What Is a Hard Money Loan in Real Estate?

A hard money loan is a short-term, asset-based loan commonly used by real estate investors. Approval is based on the value of the property—not the borrower's income or credit—making it ideal for flips, rehabs, and fast-closing deals.

✅ How a Hard Money Loan Works

Hard money lenders focus on the investment property’s value, potential after-repair value (ARV), and the strength of the deal. These loans typically close quickly and require less documentation than traditional mortgages.

  • Based on property value and ARV
  • Fast approval and funding (often within days)
  • Ideal for fix-and-flip or rehab projects
  • Short loan terms (6–24 months typical)

💡 When a Hard Money Loan Makes Sense

Hard money loans are designed for investors who need fast, flexible funding or who are buying properties that do not qualify for traditional financing.

  • Fix-and-flip or BRRRR projects
  • Distressed or non-financeable properties
  • Investors needing quick closings
  • Short-term bridge financing
  • Borrowers who cannot qualify conventionally

Investors often combine hard money loans with DSCR loans or bridge loans for long-term strategies.

📉 Risks of Hard Money Loans

  • Higher interest rates compared to traditional loans
  • Short repayment periods
  • Higher points and fees at closing
  • Potential pressure to complete rehab quickly

Hard money is best suited for experienced investors who understand timelines, ARV calculations, and exit strategies.

🏠 Flipping a house or need fast funding for an investment purchase?

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