The short answer: A hard money loan is short-term, asset-based financing from a private lender, secured by real estate and underwritten mainly on the property's value rather than your income. Investors use them to move fast on deals — purchases, rehabs, and repositions — accepting higher rates (often 9.5%–15%) and a short term (usually 6–24 months) in exchange for speed and flexible qualifying. The property is the collateral, so a strong deal can carry a borrower a bank would decline.
Hard money is the engine behind a lot of real estate investing. Here's what it is, how it's priced, and when it's the right tool. To run a deal by us, reach out or apply now.
What "hard money" actually means
The "hard" refers to the hard asset — the real estate — backing the loan. Instead of underwriting your tax returns and job history, a hard money lender focuses on the property's value (and often its after-repair value, or ARV) and your equity in the deal. That makes hard money fast and flexible, and a fit for borrowers or properties that don't fit conventional guidelines.
How hard money loans work
- Short term — commonly 6–24 months, designed to be repaid via sale or refinance.
- Asset-based — sized on the property's value/ARV and your down payment, not your income.
- Fast — far quicker to close than a bank, which is the main appeal.
- Interest-only — many are structured interest-only, with a balloon at the end.
- Higher cost — rates often 9.5%–15% plus points, reflecting speed and risk.
Common uses
Hard money is popular for fix-and-flip projects, bridge situations, quick purchases, and deals a bank won't touch on a bank's timeline. For a step-by-step on flips, see how to get a fix-and-flip loan.
Pros and cons
Pros: speed, flexible qualifying, asset-based (income docs matter less), and financing for properties or borrowers banks decline. Cons: higher rates and points, short terms that demand a clear exit, and meaningful down payment/equity. Hard money is a tool for a specific job — fast, short-term deals — not long-term hold financing. When the project stabilizes, investors typically refinance into a DSCR or conventional loan.
How Market Capital Lending helps
We arrange hard money and asset-based financing through a network of 40–50 lenders, with 40+ years of experience and $375M+ funded — so we can match your deal to a lender with the right leverage, speed, and pricing, and keep the closing on track. Explore hard money loans and fix-and-flip loans, or start your application. (Rates, approval, and terms vary by credit, collateral, experience, loan amount, and underwriting.)
Frequently asked questions
How is a hard money loan different from a bank loan?
Hard money is asset-based and private — underwritten on the property's value and your equity rather than your income — and it closes much faster. The trade-off is higher rates and shorter terms.
What are typical hard money rates?
Often in the 9.5%–15% range, plus points, reflecting the speed and short term. The exact pricing depends on the lender, the deal, and your experience.
Do hard money lenders check credit?
Most do, but they weight it less than a bank because the loan is secured by the property. A strong deal and larger down payment can offset weaker credit.
How much down payment does hard money require?
It varies, but expect meaningful equity in the deal — often 10%–25%+ — since leverage is based on the property's value or ARV.
When should I use hard money instead of a conventional loan?
When speed matters, the property or borrower doesn't fit bank guidelines, or you're doing a short-term project like a flip or reposition and plan to sell or refinance soon.