On this page
- Hard money loan definition
- How does a hard money loan work?
- Hard money loan terms by lender
- Interest only and draws: what you actually pay
- Points: the upfront cost
- Hard money loan vs bank mortgage
- Hard money loan pros and cons
- What hard money loans are used for
- Federal rules: business loans vs home loans
- Related guides
- Frequently asked questions
Based on each lender's published information; we did not apply for loans.
Hard money loan definition
A hard money loan is a short-term loan secured by real estate, made by a private lender and approved mainly on the value of the property rather than your income. In Easy Street Capital's words, hard money loans "are short-term and use real property as the backing for the loan," and the lender "rarely uses the credit worthiness of the borrower and simply uses the value of a property as the protection against default by the borrower."
The "hard" refers to the hard asset behind the loan. Fairview Lending says underwriting "decisions are based on the borrower's 'hard assets' (real estate assets)" and that the loan "is secured by a first mortgage." Most hard money loans come from private companies or individuals, and because that lending carries more risk, rates are higher than on ordinary home loans (Easy Street Capital).
How does a hard money loan work?
The lender values the property (often its after-repair value on a renovation), lends a share of the purchase and usually the rehab budget, and holds a first lien. You pay points at closing, then interest only each month. Rehab money is not handed over at closing: it is released in draws as the work is done and checked, through photo verification at Ternus or a virtual draw process at LendingOne. At the end of the term you sell the property or refinance into long-term financing and pay off the hard money loan (Easy Street Capital).
Hard money loan terms by lender
How the main pieces (term, payments, draws, points) look at national lenders, from each lender's own pages. Leverage, credit minimums and loan sizes are on the requirements page; starting rates are on the rates page.
| Lender | Term | Payments | Rehab draws | Origination or points |
|---|---|---|---|---|
| Kiavi | 12, 18 or 24 months | Interest-only options | 100% of rehab cost | Not stated |
| Lima One Capital | 13, 19 or 24 months | Interest only, on funds drawn | 24-hour draws; 100% of rehab budget | Not stated |
| RCN Capital | 12 to 18 months | Interest only, charged on the outstanding balance | Up to 100% of renovation cost | Not stated |
| LendingOne | 12 months | Interest only; no interest on undrawn rehab funds | Virtual draw process; 100% of rehab costs | Not stated |
| New Silver | Up to 18 months | Interest only | Not stated | Origination 1 to 1.75% |
| Easy Street Capital | 6 to 18 months, extension options | Interest only | 48-hour draws | 0 to 2 points plus a $1,995 document fee |
| Ternus | 12 months; 1% extension fee at lender's discretion | Interest only | Photo-verified draws as milestones are completed | Origination from 0.5% |
| CoreVest | 6 to 24 months, extension options | Not stated | Draws requested online as each phase of work is completed | Not stated |
| Sherman Bridge (Simple70) | 12 months, lender option to extend | Not stated | Not stated | 3.0% points due at closing |
From each lender's own website, read October 29, 2026. "Not stated" means the lender's page does not publish it. Terms change; confirm with the lender. Not financial advice.
Interest only and draws: what you actually pay
A hard money loan "typically includes an interest only payment," while a traditional home loan payment includes principal and interest (Easy Street Capital). On $200,000 at 9.49%, interest only is $1,581.67 a month; a 30-year principal-and-interest payment at the same rate would be $1,680.25. You pay less each month, but the full $200,000 is still owed at the end.
| Period | Balance drawn | Monthly interest at 9.49% |
|---|---|---|
| Months 1 to 3 | $150,000 | $1,186.25 |
| Months 4 to 6 | $175,000 | $1,383.96 |
| Months 7 to 12 | $200,000 | $1,581.67 |
| 12-month total | $17,200.65 |
Draws save money too when interest is charged only on what has been released, as RCN Capital, Lima One and LendingOne say they do. With $150,000 at closing and two $25,000 draws, 12 months of interest comes to $17,200.65, $1,779.35 less than paying on the full $200,000 from day one. Ask every lender which way it charges.
Points: the upfront cost
Points are a fee equal to a percentage of the loan, paid at closing. On a $200,000 loan, the published figures in the table work out to:
Some lenders let you finance points into the loan (Groundfloor) or defer origination until you exit (Lima One). The full picture, including APR, is on hard money loan rates, and the hard money loan calculator totals interest, points and cash to close for your deal.
