A short-term real estate loan from a private or non-bank lender that is decided mainly on the property's value and the exit plan, not on the borrower's income.
Hard money has no legal definition. The phrase describes who lends and how they decide. The lender is a private individual, a small lending company or a fund. The decision rests on the hard asset: what the property is worth today, what it could sell for, and how the loan gets repaid. Income documents and bank-style cash flow analysis carry less weight or none.
Borrowers use it when time or the property rules out a bank: a closing date days away, a vacant or damaged building, a purchase at auction, or a borrower whose finances are hard to document. In structure it is a bridge loan, which the OCC handbook describes as short-term financing that carries a property until it can be sold or can qualify for permanent financing. Expect a short term, interest-only payments, points paid at closing and a higher rate than a bank charges.
The loans are made for a business purpose, which keeps them outside Regulation Z’s consumer rules, so read the default interest, extension and prepayment terms closely. Have the exit settled before closing. If the exit is a bank refinance, ask that bank now what it will need.
How it shows up in the data here
Hard money is a market term, not a data field. Private lenders file no call report, and many are too small to report under HMDA, so most are not on this site. Larger non-bank lenders that reported 1-4 unit investor loans are: see 1-4 unit investor lenders and non-bank lenders in search. Before paying for speed, check which banks and credit unions hold loans like yours in search.
Go further
- Non-bank lenders in search: Lenders that are not banks or credit unions and appear in HMDA or SBA records.
- When a bank says no: Where a declined request can go next.
- LTV and LTC calculator: Loan to value and loan to cost, the equity a lender will ask for, and the federal supervisory limit for the property type.
- Amortization and balloon calculator: Payment, balance at maturity and interest paid, for a loan that amortizes over longer than it runs.
- What to do after a bank says no to a business loan: One bank's no is one lender's answer, and the reasons are yours to ask for. They usually point to a constraint you can name.
Related terms
- Fix-and-flip loan: A short-term business-purpose loan to buy a house, renovate it and sell it, repaid from the sale instead of from monthly income.
- Bridge loan: A short-term loan that carries a newly built or newly bought commercial property until it is leased and earning enough to be sold or refinanced with a permanent loan.
- Debt fund: A private investment fund that makes or buys loans with money raised from investors, instead of taking deposits the way a bank or credit union does.
- Non-bank lender: A non-bank lender is a company that makes loans but does not take deposits, so it is not a bank, a savings institution or a credit union.
- After repair value (ARV): The estimated market value of a property once a planned renovation is finished, used to size fix-and-flip and other renovation loans.
- Loan-to-value ratio (LTV): The loan amount divided by the value of the property securing it. A $700,000 loan on a property valued at $1,000,000 is 70 percent loan to value.
- Interest-only (IO): A loan, or a stretch of a loan's term, in which payments cover interest alone and the principal balance does not go down.
- Personal guaranty: A signed promise by an individual, usually an owner, to repay a business or real estate loan personally if the borrowing company does not.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.