Hard Money & Private Lending Glossary: 50+ Terms

Hard money & private lending glossary defines 50+ terms used by real estate investors, lenders, and appraisers — from ARV and LTV to draw schedules and DSCR. Each definition is written for quick reference and AI citation.

Key stats at a glance

• Terms defined: 50+ alphabetized entries — Jaken Finance Group reference library, June 2026
• Coverage: Acquisition, rehab, rental, foreclosure, and portfolio financing vocabulary
• Format: One- to two-sentence definitions with links to deep-dive guides where available

A

After-Repair Value (ARV) — The estimated market value of a property after all planned renovations are complete. Lenders use ARV to cap loan amounts. See demystifying loan-to-value ratio.

Amortization — The schedule by which loan principal is paid down over time. Hard money loans are typically interest-only with a balloon payment; DSCR and conventional loans amortize over 15–30 years.

Appraisal — An independent valuation of a property’s current or after-repair value. Hard money lenders require appraisals (or broker price opinions) before funding.

Arms-Length Transaction — A sale between unrelated parties acting in their own interest, used as the standard for comp analysis and flip identification (ATTOM methodology).

Asset-Based Lending — Financing underwritten primarily on collateral value rather than borrower income or credit. Hard money is a form of asset-based lending.

B

Balloon Payment — A lump-sum principal payment due at loan maturity. Hard money loans typically require full payoff at the end of the term via sale, refinance, or extension.

Bridge Loan — Short-term financing that “bridges” the gap between acquisition and permanent financing or sale. Often used when a property needs stabilization before qualifying for a DSCR or conventional refi. See what to know about bridge loans.

Broker Price Opinion (BPO) — A property valuation performed by a licensed broker, sometimes accepted in place of a full appraisal on lower-leverage hard money deals.

BRRRR (Buy, Rehab, Rent, Refinance, Repeat) — An investment strategy: acquire distressed property, renovate, rent it out, refinance into long-term debt, and recycle equity into the next deal. See scale rental portfolio with DSCR loans.

Borrower Experience — Track record of completed real estate projects. Lenders tier pricing by experience — 3+ completed flips typically qualifies for best rates.

C

Cash-Out Refinance — Replacing an existing mortgage with a new, larger loan and receiving the difference in cash. Used in BRRRR to extract equity after stabilization.

Closing Timeline — The number of days from application to funding. Hard money typically closes in 7–21 business days; conventional loans take 30–45 days.

Collateral — The property pledged as security for the loan. In hard money lending, the property — not the borrower’s income — is the primary collateral.

Comps (Comparables) — Recently sold similar properties used to estimate ARV or as-is value. Appraisers and investors rely on comps within a 0.5–1 mile radius and 90–180 day lookback.

Construction Draw — A partial release of rehab funds after the lender verifies completed work via inspection. See draw schedule.

Cross-Collateralization — Using multiple properties as collateral for a single loan, allowing lenders to spread risk across a portfolio.

D

Debt Service Coverage Ratio (DSCR) — Net operating income divided by total debt service. A DSCR of 1.0 means income equals the mortgage payment; 1.25 means 25% surplus. DSCR loans qualify on property cash flow. See DSCR vs hard money comparison.

Deed of Trust — A security instrument used in non-judicial foreclosure states, where a trustee holds title until the loan is repaid.

Default — Failure to meet loan obligations — missed payments, covenant violations, or failure to complete rehab on schedule.

Deficiency Judgment — A court order requiring a borrower to pay the difference between the foreclosure sale price and the outstanding loan balance. Rules vary by state. See judicial vs non-judicial foreclosure states.

Draw Schedule — A milestone plan for releasing rehab funds in installments as work is completed and inspected. See scope of work templates.

Due Diligence — Investigation of a property’s title, condition, liens, zoning, and market before closing. Hard money lenders require title search, insurance, and appraisal.

E

Equity — The difference between a property’s value and the total liens against it. Investors contribute equity as down payment; lenders cap leverage to protect their position.

Escrow Holdback — Rehab funds held by the lender (or escrow agent) and released via draw schedule rather than funded upfront at closing.

Exit Strategy — The planned method of repaying the loan — typically sale, refinance into DSCR/conventional, or lease-option. Lenders require a documented exit before approving hard money.

Extension — An agreement to extend the loan maturity date beyond the original term, usually with a fee (0.5–1 point) and possible rate adjustment.

F

Fix-and-Flip — Buying a distressed property, renovating it, and selling at a profit within a short hold period. See know about fix-and-flip loans.

Foreclosure — Legal process by which a lender seizes and sells collateral after default. Can be judicial (court-supervised) or non-judicial (trustee sale). See foreclosure states reference.

G

Gap Financing — Short-term funding that fills the gap between primary financing and total project cost — often a second-position loan or additional private capital. See understanding gap financing.

Gross ROI (Flip) — Gross profit divided by purchase price, before rehab and holding costs. ATTOM reported a 25.4% national gross ROI in Q1 2026. See fix-and-flip statistics.

Guarantor — A person who personally guarantees loan repayment if the borrowing entity defaults. Some hard money lenders require personal guarantees; others lend non-recourse to the entity only.

