Hard Money Loans: Fast, Asset-Based Funding for Flips & BRRRR
A property hits the market on a Tuesday — distressed, priced below replacement cost, with a clean ARV spread. By Friday a conventional lender is still asking for your last two tax returns. A hard money lender has already issued a term sheet. That speed is not convenience; it is structural. Hard money underwrites the asset, not the borrower, and moves at the pace of the deal, not the pace of a credit committee.
Hard money is the bridge between the deal you found and the permanent capital you have not lined up yet. It finances the gap that conventional lenders refuse to touch — distressed properties, gut rehabs, quick closings, auction purchases — and does it in days, not months. The trade-off is cost: hard money is the most expensive debt in the capital stack. Use it wrong and it eats your profit. Use it right and it captures deals that would otherwise slip to someone else.
This guide covers what hard money is, what it costs, when to use it, how to qualify for it, and — most critically — how to make sure the exit works before you sign the note.
- Hard money is short-term, asset-based lending. The lender underwrites the property’s value (as-is or after-repair), not your income, credit score, or tax returns. Closings take 7–14 days instead of 30–60.
- Hard money is institutional, not personal. Unlike private money lenders, hard money lenders run funds, have rate sheets, and employ underwriters. Hard money is a product; private money is a relationship. Mixing them up costs credibility.
- Typical terms: 9–14% interest, 2–5 points origination, 12–24 month term, interest-only payments, 65–75% ARV cap, 80–93% LTC for rehab deals. Expect a draw schedule — the lender releases rehab funds in tranches as work is completed, not all at closing.
- Use hard money for flips, BRRRR rehab phases, and bridge financing. If the exit is a sale or a DSCR refinance within 6–18 months, hard money fits. If you plan to hold the loan long-term, it does not.
- The exit is everything. Hard money is expensive on purpose — it is designed to be replaced. A failed exit turns a profitable deal into a loss faster than any other variable. Pre-qualify your takeout financing before you close the hard money loan.
- Qualify on the deal, not your credit. Hard money lenders care about the property, the ARV spread, and the exit — in that order. A FICO below 660 will limit your lender options but will not kill a deal with strong numbers.
What Hard Money Is — and What It Is Not
A hard money loan is a short-term loan secured by real estate, underwritten primarily on the value of the collateral rather than the creditworthiness of the borrower. The “hard” in hard money refers to the hard asset backing the note: the property itself.
Hard money lenders are institutional or semi-institutional: they manage a pool of capital (their own fund, a line of credit from a bank, or investor commitments), employ underwriters who evaluate deals against a rate sheet, and lend according to internal guidelines that determine maximum LTV, minimum FICO, eligible property types, and geographic footprint. They are not individuals writing personal checks — they are businesses that price risk into a loan product.
Key characteristics that define hard money:
- Short term. 6 to 24 months, almost never longer. Hard money is bridge capital, not permanent financing. The lender expects to be paid off — through a sale, a refinance, or a new capital event — at or before maturity.
- Asset-based underwriting. The loan decision turns on the property: purchase price, rehab scope, after-repair value, and the borrower’s exit plan. Personal income and tax returns are secondary or irrelevant.
- High cost, by design. Rates of 9–14% and points of 2–5% make hard money the most expensive mainstream debt. The cost is the premium for speed, flexibility, and willingness to fund properties conventional lenders decline.
- Interest-only with a balloon. Most hard money loans charge interest-only monthly payments. The full principal is due as a balloon at maturity. If the exit does not materialize, the balloon comes due anyway.
- Draw schedule for rehab. On a fix-and-flip or BRRRR rehab loan, the lender does not disburse the full rehab budget at closing. Funds are released in draws — tranches of $10,000–$20,000 each — after the lender or a third-party inspector verifies that the prior phase of work is complete.
