What Is a Hard Money Loan? Rates, Requirements and How It Works

A hard money loan is a short-term loan secured by real estate. The name comes from the collateral: a hard asset, the property itself, rather than the borrower's income. It comes from a private lender, not a bank, and it's approved mainly on the property's value and the borrower's plan for it.

Terms usually run from a few months to a couple of years. Real estate investors use hard money to buy and renovate houses, to bridge a fast purchase, to build, and to carry a property until it sells or qualifies for long-term financing. You'll also hear it called private money, bridge money or a rehab loan, depending on the job it's doing.

A hard money loan runs on a simple loop. The lender funds the purchase and, if the plan includes one, the renovation. You pay interest each month while you hold the property. You pay the whole balance off when you sell or refinance. Because the lender's security is the property, the review is about the deal: what the property is worth now, what it will be worth when the plan is done, and how you will exit. From the first call to payoff, the steps look like this:

You find a house for $200,000 that needs $50,000 of work and should be worth about $320,000 when it's done. Our fix and flip program funds up to 90% of the purchase price, which is $180,000, and up to 100% of the rehab budget, which is $50,000, for a $230,000 loan if the deal qualifies. You bring the remaining $20,000 plus closing costs.

Payments are interest-only. At our starting rate of 8.99%, interest on the full $230,000 comes to about $1,723 a month, and less than that while part of the rehab money is still waiting to be drawn. If you sell after eight months, you've paid about $13,800 in interest, you pay off the $230,000, and the rest of the sale price is yours.

Hard money costs more than a bank loan because it's faster, shorter and riskier for the lender. Our fix and flip and bridge loans start from 8.99%, and ground-up construction starts from 9.75%, as of October 2026. Your rate depends on the property, the plan and your experience.

On top of the rate, most hard money lenders charge origination points, each point being 1% of the loan amount, plus the usual closing costs for the appraisal, title and legal work. Because payments are interest-only, a hard money loan is cheap to carry for a few months and expensive to carry for years, which is why it's built to be paid off. Our short-term loans have no prepayment penalty, so paying off early never costs extra.

Hard money lenders underwrite the deal, so the requirements are about the deal:

Flipping houses is the classic use: buy, renovate, sell. Bridge loans cover a fast purchase, an auction, or a closing that's about to fall through because the buyer's mortgage died. Construction loans fund ground-up builds. And the first half of the BRRRR strategy, buy and renovate, usually runs on hard money before the investor refinances into a DSCR rental loan to hold the property.

Hard money also works for apartment and mixed-use buildings that need repositioning before they qualify for long-term financing.

The advantages are speed and flexibility:

Hard money and private money overlap. Both come from private lenders rather than banks, and both are secured by the property. "Hard money" usually means a lender like us that funds many loans on set programs, while "private money" can also mean an individual lending their own funds on a handshake. We're a private lender that makes hard money loans.

A bank loan is the opposite in almost every way. It's cheaper, it takes 30 to 60 days or more, it qualifies you on your income and debts, and it won't fund a property that needs major work. Investors use banks and DSCR loans for the long hold, and hard money for the short, fast part of the deal.

Getting a hard money loan is simpler than getting a mortgage: