Hard Money Loan
A hard money loan is short-term, asset-based financing from a private lender, underwritten primarily on the property's value and the borrower's exit plan rather than credit or income documentation. Speed and flexibility come at a cost — rates typically run in the low-to-high teens plus several points of origination — best suited for time-sensitive deals with a clear, near-term exit.
Common uses include closing an acquisition faster than a bank can underwrite, funding a fix-and-flip or light rehab, or bridging a borrower with credit or documentation issues that disqualify them from conventional financing. Terms typically run six months to two years, interest-only, with a defined exit built into the underwriting.
Because pricing is high, hard money only makes sense when the cost is outweighed by speed or flexibility. A borrower who can't refinance out within the term risks default or extension fees, so lenders and borrowers alike scrutinize the exit plan more than any other underwriting factor.
A typical hard money quote might run 11–14% interest plus 2–3 points of origination on a 12-month term.