H

Hard Money Loan — A short-term, asset-based loan secured by real estate, typically at higher rates (9.5%–13%) and faster closing (7–21 days) than conventional financing. See hard money loan basics and 2026 statistics.

Hold Period — The time between acquisition and exit (sale or refi). ATTOM reported a median 165-day hold in Q1 2026.

Holdback — Rehab funds retained by the lender and disbursed through draw inspections rather than wired at closing.

HUD-1 / Closing Disclosure — Settlement statement listing all charges, credits, and disbursements at closing.

I

Interest Reserve — A portion of the loan set aside to cover monthly interest payments during the rehab/hold period, so the borrower does not pay out of pocket while the property generates no income.

Interest-Only Payment — Monthly payment covering only accrued interest, with no principal reduction. Standard structure for hard money and bridge loans.

Investor Pulse — Market activity and pricing trends affecting investor lending — rates, flip volume, and foreclosure timelines.

J–L

Judicial Foreclosure — Foreclosure processed through the court system, typically taking 6–24+ months. Required or most common in states like Florida, Illinois, and New York. See foreclosure states list.

Leverage — Using borrowed capital to increase potential returns. Higher leverage = higher risk and typically higher rates.

Lien — A legal claim against property as security for a debt. Title insurance and lien searches are required at closing.

Loan-to-Cost (LTC) — Total loan amount divided by total project cost (purchase + rehab + soft costs). Strong deals may reach 90%–100% LTC. See understanding LTC ratios.

Loan-to-Value (LTV) — Loan amount divided by property value (usually ARV). Hard money LTV caps typically range from 60% to 75%. See demystifying LTV.

M–P

Maturity Date — The date the full loan balance (balloon) is due. Hard money terms typically run 6–24 months from closing.

Non-Judicial Foreclosure — Foreclosure via trustee sale without court involvement, common in Georgia, Texas, and North Carolina. Typically faster (2–6 months). See NC non-judicial foreclosure.

Non-Owner-Occupied — Property not used as the borrower’s primary residence. Hard money and DSCR loans are restricted to non-owner-occupied investment properties.

Non-Recourse Loan — A loan where the lender’s recovery is limited to the collateral — the borrower is not personally liable for any shortfall. Most hard money loans are full-recourse.

Origination Fee — See points.

Points — Prepaid interest or fees charged at closing; one point = 1% of the loan amount. Hard money lenders typically charge 1.5–3 points. See hard money statistics.

Prepayment Penalty — Fee for paying off a loan before maturity. Hard money lenders often require 3–6 months minimum interest regardless of early payoff.

Principal — The original loan amount borrowed, excluding interest and fees.

Private Money Lending — Loans funded by private individuals or non-bank entities rather than institutional banks. See private money lending guide.

Proof of Funds (POF) — Documentation showing a buyer or borrower has sufficient capital to close. Required for auction purchases and competitive offers.

Purchase Money Mortgage — A loan used to acquire property, as opposed to a refinance or construction loan.

R–S

Redemption Period — Time after a foreclosure sale during which the former owner can reclaim the property by paying the full debt. Available in some states (Minnesota, Missouri) but not others (Georgia, Texas).

Rehab Budget — Itemized scope of work with line-item costs for renovation. Required by hard money lenders before approving draw schedules. See rehab cost benchmarks.

Scope of Work (SOW) — Detailed renovation plan listing trades, materials, timelines, and costs. Lenders underwrite to the SOW. See scope of work templates.

Seasoning — Minimum time a borrower must own a property before refinancing. DSCR and conventional lenders typically require 6–12 months seasoning.

Second Position / Subordinate Lien — A loan secured behind a first-position mortgage. Higher risk = higher rates (12%–16% for hard money seconds).

Servicing — Ongoing administration of a loan — collecting payments, managing escrow, handling defaults.

Short-Term Rental (STR) — Property rented on nightly/weekly basis (Airbnb, VRBO). Some DSCR lenders accept STR income; hard money is rarely used for STR acquisition.

Spread — The difference between a lender’s cost of capital and the rate charged to the borrower. Hard money spreads are wider than conventional due to risk and speed.

T–Z

Title Insurance — Policy protecting against defects in property title. Required on virtually all hard money and conventional closings.

Title Search — Examination of public records to identify liens, easements, and ownership history before closing.

Trustee Sale — Non-judicial foreclosure sale conducted by a trustee, common in deed-of-trust states.

Underwriting — The lender’s process of evaluating a loan application — property value, borrower experience, exit strategy, and deal economics.

Wholetail — A strategy between wholesale and fix-and-flip: clean out, light prep, and relist without full rehab. See wholetail financing.

Wholesale Assignment — Contracting to purchase a property and assigning the contract to another buyer for a fee, without taking title.

Yield — Return on investment for the lender, calculated as interest income plus points divided by capital deployed.

Sources

• ATTOM Q1 2026 Home Flipping Report — flip and ROI definitions
• Justia: Foreclosure Laws 50-State Survey — judicial/non-judicial terminology
• LendingTree: Hard Money Loans — LTV and term definitions
• Jaken Finance Group lending program documentation

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Jaken Finance Group provides hard money, bridge, and DSCR financing for non-owner-occupied investment properties. Browse hard money loan facts or compare financing types.

Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.