The short version
A hard money loan is short-term financing secured against a property rather than against you. The lender's question is not what you earn or what your credit history looks like: it is what the property is worth, what it will be worth once the work is done, and how you intend to pay the loan back.
That single difference is why a hard money deal closes in days when a bank takes a month or more. There are no tax returns to verify, no employment to confirm, no debt-to-income ratio to satisfy. There is a property, a plan and an exit.
It is also why hard money costs well above a conventional mortgage once the points are counted. You are buying speed and access, and both are priced accordingly.
How the loan is actually structured
Almost every hard money loan works the same way, and it is not how a normal mortgage works at all.
- Interest only. Your monthly payment covers interest and nothing else. The principal does not reduce.
- A balloon at the end. When the term expires you repay the whole balance in one lump: normally by selling the property or refinancing into something longer.
- Months, not years. Terms of 6 to 24 months are common, most often 12. This is temporary money by design; there is no thirty-year version.
- Draws on the rehab money. You do not receive the renovation budget as a check on day one. It is released in stages as work is inspected and completed, which can also mean you are not paying interest on money you have not used yet. Ask the lender how it charges interest on undrawn funds.
- An exit, agreed before you start. This is the part that decides whether hard money works or ruins you, and it is covered properly below.
What it costs in 2026
Honest numbers, including the ones lenders tend not to lead with.
| Cost | Typical 2026 | What it means in practice |
|---|---|---|
| Interest rate | 8% to 15% | Against a 7.28% average on an owner-occupied conventional 30-year fixed (Freddie Mac, October 1, 2026). |
| Points | 1 to 4 | Paid up front at closing. One point is 1% of the loan. On $400,000 that is $4,000 to $16,000 before you own anything. |
| Term | 6 to 24 months | Interest only, balloon at the end. |
| Leverage | Set by the lender | Usually capped against the as-is value, the after-repair value, the total cost, or all three. You cover the rest. |
| Reserves | Months of holding costs | Lenders want to see cash to cover holding costs if the job overruns: interest, taxes, insurance, utilities. |
| Fees | Several hundred dollars and up | Processing or underwriting, appraisal, and an inspection fee on each renovation draw, plus title and recording. |
| Extension | Fee set by the lender | If you run past the term and the lender agrees to extend. Better than defaulting, and it eats margin quickly. |
| Speed | Days to weeks | Set by the appraisal, title and the lender, not by an agency rulebook. This is what you are actually paying for. |
Through our lending partners, standard fix and flip and bridge pricing is 12.99% plus 2.99 origination points, up to 100% of cost and 70% of after-repair value (whichever is lower), from $50,000, with a minimum credit score of 600. Loyalty pricing of 10.99% plus 1.99 points is available only to borrowers who have paid off two loans with the lending partner in good standing.
Have a deal on the table?
Send the address, the numbers and your exit. Our lending partner's team reviews it and tells you whether it fits and on what terms. The lender makes every credit decision.
Three numbers that get confused constantly
People use these interchangeably and they are not the same thing. Getting them wrong is how a deal you thought was funded turns out to be short.
Ask which of the three a quote is based on. An offer of 100% LTC capped at 70% LTV is a very different amount of money from 100% LTC with no cap, and only one of those exists.
Why you cannot use one on your own home
This surprises people, and the answer is mostly federal law rather than lender preference.
Regulation Z, which implements the Truth in Lending Act, puts disclosure timelines and ability-to-repay obligations on consumer mortgages, the kind secured by a home you live in. Hard money lenders underwrite the asset rather than your ability to repay from income, which those rules do not allow on a consumer home loan. Reg Z exempts credit for a business purpose and credit to an entity, and its commentary treats loans on rental property the owner will not occupy for more than 14 days a year as business purpose. So the product is written for non-owner-occupied investment property, normally to an LLC or corporation rather than to you personally.
If a lender offers you hard money on the house you live in, that is a reason to walk away rather than a lucky find.
