Updated
Hard money 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.
The term “hard money” refers to the hard asset (real estate) backing the loan. Underwriting prioritizes collateral quality, after-repair value (ARV), loan-to-cost (LTC), and exit strategy over personal credit and DTI.
How hard money works
Hard money lenders evaluate four inputs on every file:
| Input | What underwriters review |
|---|---|
| ARV | Appraised or broker opinion of value after renovation |
| LTC | Total loan amount ÷ (purchase price + rehab budget) |
| Scope of work | Line-item budget, contractor bids, draw schedule |
| Exit | Sale, DSCR refi, or bridge to permanent debt |
Typical Jaken Finance Group structure for investment property (2026):
| Feature | Hard money |
|---|---|
| Interest rate | 8.99%–13.5% (interest-only) |
| Term | 6–12 months (extensions available) |
| LTC | Up to 100% of cost on qualified files |
| ARV cap | Up to 75% 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 · what is a hard money loan
When investors use hard money
- Fix-and-flip — acquire distressed property, fund rehab draws, sell at ARV
- BRRRR bridge — hold and renovate, then refinance into DSCR at 5.75%–10.5%
- Auction and off-market acquisitions — close before conventional buyers can qualify
- Entity-vested deals — finance in your LLC without personal income documentation
- Gap financing — bridge between acquisition and permanent commercial debt
Hard money is not a 30-year mortgage replacement. It is transaction-scoped capital for investors who need speed and asset-based underwriting.
Hard money vs. conventional vs. DSCR
| Hard money | DSCR | Conventional investment loan | |
|---|---|---|---|
| Underwriting focus | ARV, LTC, exit | Rental income, DSCR ratio | W-2, tax returns, DTI |
| Close timeline | 7–10 business days | About 14 business days | 30–45+ days |
| Rate (2026) | 8.99%–13.5% interest-only | 5.75%–10.5% fixed or ARM | Market-dependent |
| Best for | Value-add, bridge, flip | Stabilized rental hold | Long-term owner strategy |
| Seasoning for cash-out | N/A (short-term) | Select no-seasoning programs | 6–12 months typical |
Worked example: fix-and-flip in Indianapolis
| Line item | Amount |
|---|---|
| Purchase price | $165,000 |
| Rehab budget | $45,000 |
| All-in cost | $210,000 |
| Hard money loan (85% LTC) | $178,500 at 10.99% IO |
| Sponsor cash in deal | $31,500 |
| ARV (supported by comps) | $295,000 |
| Sale at month 7 | $285,000 net |
| Interest carry (7 months) | ~$11,400 |
| Estimated profit | ~$63,000 before selling costs |
Full program requirements: fix-and-flip loan requirements
Worked example: BRRRR bridge in Gary, Indiana
| Line item | Amount |
|---|---|
| Purchase + rehab | $142,000 |
| Hard money balance | $118,000 at 11% IO |
| Stabilized ARV | $189,000 |
| Combined rent | $2,650/mo |
| DSCR refi at 75% LTV, 7.5% | $141,750 — capital recycled |
| Case study | Gary no-seasoning cash-out |
Regulatory context
Business-purpose investment mortgages on non-owner-occupied property follow a different framework than consumer home loans. The CFPB defines consumer mortgages as those secured by a dwelling the borrower occupies. Hard money on investment property is underwritten on collateral and exit, not household income.
Some states require licensing for private lenders; Jaken Finance Group operates nationwide on non-owner-occupied investment property from Hoffman Estates, Illinois.
Nationwide hard money at Jaken Finance Group
Programs include:
- Fix-and-flip and heavy rehab with milestone draws
- Bridge and gap financing before sale or refi
- DSCR transitions for long-term rental holds
- Commercial and mixed-use where cash flow supports the stack
Pre-Qualify · Submit flip scenario · best hard money lenders 2026 · (833) 264-7776
Extension and maturity — planning the exit before close
Hard money at 8.99%–13.5% is short-term by design. Ask at term sheet:
| Term | Typical range |
|---|---|
| Initial term | 6–12 months |
| Extension fee | 0.5%–1% of UPB |
| Extension rate step | +0.25%–0.75% |
| Max extensions | 1–2 |
Budget 6 months IO reserve on every file — forced extensions erode flip margin fast. Exit paths: sale · DSCR refi at 5.75%–10.5% · bridge to permanent · what is a hard money loan.
Hard money vs. private money vs. bridge — naming
| Term | Typical meaning |
|---|---|
| Hard money | Asset-based, 8.99%–13.5%, 6–12 mo |
| Private money | Individual lender — terms vary |
| Bridge | Short-term — may overlap hard money |
| DSCR | Permanent rental — 5.75%–10.5% |
Private money lenders hub · bridge loans · what is a hard money loan · DSCR comparison blog.
