What is a hard money loan?

A short-term loan secured by real estate and based on the property's value (often the after-repair value) rather than the borrower's credit. Hard money lenders fund quickly and accept more risk, charging higher rates and points in return.

What credit score do you need for hard money?

Requirements are looser than conventional loans because the property secures the loan. Some lenders look for around 640+, but many weigh the deal and your down payment more heavily than your score.

How much do hard money loans cost?

Expect roughly 7–15% interest plus 1–4 points (each point is 1% of the loan), with short terms of 6–18 months. The cost is high, but the speed and flexibility often make it worthwhile on a well-bought flip.

Financing

Hard Money Loans for Flipping: How They Work

The financing most first-time flippers actually use — how it works and what it really costs.

June 15, 2026 · 6 min read

Quick answer

Hard money is short-term, asset-based financing for flips. Lenders base the loan on the property's after-repair value (ARV) rather than your credit or income, fund in days, and often finance part of the rehab. In exchange, rates run roughly 7–15% plus points, with terms usually 12 months or less.

What makes hard money different

A conventional lender underwrites you — your income, credit, and debt. A hard money lender underwrites the deal — the property's value and the after-repair value. Because the loan is secured by the asset and the lender's risk is in the property, approval is fast and credit requirements are looser. That speed and flexibility are why hard money dominates beginner flipping.

Typical terms

Term	Typical range
Interest rate	7–15%
Points (origination)	1–4% of loan
Loan-to-value	Often up to ~70% of ARV
Term length	6–18 months
Funding speed	A few days to ~2 weeks

Many hard money lenders fund a large share of the rehab through a draw schedule — you complete a phase, they inspect, then release the next draw.

Pros, cons, and when to use it

Pros — fast funding, ARV-based, lenient on credit, can finance rehab, works on distressed homes.
Cons — higher rates and points, short terms, requires a down payment, time pressure to finish.
Use it when — you need to move fast, the property won't qualify for conventional financing, and you can realistically finish and sell within the term.

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Frequently asked questions

What is a hard money loan?: A short-term loan secured by real estate and based on the property's value (often the after-repair value) rather than the borrower's credit. Hard money lenders fund quickly and accept more risk, charging higher rates and points in return.
What credit score do you need for hard money?: Requirements are looser than conventional loans because the property secures the loan. Some lenders look for around 640+, but many weigh the deal and your down payment more heavily than your score.
How much do hard money loans cost?: Expect roughly 7–15% interest plus 1–4 points (each point is 1% of the loan), with short terms of 6–18 months. The cost is high, but the speed and flexibility often make it worthwhile on a well-bought flip.