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 90% on qualified fix-and-flip 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 | 21–30 days | 30–45+ days |
| Rate (2026) | 8.99%–13.5% IO | 5.75%–10.5% fixed | 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.
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