Hard Money vs. Private Money vs. Conventional vs. DSCR
Investors use “hard money” and “private money” interchangeably, and the conflation causes real problems. A borrower who pitches a private lender with hard money expectations (or vice versa) loses the deal — or the relationship. Here is the distinction.
| Feature | Hard Money | Private Money | Conventional / DSCR |
|---|---|---|---|
| Lender type | Institutional fund | Individual | Bank, credit union, or non-QM lender |
| Decision maker | Underwriter against a rate sheet | One person who trusts you (or doesn’t) | Automated underwriting + human review |
| Underwriting basis | Asset value (ARV, LTV/LTC) | Asset + trust + relationship | Income (conventional) or property cashflow (DSCR) |
| Speed to close | 7–14 days | 7–21 days | 30–60 days |
| Rate | 9–14% | 8–14% | 5–9% |
| Points | 2–5% | 1–5% | 1–3% (DSCR); 0–1% (conventional) |
| Term | 6–24 months | 6–24 months | 15–30 years |
| Property condition | Distressed OK | Distressed OK | Move-in ready or stabilized rental only |
| FICO minimum | Usually 620–660 | None formal | 620–680+ |
| Exit expectation | Sale or refi at/before maturity | Sale or refi at/before maturity | Hold to term |
Hard money sits between private money and institutional lending: more structured than a handshake deal with a PML, faster and more flexible than a bank, and more expensive than either over the long run. It is the right tool when the deal requires speed and the property disqualifies conventional financing — but only when the exit is clearly defined and pre-qualified.
Hard money is a product. Private money is a relationship. A hard money lender will tell you yes or no based on their underwriting model and move on. A private money lender will answer your call at 9 p.m., negotiate terms, and fund deals because they trust you. Know which one you are talking to before you open the conversation. Read the full breakdown at /financing/private-money-lenders.
Typical Terms: Points, Rate, LTV, and the ARV Cap
Hard money terms vary by lender, deal quality, borrower experience, and market. The ranges below represent what is available to an experienced investor with a clean deal in mid-2026. First-time borrowers and higher-risk deals will land toward the wider end of each range.
| Term Element | Typical Range | What Drives It |
|---|---|---|
| Interest rate | 9–14% | Deal risk, borrower track record, lien position, market competition |
| Points (origination) | 2–5% | Paid at closing from loan proceeds; higher points can sometimes trade for lower rate |
| Term | 6–24 months | Match to your exit timeline; shorter terms carry lower total interest cost but tighter deadlines |
| LTV (as-is value) | 65–75% | For stabilized properties or land; the lender caps the loan at a percentage of current appraised value |
| LTC (loan-to-cost) | 80–93% | For rehab deals; covers purchase + rehab costs, with the higher end reserved for experienced borrowers |
| ARV cap | 65–75% | The absolute ceiling: even at 93% LTC, the loan cannot exceed 65–75% of the after-repair value |
| Payment structure | Interest-only monthly, balloon at maturity | Keeps monthly cost low during the rehab/holding period; the balloon forces the exit |
| Draw schedule | Rehab funds released in 3–5 draws | Lender inspects work before each draw; borrower carries the working capital gap between draws |
| Prepayment penalty | 1–6 months interest or none | Some lenders charge if you exit early; negotiate this out if you plan to sell or refi in under 6 months |
The ARV Cap Is the Real Constraint
Most borrowers focus on LTC — “they’ll lend me 90% of what I spend.” The binding constraint is almost always the ARV cap. If your total loan (purchase + rehab + points + holding costs) exceeds 75% of the after-repair value, the lender will not fund the deal regardless of LTC.
Example: Purchase $80,000, rehab $40,000, ARV $180,000. LTC at 90% = $108,000 loan. But 75% ARV cap = $135,000. The ARV cap is not binding here — the LTC limit hits first.
Example: Purchase $120,000, rehab $30,000, ARV $175,000. LTC at 90% = $135,000. But 75% ARV = $131,250. The ARV cap binds. The maximum loan is $131,250, not $135,000.
Always run both LTC and ARV cap calculations before you model the deal. The lower of the two numbers is your actual maximum loan. For the full ARV and repair estimation framework, see /wholesaling/arv-mao-repair-estimates.