Hard money loan vs bank mortgage
| Hard money loan | Bank mortgage | Source | |
|---|---|---|---|
| Who lends | Mostly private companies or individuals | Banks and mortgage lenders | source |
| What approval rests on | The property's value; the borrower's credit is rarely the deciding factor | Your ability to repay: a reasonable and good faith determination is required on consumer home loans | source 1 source 2 |
| Income documents | None at Kiavi; no W-2s or pay stubs on LendingOne bridge loans | Full income documentation (LendingOne's description) | source 1 source 2 |
| Appraisal | None at Kiavi; in-house or waived at LendingOne | Third-party appraisals often required (LendingOne's description) | source 1 source 2 |
| Monthly payment | Typically interest only | Principal and interest | source |
| Rate | Higher, because the lender takes more risk | Lower | source |
| Fastest published closing | As little as 5 days (Express Capital) | Varies by lender | source |
Hard money loan pros and cons
| Pros | Cons |
|---|---|
| Fast: Express Capital says it can close in as little as 5 days | Higher rates than ordinary home loans |
| Approval rests on the property; Kiavi asks for no income verification | Points at closing, up to 3.0% at Sherman Bridge |
| Rehab funded too: up to 100% of rehab cost at Kiavi, Lima One and LendingOne | Short terms (6 to 24 months) leave little room if a sale or refinance slips |
| Interest-only payments keep monthly costs down | Interest only does not pay down the balance |
| Interest only on funds drawn at RCN, Lima One and LendingOne | Built for investment property, not a home you live in |
What hard money loans are used for
Investors
Easy Street Capital names new construction, flipping and updating rentals, and calls flipping "the most common situation for a hard money loan." See fix and flip, construction loans and bridge loans.
Commercial property
Fairview Lending makes commercial hard money loans decided on the property "as opposed to relying heavily on a borrowers credit, financials." Apartments, retail and office lenders are compared on commercial hard money lenders.
Federal rules: business loans vs home loans
Whether consumer-protection rules apply depends on what the loan is for, not on the word "hard money." Investor loans are business credit; a loan to you for a home you live in is generally consumer credit.
| Rule | Applies to | What it means |
|---|---|---|
| Business-purpose exemption 12 CFR 1026.3(a); comment 3(a)-4 | Loans for a business purpose or to an entity such as an LLC; loans on rentals you do not live in | Outside Regulation Z (Truth in Lending). A rental is not non-owner-occupied if the owner expects to live there more than 14 days during the coming year. |
| Ability to repay 12 CFR 1026.43 | Consumer loans secured by a dwelling | The lender must make a reasonable and good faith determination that you can repay. Temporary or bridge loans of 12 months or less are exempt from that test. |
| Higher-priced mortgage loan 12 CFR 1026.35 | Consumer loans secured by your principal dwelling | Applies when the APR exceeds the average prime offer rate by 1.5 or more points (first lien), 2.5 or more (first lien above the Freddie Mac loan limit) or 3.5 or more (subordinate lien). First-lien loans then generally need an escrow account for taxes and insurance, with limited exemptions. |
| High-cost mortgage (HOEPA) 12 CFR 1026.32 | Consumer loans secured by your principal dwelling | Triggered by an APR more than 6.5 points over the average prime offer rate (8.5 on a subordinate lien), points and fees above 5% (for 2026, on loans of $27,592 or more), or a prepayment penalty after 36 months or above 2% of the amount prepaid. |
That is why most investor lenders will not lend on a home you live in. Read owner-occupied hard money loans before you apply if you will live in the property.
Before you apply, ask each lender how it charges interest on undrawn funds, how fast draws are paid and what an extension costs. Check whether a lender covers your state on the lenders by state list, and compare private money lenders if you are borrowing from an individual.
Related guides
Frequently asked questions
What is a hard money loan in simple terms?
A short-term loan secured by real estate, made by a private lender and based mainly on the property's value rather than your income or credit. Investors use it to buy, renovate or bridge to a sale or refinance.
How does a hard money loan work?
The lender sizes the loan on the property, you pay points at closing and interest only each month, rehab money is released in draws, and the loan is repaid in one payment when you sell or refinance. Terms run 6 to 24 months at the national lenders on this page.
Are hard money loans interest only?
Usually. Easy Street Capital says a hard money loan typically includes an interest only payment, and Ternus, LendingOne and RCN publish interest-only terms. Kiavi offers interest-only options.
Who offers hard money loans?
Mostly private companies or individuals rather than banks. National investor lenders such as Kiavi, Lima One, RCN Capital and Ternus publish their terms online.
Can I get a hard money loan on my own home?
Rarely from investor lenders. A loan for a home you live in is generally consumer credit, which brings federal ability-to-repay, higher-priced and high-cost mortgage rules.
What happens when the loan term ends?
You repay it by selling the property or refinancing into long-term financing. Ternus charges a 1% extension fee, at its discretion, if you need more time.