Hard Money

A hard money loan is a specific type of asset-based loan financing in which a borrower receives funds based on the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers.

Many hard money mortgages are made by private investors. often in their local area. Usually the credit score of the borrower is not important. The loan is purely against the collateral of the property. Typically the maximum loan to value is 65-70%. That is, if the property is worth $100,000 you can borrow $65,000-70,000 against it. This low LTV is to cover the lender if the borrower does not pay and they have to foreclose on the property.