The Draw Schedule: How Rehab Money Actually Flows
Most new investors assume the rehab budget is disbursed at closing. It is not. Hard money lenders release rehab funds in draws — typically three to five tranches — each released after the lender or an inspector confirms that the prior phase of work is complete.
A typical draw schedule for a $40,000 rehab:
- Initial draw at closing: $10,000 (materials deposit, demolition, permit fees)
- Draw 2 (rough-in complete): $10,000 (framing, rough plumbing, rough electrical signed off)
- Draw 3 (drywall and finishes): $10,000 (drywall, trim, paint, flooring)
- Draw 4 (final): $10,000 (punch list, final inspection, CO)
Each draw costs the borrower time and sometimes fees — the lender charges a draw inspection fee ($100–$300 per draw) to send someone to the property. The practical implication: you must have working capital to float the gap between when you pay contractors and when the lender reimburses you. If your contractor requires payment before the draw is approved, that cash comes from you.
Negotiate the draw schedule. First draw at closing should be large enough to cover materials and mobilization — at least 25–30% of the rehab budget. Draws every 2–3 weeks keep your contractor paid and the job moving. If a lender proposes draws every 30 days on a 10-week rehab, negotiate tighter intervals or bring more working capital.
When to Use Hard Money: The Three Core Use Cases
Hard money is a specific tool for specific situations. It is not general-purpose debt.
1. Fix-and-Flip
The classic use case. Hard money funds the purchase and rehab of a distressed property that no conventional lender will touch. The exit is a retail sale at ARV within 6–12 months. The numbers must work with hard money’s high cost factored in — if the spread between total project cost and ARV does not cover 6–12 months of hard money interest plus points plus selling costs plus a profit margin, the deal does not work.
2. BRRRR — The Rehab Phase
In a BRRRR sequence, hard money is Loan 1: the short-term acquisition and rehab loan. Loan 2 is a DSCR long-term refinance that pays off the hard money note once the property is rehabbed, rented, and stabilized. The two-loan pairing is the engine of the BRRRR strategy: hard money gets you in and through the rehab; DSCR gets you out and into a permanent hold. The critical rule: never close the hard money loan without the DSCR refi pre-qualified. Read the full two-loan walkthrough at /financing/dscr-loans-explained.
3. Bridge to Permanent Financing
When you need to close fast — an auction purchase, a cash-only seller, a time-sensitive opportunity — and permanent financing is not ready, hard money bridges the gap. You close with hard money in 7–10 days, then refinance into a conventional loan, DSCR loan, or portfolio loan once the property qualifies. The bridge works because hard money closes fast and permanent lenders refinance into a stabilized asset. The risk: if the permanent lender changes terms or declines during the bridge period, you are holding an expensive loan with a balloon and no exit.
Do not use hard money for long-term holds. If your plan is to buy and hold for 5+ years, hard money at 11% with a 24-month balloon is the wrong tool. The cost erodes cashflow, and the balloon forces a refinance decision on the lender’s timeline, not yours. Use hard money only when you have a defined, near-term exit.
What Hard Money Actually Costs: Worked Flip Example
The following example shows the all-in cost of hard money on a typical single-family rehab flip. Points, interest, draw fees, and closing costs are all included — the real cost is higher than the rate headline.
