Hard Money Loan

Definition

A hard money loan is short-term real estate financing (typically 6–18 months) collateralized primarily by the asset itself rather than the borrower's income or credit. Hard money lenders price for speed and risk: rates typically 9–13%, 1–3 points origination, with interest-only structures and balloons at maturity. Hard money is the default capital source for fix & flip acquisition and rehab.

Worked example

A hard money loan of $400k at 10.5% interest-only with 2 points origination on a 9-month flip: interest carry ≈ $31,500 + $8,000 origination ≈ $39,500 in financing cost before payoff.

How DealIntel uses it

DealIntel compares hard money against DSCR, construction loan, and conventional financing on every deal. The Kill List flags deals where hard-money carrying cost erodes more than 30% of projected profit — a common failure mode in long-rehab fix & flips.

Related terms

• Debt-Service Coverage Ratio Loan · DSCRAn investment property loan qualified on the property's rental income rather than the borrower's W-2 income.
• Loan-to-Value · LTVThe ratio of a loan amount to the appraised value of the underlying property.
• Buy, Rehab, Rent, Refinance, Repeat · BRRRRA long-hold real estate strategy that recycles capital through a cash-out refinance after stabilization.