What is a hard money loan? It is short-term, asset-based real estate financing secured by the property — not your W-2 income or tax returns. Real estate investors use hard money to acquire, renovate, bridge, or exit deals faster than conventional banks allow.
This is the canonical Jaken explainer for hard money in 2026. For metro-specific programs, see hard money lenders Chicago or hard money lenders Washington DC.
How hard money works
Hard money lenders underwrite to collateral and exit strategy — after-repair value (ARV), loan-to-cost (LTC), scope of work, and how you plan to sell or refinance. Credit-flexible programs are available on select files; approval is collateral-first, not FICO-driven.
Typical structure:
| Feature | Hard money (2026) |
|---|---|
| Interest rate | 8.99%–13.5% (interest-only) |
| Term | 6–12 months (extensions available) |
| LTC | Up to 90% on qualified fix-and-flip files |
| ARV cap | Up to 80% after-repair value |
| Close speed | 7–10 business days with complete file |
Compare products: DSCR vs hard money vs conventional · hard money loan statistics 2026 · interest rates hub.
When investors choose hard money
- Speed — auction wins, estate sales, and off-market deals close in days, not 45-day bank timelines
- Distressed condition — banks require habitable collateral; hard money funds the rehab that makes the property financeable
- Entity borrowing — LLC-vested acquisitions without personal guarantee on every file
- Bridge-to-DSCR — buy and rehab with hard money, exit to DSCR rental debt when stabilized
- Construction and ground-up — new construction loans with milestone draws
Hard money vs bridge vs DSCR
| Product | Best for | Term |
|---|---|---|
| Hard money / fix-and-flip | Acquisition + rehab + resale | 6–18 months IO |
| Bridge | Stabilized hold, 1031 gap, maturity wall | 12–24 months IO |
| DSCR | Long-term rental hold | 30-year fixed/ARM |
Read bridge loans vs hard money when your exit is refi, not sale.
What lenders review on your file
- Purchase price and rehab budget — documented scope, licensed GC bids
- ARV or stabilized value — third-party comps, not seller optimism
- Liquidity — interest reserve, closing costs, contingency
- Track record — first deals need stronger equity; repeat sponsors access higher leverage
- Exit plan — flip sale, DSCR refi, or bridge payoff documented at origination
Worked example: $280K Chicago flip
| Line item | Amount |
|---|---|
| Purchase | $185,000 |
| Rehab | $95,000 |
| Total cost | $280,000 |
| ARV | $365,000 |
| Loan (88% LTC) | $246,400 |
| Rate | 10.5% IO · 8-month hold |
| Interest carry | ~$17,300 |
| Sale net (after costs) | ~$45,000–$55,000 |
Model your file in the fix and flip calculator before LOI.
Metro programs
- Fix and flip loans Illinois
- Fix and flip loans Washington DC
- New construction loans Chicago
- New investor solutions
Common mistakes
- Under-budgeting carry — permit delays add months; size interest reserve at origination
- Optimistic ARV — lenders cap at documented comps; your pro forma should match
- Wrong product — DSCR is not a flip tool; hard money is not a 30-year hold solution
Pre-qualify for hard money · (833) 264-7776
Rates, terms and conditions offered only to qualified borrowers. Jaken Finance Group only finances non-owner occupied investment properties.