Complete Hard Money Loan Guide
Written by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A hard money loan is a short-term, asset-based loan secured by real estate and funded by private lenders rather than banks. Florida investors use hard money to move fast on fix-and-flip deals, auctions, and properties that traditional financing will not touch.
This guide explains how hard money loans work, their costs, and when they make sense. Mortgage Capital, NMLS# 1859012, connects Florida investors with hard money and bridge financing for time-sensitive deals.
How hard money works
Hard money lenders care primarily about the property's value and the deal, not your tax returns or debt ratios. They lend a percentage of the purchase price or the after-repair value, and they can close in days rather than weeks.
The speed and flexibility come at a cost: higher rates and fees, and short terms, typically 6 to 24 months.
Loan-to-value and after-repair value
Lenders often lend up to 70% to 75% of the after-repair value, the projected value once renovations are done. This lets investors finance both the purchase and part of the rehab on a sound deal.
A credible scope of work and accurate comparable sales are key to maximizing what you can borrow.
Costs and terms
Expect rates well above conventional, plus points charged upfront. Most hard money loans are interest-only with a balloon payment at the end of the short term. The math works when the deal's profit easily covers the carrying cost.
Always build the financing cost into your deal analysis so a slow sale does not erase your margin.
When to use hard money
Hard money fits fix-and-flips, auction purchases, properties needing major repairs, and situations where speed wins the deal. It is a tool for short holds, not long-term ownership.
For a buy-and-hold rental, plan to refinance the hard money loan into a DSCR or conventional loan once the property is stabilized.
Exit strategy
Every hard money loan needs a clear exit: sell the renovated property or refinance into long-term financing. Lenders want to see that exit before they fund.
We help investors line up the takeout refinance in advance so the short-term loan never becomes a problem.
Complete Hard Money Loan Guide: step by step
Frequently asked questions
What is a hard money loan?
A short-term, asset-based real estate loan from a private lender that funds quickly based on the property's value.
How fast can hard money close?
Often within a few days to about two weeks, much faster than conventional financing.
How much can I borrow with hard money?
Frequently up to 70% to 75% of the after-repair value, covering purchase and part of the rehab.
What are hard money rates?
Well above conventional, plus upfront points. The cost is justified by speed and the deal's profit on short holds.
What is the typical term?
Usually 6 to 24 months, interest-only with a balloon payment at the end.
Do hard money lenders check my income?
Minimally. They focus on the property, the deal, and your exit strategy rather than tax returns.
When should I use hard money?
For fix-and-flips, auctions, and properties needing major repair where speed and flexibility matter most.
How do I pay off a hard money loan?
By selling the property or refinancing into a DSCR or conventional loan once it is stabilized.