Money Loan rates

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Frequently Asked Questions

What interest rates should I expect on a hard money loan?
Hard money loan rates typically range from 8%–15%, depending on the lender, property type, your experience level, and the LTV ratio. First-position loans generally run 9.5%–12%; second-position loans are higher. Rates are above conventional mortgages but reflect the speed and flexibility offered.
Do I need good credit to qualify?
Not necessarily. Most hard money lenders focus on the property’s value and your exit strategy rather than your FICO score. Some lenders set a minimum around 600–680, while others fund deals with no minimum at all. Your credit may influence the rate you’re offered, but it’s rarely a dealbreaker.
How fast can I actually close?
Most hard money loans close in 3–14 days — dramatically faster than the 30–45 days typical of conventional financing. This speed is one of the primary reasons investors use hard money for auctions, off-market deals, and competitive offers.
What happens if I can't repay the loan on time?
If you miss your repayment deadline, the lender has the legal right to foreclose on the property used as collateral. Many lenders offer 3–6 month extensions for borrowers making progress on their exit strategy, usually at an additional 1–2 points plus continued interest. Always contact your lender early if the timeline shifts.
Can I use a hard money loan to buy a primary residence?
It’s possible, but generally not recommended. Hard money is designed for investment scenarios — high rates, short terms, and large down payments make it a poor fit for a home you plan to live in long-term. Consumer protection laws also impose additional requirements on owner-occupied hard money loans. Conventional, FHA, or VA loans are better options for a primary residence.

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