Hard money loans are a form of short-term, high-interest real estate financing often used by investors who need quick access to capital or don’t qualify for traditional loans. Unlike banks, which heavily scrutinize income, credit history, and debt-to-income ratio, hard money lenders focus on the asset itself—the value of the property—as their main form of collateral. This allows deals to be approved and funded quickly, sometimes in as little as 3–7 days.
These loans are especially common in fix-and-flip projects, where speed and flexibility matter more than cost. Because hard money loans carry more risk for lenders, they come with higher interest rates, typically between 8% and 15%, and shorter loan terms, usually 6 to 24 months. Investors who use hard money must have a clear exit strategy, such as selling the property or refinancing into a traditional mortgage once renovations are complete.
The application process for hard money is relatively streamlined, but it often requires a detailed plan, including purchase price, rehab budget, ARV (After Repair Value), and timelines. Hard money lenders may also require a significant down payment—often 20% to 30%—and charge additional fees such as origination points or servicing fees. Still, for seasoned investors, the speed and flexibility of hard money loans make them a powerful tool for turning over deals quickly and efficiently.