Acquisition
| Item | Amount |
|---|---|
| Purchase price | $95,000 |
| Rehab budget | $35,000 |
| Total project cost | $130,000 |
| Hard money loan @ 90% LTC | $117,000 |
| Borrower cash at closing | $13,000 |
Loan Terms
| Item | Amount |
|---|---|
| Loan amount | $117,000 |
| Interest rate | 11% |
| Points (3%) | $3,510 (deducted from loan proceeds at closing) |
| Term | 12 months |
| Payment | Interest-only monthly ($1,073) |
| Draw inspection fees (4 draws × $200) | $800 |
| Closing costs (title, legal, processing) | $2,500 |
| Balloon due at maturity | $117,000 |
Holding Period (months 1–7)
| Item | Amount |
|---|---|
| Monthly interest payment | $1,073 |
| Holding interest (7 months) | $7,511 |
| Rehab completed month 4 | — |
| Property listed month 5 | — |
| Property sold month 7 | — |
Total Hard Money Cost
| Item | Amount |
|---|---|
| Points paid at closing | $3,510 |
| Interest paid over 7 months | $7,511 |
| Draw inspection fees | $800 |
| Closing costs | $2,500 |
| Total cost of hard money | $14,321 |
Exit (month 7)
| Item | Amount |
|---|---|
| Sale price (ARV) | $195,000 |
| Pay off hard money principal | ($117,000) |
| Selling costs (6% commission + closing) | ($15,000) |
| Borrower gross proceeds | $63,000 |
| Less rehab (+ contingency) | ($37,000) |
| Less holding costs (interest) | ($7,511) |
| Less points and fees | ($6,810) |
| Less borrower cash at closing | ($13,000) |
| Net borrower profit | $35,679 |
The hard money cost — $14,321 all-in — represents roughly 11% of the total project cost and 12.2% of the loan amount over seven months. That is the premium for funding a distressed property that no bank would touch and closing in under two weeks. The borrower nets $35,679 on $13,000 invested — a 274% return over seven months — because the deal spread absorbs the financing cost and still produces a margin. The deal works because the numbers were run with all-in hard money cost, not just the quoted interest rate.
Hard money cost is a line item, not a deal killer. The question is not “is hard money expensive?” The question is “does the spread between total project cost and ARV cover the all-in hard money cost plus selling costs plus a profit margin?” If yes, the deal works. If no, the deal does not work — and cheaper capital would not fix it. Run the math before you run the deal.
The Exit Is Everything
Hard money is designed to be replaced. The lender expects to be repaid at or before maturity — either through a sale, a refinance, or a new capital event. The exit is not a contingency; it is the entire premise of the loan. If the exit fails, the lender does not extend and pretend — they accelerate the note, charge default interest (often 18–25%), and eventually foreclose.
The exit slips more often than investors admit. A flip that was supposed to sell in four months sits on the market for seven. A DSCR refi that was “pre-qualified” turns into a decline when the appraisal comes in $20,000 below target. A contractor walks off the job and the rehab runs three months over. Each month of delay at 11% costs roughly 0.9% of the loan balance in additional interest — and eats directly into profit. On a $117,000 loan, a three-month delay costs $3,219 in additional interest, turning a $35,679 profit into $32,460 before any other slippage.
Build a buffer. Underwrite your deal with a worst-case holding period — the longest the rehab could take plus the longest it could take to sell or refi. If the optimistic timeline is 6 months, run the numbers at 9 and again at 12. If the deal still works with 12 months of hard money interest, the margin of safety is real. If the deal only works at 6 months, you are betting on everything going right — and in real estate, something always goes wrong.
Acceptable Exits, Ranked by Certainty
- Sale at or below ARV. The most certain exit: a retail buyer who closes with their own financing and pays off your hard money note at the closing table. Certainty depends on honest ARV pricing and a realistic days-on-market assumption.
- DSCR refinance (pre-qualified in writing). Strong when the DSCR lender has issued a pre-qualification or term sheet before you close the hard money loan. Weaker if you plan to “find a DSCR lender” after the rehab is done.
- Portfolio or community bank refinance. Lower rate than DSCR but slower and more document-intensive. Use only when you have a relationship with the bank and they have confirmed the refi criteria in advance.
- Sale to another investor (wholesale exit). Fast but lower price. A backup exit, not a primary one. If you have to wholesale a property you planned to retail, the margin compresses significantly.
If you cannot name your exit in one sentence — “I will refinance with a DSCR loan from Lender X, who has pre-qualified me at 75% LTV on a $200,000 ARV” — the deal is not ready for hard money.
How to Qualify: The Deal Matters More Than Your Credit
Hard money underwriting is deal-centric. The property, the numbers, and the exit carry more weight than your FICO score. Here is what lenders actually evaluate, in order of importance.
