Why do house flippers use hard money instead of bank loans?

Speed (7–14 business days), ARV-based leverage up to ~90% LTC, and collateral-first underwriting when distressed stock, entity vesting, or rehab scope does not fit 30–45 day bank timelines — on non-owner-occupied investment property only.

What rate do Jaken Finance Group hard money flip loans carry?

Qualified investment-property bridge files run 8.99%–13.5% interest-only during the hold. Carry is a line item in spread math — model IO against projected sale or DSCR refi at 5.75%–10.5% before LOI.

What documents help a flip file close faster?

Purchase contract, three sold comps, line-item scope with 10%–15% contingency, LLC docs, investor insurance quote, and a written exit (resale pro forma or lease plan for DSCR path).

Blog

Benefits of Using a Hard Money Lender for Flipping Homes

Published June 12, 2026 · Updated July 18, 2026

By Jason Taken · Principal, Jaken Finance Group

Why flippers choose hard money at 8.99%–13.5% IO — ARV leverage, 7–14 day close, draw-managed rehab, and exit math vs bank timelines on investment property.

Hard money gives non-owner-occupied flippers speed, ARV-based leverage, and draw-managed rehab funding when bank condition lists and personal-guarantee underwriting cannot match auction, off-market, or heavy value-add timelines. Jaken Finance Group prices qualified bridge files at 8.99%–13.5% interest-only — not a 30-year hold mortgage. This guide maps the concrete benefits flippers gain from a collateral-first lender and what underwriters expect before term sheet.

Hard money vs bank — flipper comparison

Factor	Hard money (flip bridge)	Bank / agency
Rate band	8.99%–13.5% IO	Lower fixed, longer term
Sizing	ARV, LTC, collateral	Stabilized value, DTI
Close	7–14 business days	30–45+ days typical
Rehab draws	Milestone inspection releases	Rare on distressed stock
Credit	Business-purpose, deal-driven	Personal guarantee common
Property type	Non-owner-occupied only	Owner-occ and investment

What is hard money · Fix and flip requirements · DSCR hub.

Benefit 1 — Close before the deal walks

Distressed inventory moves on contract timelines, not bank committee schedules. A hard money lender underwrites the subject collateral — sold comps, scope, exit — rather than waiting on full W-2 documentation cycles.

When a seller accepts your offer with a 10-day inspection and 21-day close, a bank file that needs 35 days from application to funding loses the property. Hard money programs built for investors target 7–14 business days from complete package to wire, assuming appraisal access and borrower conditions are satisfied.

That speed is not free — IO carry at 8.99%–13.5% accrues from day one. The benefit only holds when your spread after ~8% sale costs absorbs carry and closing. Thin deals where ARV minus basis leaves less than 15% gross margin rarely justify bridge leverage regardless of close speed.

Benefit 2 — Leverage on ARV, not just purchase price

Banks size on as-is appraised value and often cap rehab exposure. Hard money flips size on after-repair value (ARV) and loan-to-cost (LTC) — funding purchase plus rehab when comps and scope support the exit.

Typical qualified flip parameters:

Parameter	Typical range
LTC	Up to ~90% of all-in basis
ARV cap	~70%–75% of ARV
Rate	8.99%–13.5% IO
Term	6–18 months bridge

Fix and flip calculator · 100% LTC program details.

Higher leverage preserves cash for multiple concurrent projects, reserves, and carry — but only when ARV is supported by sold comps within 0.5 miles on matching product, not listing aspirational prices from actives.

Benefit 3 — Rehab funded through draws, not out-of-pocket

Flippers who self-fund rehab tie up capital that could fund the next acquisition. Hard money holdback accounts release on inspection milestones — rough-in, drywall, CO — after documented progress.

Draw rhythm matters:

Milestone	Typical release
Closing	Purchase portion + partial rehab holdback
Rough-in / mechanical	Tranche per approved scope
Drywall / finishes	Subsequent tranches
Final / CO	Remaining holdback

Plan 3–5 business days per draw after inspection. Submit draw requests 48 hours before the milestone to avoid GC idle time. See fix and flip draw process.