The exit is the whole thing
Everything else about hard money is arithmetic. The exit is the part that decides whether it worked.
You are on a clock from the day you close. At the end of the term the full balance is due, and there are only three ways to produce it: sell the property, refinance into longer-term financing, or pay it off from other funds. If none of those happens on time you are looking at extension fees, and beyond that, foreclosure on the property securing the loan.
So the exit gets planned before the loan is applied for, not afterwards. If the plan is to sell, be honest about how long properties are actually sitting in that market right now, not how long they sat two years ago. If the plan is to refinance into a DSCR loan, check the property will meet that lender's ratio and leverage rules while you are still in a position to walk away.
The investors who get hurt by hard money are almost never the ones who paid too much interest. They are the ones whose exit slipped by four months.
When it is the right tool, and when it is not
Right
- A property that needs work before any bank will touch it
- An auction or a distressed sale where the seller wants a fast close
- A deal you would lose while waiting thirty days for conventional approval
- Good equity or a strong ARV, but income that will not document conventionally
- A short, clearly costed project with a realistic exit
Wrong
- Buying somewhere you intend to live
- Long-term hold financing: that is DSCR or conventional
- A thin margin where the points and interest eat the profit
- No cash reserves for an overrun, which is most overruns
- An exit that depends on everything going right
Related guides
The four types of hard money loan · How the financing is built, step by step · Hard money rates · Hard money requirements · Hard money calculator
Get your deal reviewed
Answer these and your deal goes to our lending partner's team, who will contact you about whether it is fundable and on what terms. By sending it you agree to your details being shared with them. Investment property only: our lending partners do not finance a home you will live in.
Got it.
Thank you. Your details are on their way to our lending partner's team, who will contact you shortly.
Hard money questions, answered plainly
What is a hard money loan in simple terms?
Short-term financing secured against a property rather than against your income or credit. The lender assesses what the property is worth, what it will be worth after renovation, and how you plan to pay the loan back.
For how the financing is put together, from the purchase advance and renovation holdback to the payoff, see what is hard money financing.
How fast can a hard money loan close?
Usually much faster than a bank, because there is no income file to verify. The appraisal and title work set the pace, and the lender decides the closing date. Order both the day you have a term sheet.
What credit score do I need for a hard money loan?
Far less than a bank wants. Our lending partners set a minimum of 600 for fix and flip and bridge loans. Credit affects your pricing and leverage more than whether the deal is considered at all, because the property carries the underwriting.
Can I get 100% financing with a hard money loan?
Sometimes, but read what it is measured against. Offers of 100% of cost are still capped by a loan-to-value or after-repair-value ceiling underneath. Our lending partners lend up to 100% of cost but no more than 70% of after-repair value, whichever is lower.
Can I use a hard money loan to buy my own house?
No. These are business-purpose loans on non-owner-occupied property. A home you live in needs a consumer mortgage, which comes with Regulation Z disclosure and ability-to-repay rules that asset-based lending is not built to meet.
What happens if I cannot repay at the end of the term?
Many lenders will consider an extension for an additional fee plus continued interest, at their discretion. That is better than defaulting, and it eats into margin quickly. Beyond that the lender can foreclose on the property.
Sources
- Crestmont Capital, Hard Money Loan Rates 2026, market range of about 8% to 15% interest, 1 to 4 points, and typical processing, appraisal and draw fees (accessed Oct 2026)
- RentalRealEstate.com, Hard money loans (updated April 2026), typical 6 to 24 month terms, 12 months most common (accessed Oct 2026)
- Freddie Mac, "Mortgage Rates Average 7.28%" (October 1, 2026), average 30-year fixed rate (accessed Oct 2026)
- CFPB, Regulation Z official interpretation of 1026.3, business-purpose exemption and the 14-day owner-occupancy test (accessed Oct 2026)
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. All financing is arranged for business purposes only and secured by non-owner-occupied investment property. Not a commitment to lend. All loans subject to underwriting, property review, and approval by the lender. Terms vary by property, borrower experience, and exit strategy.