1. The Property and the ARV Spread
The lender’s first question: if the borrower defaults and we foreclose, can we recover our principal by selling this property? That means the loan amount relative to the as-is value and the after-repair value is the dominant underwriting variable.
A deal with 65% LTV against ARV gets approved with fewer questions than a deal at 75% ARV. A deal in a liquid market — where properties sell in 30–60 days — gets approved faster than a deal in a rural market with 180-day average DOM. The property is the collateral. The collateral is the underwriting.
2. The Exit Plan
The lender needs to see how they get repaid. A clear, credible exit — a sale at ARV, a DSCR refi with a term sheet, a takeout commitment — is almost as important as the property itself. Vague exits (“I’ll figure it out when the rehab is done”) kill more hard money applications than low FICO scores.
3. Borrower Experience
Experienced flippers with a track record of 3+ completed deals get better terms: lower rates, fewer points, higher LTC. First-time borrowers are not disqualified, but they face tighter LTV/LTC caps (closer to 80% LTC and 65% ARV rather than 93% and 75%), higher rates, and more lender scrutiny on the rehab budget and timeline.
If you have no track record, bring a deal with a bigger margin of safety — lower LTV, higher ARV cushion, detailed contractor bids — to offset the lender’s experience concern.
4. Credit and Financials
Most hard money lenders have a FICO minimum — typically 620 to 660. Some go lower; a few have no minimum for strong deals. Credit matters, but it is a gate, not a decision driver. A borrower with a 640 FICO and a deal at 60% ARV LTV gets approved before a borrower with a 780 FICO and a deal at 78% ARV LTV.
Lenders will also verify:
- Liquidity: enough cash to cover the down payment, closing costs, and 3–6 months of interest reserve
- No recent bankruptcies or foreclosures (typically within the last 2–4 years, varies by lender)
- Entity structure: most lenders lend to LLCs with a personal guaranty from the borrower; some lend to individuals directly
If your credit is below 620, you still have options. Some hard money lenders have no FICO minimum and underwrite purely on the deal. Your LTV/LTC caps will be tighter, your rate higher, and your lender pool smaller — but a deal with strong numbers will find funding. In that scenario, bringing a co-guarantor with stronger credit can widen your lender options and improve your terms.
The Documents a Hard Money Lender Asks For
Because a hard money loan is secured by the property, the paperwork is far lighter than a bank’s — the lender cares most about the deal, not your life story. Here’s the typical list for a standard US-borrower loan, and then what changes if you’re a foreign buyer.
For a standard hard money loan (fix-and-flip or investment):
- The purchase contract — the signed agreement showing the price and closing date.
- A property valuation — the lender orders an appraisal (an independent estimate of value), usually both “as-is” (what it’s worth today) and the ARV (After-Repair Value — what it will be worth once renovated). You typically pay the appraisal fee up front.
- Your scope of work (SOW) — a line-by-line rehab budget. For bigger projects, 2–3 contractor bids, plus the contractor’s license, insurance, and W-9 (the US tax form a business fills out).
- Proof of funds — 2–3 months of bank statements showing you have the down payment, closing costs, and a cushion to cover interest payments during the rehab.
- Entity documents — hard money lenders lend to a company, not a person (to stay out of consumer-lending rules). Expect to provide your LLC’s formation papers (articles of organization), operating agreement, EIN letter (the company’s tax ID), and often a “certificate of good standing.”
- Property insurance — a builder’s-risk or vacant-property policy binder.
- Your track record — settlement statements from past flips. Experience isn’t required for a first deal, but it unlocks better terms (a proven flipper might get 90% of the cost financed instead of 80%).
- A written exit plan — how you’ll pay the loan off: a target sale price (if you’ll sell) or a refinance plan (if you’ll keep it, often into a 30-year DSCR loan).
- Credit authorization — most will pull your credit, but far more lightly than a bank; they’re mainly checking for recent bankruptcies or foreclosures, not a high score.
If you’re a foreign national
Because hard money is asset-based, not being a US citizen isn’t a dealbreaker. You keep everything above, and add or swap a few things:
- A valid passport (and sometimes a visa or foreign driver’s license) instead of a US ID. An ITIN (a US tax number for people who can’t get a Social Security number) is often not required if you close inside a US LLC.
