Hard Money

Hard money is short-term, asset-based real estate financing. The loan is "hard" in two senses: backed by hard collateral (the property itself), and qualified primarily on hard data (the deal numbers) rather than soft borrower factors like income history.

Hard money is real estate's emergency lever — capital available fast for deals where conventional and DSCR financing won't work. Typically 6-12 month terms, higher rates than long-term financing, and tight underwriting focused on property and exit, not borrower income.

Hard money vs. bridge loan

The terms overlap heavily and are often used interchangeably. Some operators distinguish:

• Hard money: Slightly more aggressive — lends on distressed assets, foreclosures, and unrehabbed properties at higher rates. Often called "asset-based."
• Bridge loan: Slightly more conservative — lends on stabilized or near-stabilized properties at slightly lower rates. Bridges to permanent financing.

The categories blur. Both are short-term, asset-based, fast-close. Bridge loans tend to focus on commercial real estate; hard money tends to focus on residential investment properties. Functionally similar tools.

How hard money works

Three defining features:

1. Asset valuation drives the loan. Hard money lenders care about the property's value, condition, and exit strategy. Some don't pull credit at all. Most cap LTV at 65-75% of value.

2. Speed. Close in 5-10 business days. The fastest deals close in 3-5 days when title and survey are ready.

3. Short term. 6-12 months typical, sometimes extended to 18-24. Designed for repositioning, not long-term holds.

Pricing

• Rate: 10-13%, sometimes higher in distressed scenarios.
• Points: 2-4 points at closing.
• LTV: 65-75% of as-is value, or 70-80% of ARV on rehab loans.
• Interest-only payments: Standard. Principal due at exit.
• Prepayment terms: Some lenders charge prepayment penalty if loan is paid off in first 3-6 months.

When hard money is the right tool

Foreclosure auctions. Cash-or-cashier's-check at auction. Most lenders can't fund this fast. Hard money can.

Distressed REO acquisitions. Bank-owned properties often need fast close and don't qualify for conventional inspection-based financing.

Fix-and-flip. Short hold, fast turnover. Hard money lenders structure rehab draws into the loan — fund the acquisition + rehab as one product.

BRRRR acquisition phase. Use hard money to acquire and rehab. Refinance into DSCR at the end. Pay off hard money from refi proceeds.

Wholesale and assignment deals. When you've locked up a deal at a discount and need to close fast before reassigning or holding.

What hard money is NOT for

Hard money is expensive. It's the wrong tool for:

• Long-term holds (refinance into permanent financing as fast as possible)
• Deals that qualify for conventional or DSCR financing (those are cheaper)
• Deals where speed isn't critical and 30-45 day conventional close is acceptable
• Borrowers who can't articulate a clear exit strategy

Hard money pricing only makes sense when (a) the speed unlocks a deal you'd otherwise miss, or (b) the deal returns enough alpha to cover the financing premium. If neither applies, use a cheaper product.

Rate Hero's take

We offer hard money / bridge financing for investors doing BRRRR, fix-and-flip, and fast-close acquisitions. The advantage: we structure the entire deal — hard money acquisition, rehab draws, and DSCR refinance exit — as one continuous workflow.

For fix-and-flip specifically, we structure aggressive leverage — up to 90% LTC on qualified scenarios. That means 90% of total project cost (purchase + rehab) financed, leaving you with significantly less cash deployed per project. For experienced flippers running multiple deals, that capital efficiency directly translates to portfolio velocity.

That structure also means you're not scrambling for a refi lender at month 5 of a hard money loan with the clock ticking. Your exit is underwritten the day you close on the acquisition. Tell us about the deal and we'll tell you in one conversation whether hard money is the right tool or whether a different structure works better.