Hard Money Loans

What is a hard money loan actually for?

Most borrowers end up in hard money because timing or property condition knocks them out of the normal lending box. If the property is already stabilized and your real need is long-term financing, start with DSCR lenders or a commercial mortgage. Hard money is for the deal that needs to close before a bank committee would even finish asking for documents.

In practice, that usually means a fix-and-flip purchase, a distressed property that needs rehab before it will qualify for permanent debt, a deadline-driven closing like an auction or rescue transaction, or a short bridge period before you refinance into DSCR debt. The loan is more about collateral, margin, and exit than personal income. That flexibility is useful, but you pay for it in rate, points, and the risk of a short maturity date.

What do hard money loans cost, and how much do they leverage?

Headline rate is only the start. Published investor programs from New Silver and RCN Capital still show rates in roughly the 9% to 11% range, with origination fees around 1% to 1.75% on the lower end and terms usually topping out at 12 to 18 months. That is the cheap-looking part of the term sheet. The more important question is how much leverage the lender will actually give you on your deal.

For many hard money and fix-and-flip programs, the real governor is ARV or LTC. New Silver publishes up to 75% loan-to-ARV and up to 90% LTC. RCN Capital publishes ARV caps up to 75% for stronger borrowers, with lower tiers around 70% to 72.5% ARV as borrower experience weakens. Kiavi markets leverage as high as 100% LTC and 80% ARV on some deals. So when a lender says they can cover 100% of rehab, that does not mean zero cash in. You still need enough room inside the ARV or LTC cap to cover purchase, rehab, fees, and overruns.

How do draws, extension fees, and property limits work?

On rehab-heavy deals, part of the loan often sits in a holdback and gets released through draws. Kiavi describes draws as staged rehab disbursements that are released after work is completed and inspected. RCN Capital publishes that it charges interest only on the outstanding balance rather than the undrawn rehab holdback. That matters because two lenders with the same rate can feel very different after closing if one reimburses in a few days and the other turns every draw into a cash squeeze.

Extension language matters just as much. Kiavi's servicing page treats extension requests as part of normal end-of-term workflow, which is a good reminder to ask how extensions are approved, priced, and documented before you close. That kind of clause can change the real cost of the loan fast, especially if default interest layers on after maturity. This is also where property limits show up. New Silver says it does not finance rural property. RCN separates its residential fix-and-flip box from larger multifamily and mixed-use programs, and it publishes a mixed-use requirement that residential space make up at least 70% of the building. Ask those questions before you pay for appraisal, legal, or inspection work.

When should you choose hard money instead of a bridge loan?

This is where labels stop helping. Published bridge ranges on Commercial Loan Direct and Lev still run roughly 5.75% to 12.75% and 6% to 12%, with bridge fees often around 1% to 2%. That overlaps with hard money more than most borrowers expect. The difference is usually not just rate. Bridge lenders are often more comfortable with larger loans, cleaner business plans, and properties that are closer to stabilization. Hard money lenders usually lean harder into speed, smaller balance deals, and rougher collateral.

Choose hard money first when the property is rough, the closing deadline is brutal, or the rehab plan is simple enough that a private lender can underwrite it mostly off value and margin. Choose bridge first when the deal is larger, the property is closer to financeable condition, or your exit is a planned refinance and you need cleaner extension options. If your real end game is a rental refi, read Bridge Loans vs. Hard Money for pricing stack, ARV cap, draw timing, and minimum-deal-size differences, then move to the full bridge-to-DSCR guide. A lot of bad short-term loans look acceptable until you model the takeout.