- A US LLC to hold the property — plus its EIN (the company’s tax ID, which takes longer to get without a Social Security number, via IRS Form SS-4) and a US registered agent (a person or company with a US address that receives official mail for your LLC).
- A US bank account — usually required to receive the loan draws and auto-pay the monthly interest. Opening one often means a US visit or a cross-border banking partner.
- Proof of funds from abroad — foreign bank statements, officially translated to English and converted to dollars, and “seasoned” (the money has sat in the account for a while). Big last-minute deposits raise red flags under US anti-money-laundering (AML) rules, so be ready to explain where the money came from.
- A bigger down payment — typically 30–40% for a foreign national, versus 10–20% for a US borrower.
- Bigger reserves — often 6–12 months of the full payment (PITIA: principal, interest, taxes, insurance) kept in reserve, sometimes in a US account.
- A substitute for US credit — since you won’t have a US credit score, lenders lean on the bigger down payment plus a reference letter from your home-country bank and proof of real estate you already own.
For the full picture of financing US property as a non-resident — including DSCR loans, which work the same asset-based way for rentals — see foreign-national real-estate loans.
How to Find and Vet Hard Money Lenders
Hard money lenders are easier to find than private money lenders because they market publicly. The challenge is separating the reliable ones from the ones who issue term sheets they cannot fund.
Where to Find Them
- Referrals from other investors. The highest-quality source. Ask investors at REIA meetings, in Facebook groups, and in your local network who they use and whether the lender performs — funds on time, honors the draw schedule, does not change terms at the closing table.
- Broker networks and marketplaces. Platforms that match borrowers with hard money lenders can surface options quickly, but vet every lender independently — the platform’s vetting is not your vetting.
- Mortgage brokers who specialize in non-QM and private capital. A broker with hard money relationships can shop your deal to multiple lenders simultaneously. The broker’s fee (typically 1–2 points) may be worth the time saved and the term comparison.
- Title companies and real estate attorneys. Title agents and closing attorneys see which lenders fund deals and which ones fall through. Ask them: “Which hard money lenders close on time and honor their term sheets?”
How to Vet a Hard Money Lender
Before you sign a term sheet or pay an application fee, verify:
- Proof of funds. Ask for a recent proof of funds letter or a reference from a title company that has closed with the lender in the last 90 days. A lender who hesitates to provide either is not ready to fund.
- Term sheet that matches final loan docs. Some lenders issue aggressive term sheets to win the deal, then change terms (lower LTV, higher rate, additional fees) during underwriting. Ask: “What percentage of your term sheets close on the original terms?” A direct answer under 80% is a red flag.
- Draw process transparency. Ask exactly how draws work: who inspects, how long between request and funding, what fees are charged per draw, and whether there is a minimum draw amount. A lender who cannot explain their draw process clearly will cause delays during the rehab.
- Extension policy. Ask: “If my exit is delayed by 60 days, what happens?” Some lenders offer extensions for a fee (typically 1–2 points); others accelerate the note immediately. Know the policy before you need it.
- Geographic and property-type restrictions. Confirm the lender lends in your state and on your property type (single-family, 2–4 unit, condo, mixed-use). Some lenders restrict by ZIP code, not just by state.
Red Flags
- Application fees above $500 before any underwriting has been done.
- A term sheet that expires in 24 hours — pressure to sign before you can read it.
- A lender who refuses to provide references from title companies or past borrowers.
- Terms that change materially between the initial conversation and the written term sheet.
- A lender who claims they fund “anything” with no underwriting — that lender is either a broker who does not control the capital or will not exist in six months.
A hard money lender is a business partner for the next 6–18 months. Their draw schedule determines whether your contractor gets paid. Their extension policy determines what happens if the flip runs long. Their reputation with local title companies determines whether your closing goes smoothly. Vet them as carefully as you vet the deal itself.
