How much does a hard money loan cost?

On a $300,000 loan at 11% IO for 6 months, interest carry is roughly $16,500 plus 1.5–3 origination points ($4,500–$9,000). Total cost depends on hold period — model carry in the fix-and-flip calculator before bidding.

Do hard money lenders check credit?

Hard money is collateral-first — credit-flexible on select programs with no minimum FICO. Lenders may pull credit to review trends, but approval is driven by ARV, LTC, liquidity, and exit strategy.

When should investors use hard money instead of a bank?

When you need 7–10 business day closes, distressed property acquisition, entity-vested LLC borrowing, rehab draw funding, or bridge-to-DSCR on a BRRRR cycle — banks rarely fund these timelines or property conditions.

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What You Should Know About Hard Money Loans (2026 Investor Guide)

Q: What is a hard money loan in 2026?

A hard money loan is asset-based financing secured by investment property — underwritten on ARV, LTC, scope of work, and exit strategy rather than W-2 income. Rates run 9%–13.5% interest-only on 6–12 month terms with 7–10 business day closes.

Published June 12, 2026 · Updated June 26, 2026

By Jason Taken · Principal, Jaken Finance Group

What is a hard money loan in 2026 — LTC, ARV, rates, and close timelines for fix-and-flip and BRRRR investors. Asset-based lending explained by Jaken.

When obtaining financing for a real estate project, many investors turn to hard money lenders for speed and flexibility. This 2026 refresh updates legacy LTV ranges with current LTC/ARV underwriting, links to our hard money product hub, and points beginners to new investor solutions.

What is a hard money loan?

A hard money loan is asset-based financing secured by investment property — not your W-2. The lender underwrites after-repair value (ARV), loan-to-cost (LTC), scope of work, and exit strategy (flip sale, DSCR refi, or bridge payoff).

Hard money is short-term — typically 6–18 months interest-only — built for fix-and-flip, BRRRR acquisition/rehab, auction wins, and bridge-to-permanent debt.

How hard money works in 2026

Step	What happens
1	Submit property, comps, and line-item scope
2	Lender sets LTC cap (often 85%–90%) and ARV cap (often 70%–75%)
3	File closes in 7–14 business days when complete
4	Rehab releases on milestone draws after inspection
5	Exit via sale, DSCR refi, or bridge extension

2026 rate band: 9%–13.5% IO for qualified investor files — priced for speed and asset risk. Model carry in the fix and flip calculator before you bid.

Worked example: 6-month flip carry

$340,000 hard money loan at 11% IO, 6-month hold:

Cost item	Amount
Monthly IO	~$3,117
6-month interest	~$18,700
2 points origination	$6,800
Total financing cost	~$25,500

If ARV spread supports $40K+ net after rehab and sale friction, hard money carry is a line item — not a deal killer. If spread is $15K, carry eats the profit. Run numbers before LOI.

See hard money loan statistics 2026 for industry benchmarks.

See how a DSCR loan works for the permanent refi half of a BRRRR cycle.

Hard money vs bank financing

Factor	Bank mortgage	Hard money
Close	30–60+ days	7–14 days
Qualification	W-2, DTI, credit	ARV, LTC, exit
Property condition	Habitable	Distressed OK
Term	15–30 years	6–18 months IO
Best for	Owner-occupied, turnkey	Value-add investors

Read hard money vs conventional financing and bridge vs hard money when you need product fit clarity.

Who uses hard money loans?

Fix-and-flip operators — fix and flip loans Chicago, Florida, nationwide
BRRRR sponsors — hard money buy/rehab → DSCR refi
Auction buyers — auction.com financing without inspection
First-time investors — experience helps on leverage, but is not always required

Funded proof: case studies hub.

Pros and cons (2026)

Pros: Speed, flexible terms, asset-based approval, draw-funded rehab, nationwide execution.

Cons: Higher IO carry, short term requires exit discipline, points/fees, extension costs if project slips.

Avoid pitfalls in hard money loan mistakes and 10 myths first-time borrowers believe.

Hard money in a BRRRR cycle

Hard money is the acquisition and rehab leg — not the permanent hold. The typical BRRRR sequence:

Buy with hard money at 9%–13.5% IO
Rehab via milestone draws (see draw process guide)
Rent at market rate — stabilize occupancy
Refinance into DSCR at 7.5%–10.5% when ratio clears 1.0+
Repeat with cash-out proceeds

Plan the DSCR exit before you close hard money. Read federal rate cuts and BRRRR strategy for refi timing guidance.

Hard money state hubs

Hard money lenders Illinois · Florida · North Carolina
Georgia · Washington DC
National: what is a hard money loan · interest rates · hard money statistics 2026

Choosing a hard money lender (2026 checklist)

Before you sign a term sheet, compare lenders on these dimensions — not rate alone:

Factor	What to ask
LTC on your experience tier	”What leverage for a first-time sponsor?”
Draw inspection lag	”How many days from inspection to wire?”
Extension policy	”Minimum interest months and extension fee?”
DSCR exit familiarity	”Have you refinanced sponsors in my market?”
Points and fees	”Total cost at close including processing?”

Pillar guides: choose the right hard money lender · red flags in hard money lenders · DSCR vs hard money vs conventional

Hard money rates and leverage (2026 reference)

Parameter	Jaken range
Interest rate	9%–13.5% IO
LTC	Up to 90% on qualified files
ARV cap	Up to 75%
Term	6–12 months
Close	7–10 business days
Points	1.5–3 origination

Full benchmarks: hard money loan statistics 2026 · interest rates hub

Next steps

Get pre-qualified — 24-hour response on complete files
Walk the loan process document checklist
Download the fix-and-flip financing guide

Pre-Qualify for Hard Money · What is a hard money loan (programs) · (833) 264-7776

Rates, terms and conditions offered only to qualified borrowers. Jaken Finance Group only finances non-owner occupied investment properties.