Hard Money Loan Explained
A Hard Money Loan is a short‑term real estate loan based primarily on the property’s value—not the borrower’s income or credit. These loans are commonly used by investors who need fast funding for flips, renovations, or time‑sensitive deals.
How Hard Money Loans Work
Hard money lenders focus on the property’s after‑repair value (ARV) and the strength of the deal. Approval is based on collateral, not traditional income documentation.
Who Hard Money Loans Are For
- Real estate investors
- House flippers
- BRRRR investors
- Buyers needing fast closings
- Borrowers with limited documentation
- Investors purchasing distressed properties
What Lenders Look At
- Property value and condition
- After‑repair value (ARV)
- Renovation budget
- Investor experience
- Exit strategy (sell or refinance)
- Down payment or equity
Basic Requirements
- 10%–30% down payment
- 600+ credit score (varies by lender)
- Strong property collateral
- Clear renovation plan
- Short‑term loan (usually 6–24 months)
Loan Structure
- Interest‑only payments
- Higher interest rates than traditional loans
- Points charged upfront
- Quick approvals (often 24–48 hours)
- Fast closings (as little as 5–10 days)
Property Types Allowed
- Single‑family homes
- Condos and townhomes
- 2–4 unit properties
- Multi‑unit investment properties
- Distressed or fixer‑upper homes
Benefits
- Extremely fast funding
- Flexible guidelines
- Minimal documentation
- Ideal for flips and BRRRR
- Approval based on property value, not income
Next Steps
If you’re an investor needing fast financing for a flip or renovation project, a Hard Money Loan may be the best option. Review the property’s ARV, prepare your renovation plan, and compare lender terms before applying.
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