Hard Money in the Capital Stack
Hard money typically sits in the first-lien position — senior to all other debt on the property — because hard money lenders demand priority and rarely accept subordination. It is the most expensive layer of the capital stack and therefore the first one you want to replace.
In more complex structures, hard money can be layered with:
- Seller financing in second position behind the hard money lender, reducing the borrower’s cash requirement at closing. The seller note is subordinate to the hard money lien, which the seller must accept via a subordination agreement.
- Private money in second position, filling the gap between the hard money LTC cap and the total project cost. A private lender who trusts you may accept second position at a higher rate; a hard money lender almost never will.
- Equity partners who contribute the cash piece that hard money does not cover, in exchange for a share of the deal profits.
The capital stack framework shows how to layer hard money with every other source — senior, mezzanine, and equity — to minimize your cash in while maintaining lender compliance.
FAQ
What is the difference between hard money and a bridge loan?
The terms overlap significantly and some lenders use them interchangeably. In practice, a bridge loan is slightly broader — it can be secured by real estate or other assets, and its purpose is to bridge a gap between a current state and a permanent financing event (a sale, a refinance, a new capital raise). Hard money is a subset of bridge lending: it is always secured by real estate, always short-term, and always asset-based. When a lender says “bridge loan,” confirm whether they mean hard money or a different product.
Can I get a hard money loan with no money down?
Rarely, and only when the deal itself creates equity that covers the lender’s required equity cushion. If you buy a property for $70,000 that appraises for $100,000 as-is, and the lender lends 70% LTV, the loan amount is $70,000 — covering the full purchase. This is a no-money-down acquisition, but it requires finding a property at a deep discount to its current value. The No Money Down pillar covers the full range of zero-cash-close structures.
How fast can a hard money loan actually close?
Seven to ten calendar days is realistic for a clean deal with an experienced borrower and a lender who has funded in that market before. The variables: how fast the appraisal is completed (3–5 days), how fast title work comes back (2–5 days), and whether the borrower has all entity documents and bank statements ready at application. Delays almost always come from title issues or missing borrower documentation, not from the lender.
What happens if I cannot repay at maturity?
The lender will first offer an extension — typically for a fee of 1–2 points and possibly at a higher interest rate. If you cannot or will not extend, the lender accelerates the note (demands full payment immediately) and, if unpaid, initiates foreclosure. Hard money lenders foreclose faster than banks because foreclosure is part of their business model — they underwrite to the collateral precisely so they can recover through the property if the borrower fails. A hard money lender who forecloses will also report the default to credit agencies, and the property will be sold at auction or via a receiver. Do not plan on extensions. Plan on the exit.
Do hard money lenders require a personal guarantee?
Yes, almost universally. Even when the borrower is an LLC, the lender requires a personal guaranty from the principal(s). This means you are personally liable for the loan beyond the collateral. If the property sells at foreclosure for less than the loan balance, the lender can pursue you personally for the deficiency. A small number of lenders offer non-recourse hard money — usually at significantly lower LTV (50–60%) and with a rate premium — but these are the exception.
How do I estimate ARV accurately enough for a hard money lender?
The lender will order their own appraisal, so your ARV estimate is a starting point, not the final word. That said, your estimate needs to be credible: based on sold comps (not listings) within the last 6 months, within 0.5–1 mile (urban/suburban) or 2–5 miles (rural), of similar square footage, bed/bath count, and condition to the subject property post-rehab. If your ARV is $30,000 above the appraiser’s value, the lender cuts the loan amount and you make up the difference in cash or lose the deal. See /wholesaling/arv-mao-repair-estimates for the full ARV estimation methodology.
Hard money is the most expensive debt in real estate for a reason: it funds what nothing else will, and it funds it fast. The key is using it only when the exit is clear, the spread covers the cost, and the lender is vetted. Pair it with DSCR long-term debt for the BRRRR exit, with private money for the gap, and with the strategies in the No Money Down pillar to reduce or eliminate your cash at closing.
This guide is educational and is not financial, tax, legal, or investment advice. Programs, lender policies, and tax rules change. Consult a licensed attorney, CPA, and lender before acting.