Getting a hard money loan starts with finding a property that works as collateral, then applying with a private or non-bank lender who focuses on the asset’s value rather than your personal income. The entire process, from application to funding, can take as few as five to seven business days, which is why real estate investors use these loans when speed matters more than getting the lowest rate.
Hard money loans are short-term financing (typically 6 to 24 months) secured by real property. They’re built for fix-and-flip projects, bridge financing, and other deals where a conventional mortgage is too slow or where the borrower doesn’t meet traditional lending criteria. Here’s how to move from first inquiry to funded loan.
What Lenders Actually Care About
Unlike a bank, a hard money lender puts most of its attention on the property, not your tax returns. The two metrics that drive approval are loan-to-value (LTV) and loan-to-cost (LTC).
Loan-to-value compares the loan amount to the property’s appraised or after-repair value (ARV). Most hard money lenders cap LTV at 65% to 75%. So if a property’s ARV is $300,000 and the lender offers 70% LTV, you can borrow up to $210,000 and need to cover the rest yourself.
Loan-to-cost measures the loan against the total project cost, including both the purchase price and renovation budget. If you’re buying a property for $200,000 and spending $50,000 on rehab, the total project cost is $250,000. At 80% LTC, the lender finances up to $200,000, and you bring $50,000 to the table. Fix-and-flip investors and new construction borrowers typically get evaluated on LTC because it reflects the full scope of the investment.
Your credit score and income still matter, but they carry far less weight. Many lenders have a minimum credit score in the low 600s, and some will go lower if the deal is strong. What they really want to see is enough equity in the property to protect their investment if something goes wrong.
Costs You Should Expect
Hard money is expensive compared to conventional financing. Interest rates currently range from roughly 7.5% to 12% or higher, depending on the lender, the property type, and how much experience you bring. Fix-and-flip loans tend to sit at the higher end of that range, while rental property bridge loans can sometimes come in lower.
On top of interest, you’ll pay origination fees (also called “points”) at closing. These range from 1% to 5% of the loan amount. On a $250,000 loan, that means $2,500 to $12,500 due upfront. Some lenders charge additional fees for underwriting, document preparation, or wire transfers, so ask for a full fee breakdown before you commit.
Most hard money loans are interest-only during their term, meaning your monthly payment covers only interest. The full principal balance comes due at the end as a balloon payment. On a $200,000 loan at 10%, your monthly interest-only payment would be roughly $1,667. That structure keeps your carrying costs manageable during a renovation, but it means you need a clear plan to pay off the full balance when the loan matures.
Documents You’ll Need
The paperwork for a hard money loan is light compared to a conventional mortgage. You won’t need W-2s, pay stubs, or years of tax returns. Lenders typically ask for:
- Property details: address, property type, purchase price or current value, and photos if available
- Rehab budget: a line-item scope of work with estimated costs for each phase of renovation
- Entity documents: most investors borrow through an LLC or S-Corp, so have your formation documents, operating agreement, and EIN ready
- Government-issued ID: standard identity verification for all borrowers and guarantors
- Personal financial statement: a snapshot of your assets and liabilities, which helps the lender gauge your overall financial position
- Bank statements: recent statements showing you have the cash reserves to cover your down payment, closing costs, and any gap between the loan and total project cost
- Insurance information: proof that you can insure the property (builder’s risk or hazard insurance, depending on the project)
If you’ve completed similar projects before, bring a track record. A portfolio of past flips or renovations can help you negotiate a lower rate or higher leverage because lenders view experienced borrowers as lower risk.
The Application-to-Funding Timeline
Speed is the main selling point of hard money. While a conventional mortgage can take 30 to 45 days, a hard money loan often funds in under two weeks. Some lenders close in as few as five to seven business days. Here’s what that timeline looks like in practice.
Day one: you submit a short application, either online or via email. This includes the property address, estimated loan amount, purchase price, rehab budget, and your entity information. Many lenders don’t even require a formal application form at this stage.
Day two: the lender reviews the deal and sends you a term sheet, a preliminary document outlining the proposed loan amount, interest rate, points, fees, and estimated closing date. This is not a commitment letter, but it tells you whether the deal pencils out for both sides.
Days two through three: underwriting happens quickly because it’s focused almost entirely on the property. The lender orders a property valuation, which could be a desktop appraisal, a broker price opinion, or a full appraisal depending on the deal size. They review your rehab scope, title report, insurance, and entity documents.
Day four: once underwriting approves the file, loan documents go to the escrow or title company. This package includes the loan agreement, deed of trust, closing statement, and required disclosures.
Days five through seven: you sign closing documents, the lender wires the funds, and escrow disburses the money. If the loan includes rehab funds, those are often held in escrow and released in draws as you complete phases of the renovation.
Delays usually come from title issues (liens, unclear ownership) or missing documents. Having your paperwork organized before you apply is the simplest way to keep things on track.
How to Find a Lender
Hard money lenders range from large national platforms to small local shops that fund from their own capital. Start by looking at lenders who specialize in your property type. A lender focused on residential fix-and-flips may not be the right fit for a commercial bridge loan, and vice versa.
Compare at least three lenders on rate, points, LTV or LTC limits, minimum loan size, and how they handle rehab draws. Ask whether they fund from their own balance sheet or broker loans to third parties, because a direct lender generally closes faster. Check whether they charge prepayment penalties, since you’ll want to pay off the loan as soon as your project is complete without getting hit with extra fees.
Local real estate investor meetups, online investor forums, and referrals from title companies or real estate agents who work with investors are reliable ways to find reputable lenders. The American Association of Private Lenders maintains a directory of member firms, which can be a useful starting point.
Your Exit Strategy Matters Most
Every hard money lender will ask how you plan to repay the loan, and your answer can make or break the deal. A well-defined exit strategy signals that you’ve thought beyond the purchase and have a realistic plan to close out the debt before it matures.
The most common exit strategies are:
- Sell the property: the classic fix-and-flip approach. You buy, renovate, and sell at a profit, using the sale proceeds to pay off the loan.
- Refinance into a long-term loan: if you plan to hold the property as a rental, you refinance the hard money loan into a conventional mortgage or long-term commercial loan once the renovation is complete and the property is stabilized with tenants.
- BRRRR method: Buy, Rehab, Rent, Refinance, Repeat. You renovate, lease the property to generate rental income, then refinance based on the new appraised value. The refinance pays off the hard money lender, and you move on to the next deal.
Lenders want to see a timeline for each phase, comparable sales or rental rates that support your projected numbers, and a backup plan. If the market softens and you can’t sell at your target price, could you rent the property instead? Having a contingency makes the deal more fundable and protects you from a costly default if your first plan doesn’t work out. Set aside reserves for unexpected construction delays or cost overruns, because going over budget on a loan with 10% interest compounds quickly.