Scope without 10%–15% contingency is the most common reason equity absorbs overruns — underwriters treat contingency as mandatory, not optional padding.

Benefit 4 — Collateral-first underwriting on investment entities

Many flippers vest acquisitions in an LLC for liability and portfolio management. Banks often require personal guarantee with full personal financials. Hard money programs for business-purpose, non-owner-occupied deals focus on:

Entity docs — operating agreement, EIN, good standing
Sold comps — ARV support
Scope + bids — LTC and draw schedule
Exit letter — sale timeline or DSCR refi path at 5.75%–10.5%
Insurance — investor/landlord quote, not owner-occupied HO-3

Credit-flexible programs exist on select files — see hard money vs conventional — but deal quality (comps, scope, exit) drives approval more than FICO alone.

Benefit 5 — Distressed and code-violation inventory banks reject

Banks decline properties with open permits, code violations, fire damage, or non-functional systems because collateral is not financeable on their checklist. Hard money lenders who specialize in value-add accept those files when scope cures the deficiency and **ARV reflects post-rehab market.

Hard money for code violations · Hard money loan mistakes to avoid.

The trade-off: higher IO rate and shorter term. Your pro forma must show rehab curing the defect and resale or lease-up before bridge maturity.

Worked example — $240K all-in flip

Assumptions: $195,000 purchase + $45,000 rehab = $240,000 all-in. ARV $310,000. Hard money 88% LTC → $211,200 note at 11% IO ≈ $1,936/mo during 6-month hold ≈ $11,616 carry.

Line	Amount
ARV	$310,000
Sale costs (~8%)	−$24,800
Net sale	$285,200
All-in basis	−$240,000
Carry + closing (approx.)	−$15,000
Spread (pre-tax)	~$30,200

Stress ARV −10% ($279K net before costs) and +1 month carry before you lock scope. At $279K ARV, net sale after 8% costs ≈ $256,680 — spread drops to roughly $1,680 before closing friction. That sensitivity is why experienced flippers model downside before leveraging to 90% LTC.

Benefit 6 — Clear exit paths — sale or DSCR refi

Hard money is bridge debt. The benefit collapses without a documented exit:

Exit	When it fits	Next product
Resale	Flip timeline 4–9 months	Payoff from sale proceeds
DSCR refi	BRRRR / value-add hold	5.75%–10.5% permanent at DSCR ≥1.0
Sale of other asset	Portfolio rebalancing	Bridge until liquidity event

Using hard money to invest · Hard money buy-and-hold strategy · Scale portfolio with DSCR.

Confirm DSCR seasoning (6–12 months from note date on many programs) before you close bridge if refi is the primary exit.

When hard money is the wrong tool for a flip

Stabilized turnkey with executed lease — start with DSCR, not bridge
Owner-occupied purchase — Jaken Finance Group finances non-owner-occupied investment property only
No sold comps supporting ARV — collateral underwriting has nothing to anchor
Spread under 10% gross after 8% sale costs and modeled carry — pass or renegotiate basis
GC unavailable or scope undefined — draws cannot release without milestones

File package — before term sheet

Document	Purpose
Purchase contract / LOI	Timeline and price
Sold comps (3+)	ARV / value support
Scope + bids	LTC and draw schedule
Entity docs	LLC OA, EIN, good standing
Exit letter / pro forma	Sale or DSCR path
Insurance quote	Carry and refi PITIA

Incomplete files queue behind complete packages. Gather one PDF folder before submission — see checklist for evaluating hard money proposals.

Risks to model honestly

IO carry — each extra month at 8.99%–13.5% burns spread without sale
Scope overrun — without contingency, equity absorbs overruns
ARV miss — appraiser may land below pro forma; size exit on conservative comps
Seasoning — DSCR refi may need months on title; confirm before bridge close
Extension fees — pre-negotiate max term and extension cost at origination