Two caps set the check
On a qualified fix-and-flip file, Jaken Finance Group can fund up to 100 percent of cost. Cost means the purchase price plus the rehab budget. The loan still stops at 75 percent of after-repair value. Fund the lower number. Bridge loans use the same 8.99 percent to 13.5 percent interest-only range, for 12 to 24 months, up to 90 percent of the purchase price. A flip term is 6 to 12 months. Both products can close in 7 to 10 business days on a complete file. A later DSCR loan, when the exit is a rental, is quoted from 5.75 percent to 10.5 percent and closes in about 14 business days.
Illustration: the ARV cap wins
This sketch is not a closed loan. Purchase price is $240,000. Rehab is $60,000. All-in cost is $300,000. Funding 100 percent of cost would be $300,000. Supported after-repair value is $380,000, and 75 percent of that value is $285,000. The loan in this sketch is $285,000, the lower cap. Cash required is $15,000. At 11.49 percent interest-only, the monthly interest is $2,728.88. Eight months cost $21,831. A contract price of $365,000, before selling costs, leaves $43,169 after the $300,000 of cost and the interest. Commissions and concessions still reduce that remainder. If after-repair value were $360,000 instead, 75 percent would be $270,000 and cash in would be $30,000.
The $285,000 can be split across draws. This schedule is an illustration of the same math:
| When | What must be done | Amount |
|---|---|---|
| Closing | Purchase funded, rehab held back | $240,000 |
| First draw | Roof and mechanical rough-in | $20,000 |
| Second draw | Interior finishes | $15,000 |
| Final draw | Punch list and lien waivers | $10,000 |
Those four amounts total $285,000. The loan funds $45,000 of the $60,000 rehab. The $15,000 of borrower cash covers the rest of the budget. A draw is released when the work in that row is done.
Material prices and carrying costs in 2026
The producer price index for construction materials, not seasonally adjusted, was 375.908 in August 2026 on FRED WPUSI012011. It was 341.458 in August 2025, so the index is 10.1 percent higher than a year earlier. A rehab budget copied from last summer can be short before the first draw. Price the scope from current contractor bids.
U.S. city average electricity was 19.6 cents per kilowatt-hour in August 2026, up from 19.0 cents a year earlier, on FRED APU000072610. That is a national average, not a single utility bill. Put it in the carry budget next to interest, taxes, and insurance. The FHFA purchase-only house price index, seasonally adjusted, was 443.52 in July 2026, up 2.6 percent from 432.40 in July 2025, on FRED HPIPONM226S. January 1991 equals 100 on that index. It is a national series, so it is not a comparable sale for one after-repair value.
Freddie Mac’s 30-year fixed rate was 7.28 percent for the week of October 1, 2026, and 7.03 percent for the week of September 24, 2026, on FRED MORTGAGE30US. Hard money sits above that consumer print because the term is short, the house is often mid-rehab, and the payment is interest-only.
Why this is business-purpose credit
The official interpretation of 12 CFR 1026.3 treats credit to acquire, improve, or maintain non-owner-occupied rental property as a business purpose. The comment includes a single-family house rented to someone else. If the owner expects to occupy the property more than 14 days in the coming year, the comment says it cannot be treated as non-owner-occupied. Jaken Finance Group finances non-owner-occupied investment property. Underwriting looks at after-repair value, cost, the budget, and the exit.
What belongs in a complete flip file
- The purchase contract and, on an assignment, the assignment that shows the real price.
- A rehab budget by line, with bids rather than one round number.
- Photos and a scope that matches the budget.
- Comparable sales that support the after-repair value in the request.
- The exit in one sentence: sell, or refinance to a DSCR loan after a lease is in place.
- A renovation insurance binder when the carrier requires one.
- Entity documents if the deed will vest in an LLC, plus the guarantor package.
What the rate range costs on the same loan
Using the $285,000 illustration above, interest-only math at the ends of the published range is straightforward. At 8.99 percent, eight months of interest is $17,081. At 13.5 percent, eight months is $25,650. The spread is $8,569 on the same balance and the same hold. One percentage point on that balance for eight months is $1,900. Price is set in underwriting. It is not a menu the borrower picks. Quote the deal, then rerun the sale proceeds with the rate on the term sheet.
Call (833) 264-7776 when the contract deadline is inside two weeks. Requirements are listed on fix-and-flip loan requirements. Longer holds are outlined under bridge loans.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon satisfaction of borrower conditions. All loans are subject to asset-based underwriting. Jaken Finance Group only finances non-owner occupied investment properties.
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Jaken Finance Group, 2300 Barrington Road, Suite 400, Hoffman Estates, IL 60196