Hard Money, like conventional money, is generally still handed out by some type of lender unless “you know a guy”. The guy here would be a private lender and he/she would be handing our PRIVATE money. Hard Money Lenders (HMLs) are referred to as “non-banks” because they don’t have to follow the rules set forth by Fannie Mae, Freddie Mac, the USDA, VA, FHA, or Ginnie Mae. They are also ALLOWED to have risky loan features like balloons, interest only payments, prepayment penalties, and adjustable rates.

I prefer to think of those risky features as a tax for getting the money together really quickly.

Hard Money typically comes in three basic ways and is ALMOST always used for investment properties.*

Fix and Flip Loans: Lenders provide a large percentage of the purchase price, generally all or very near all of the money needed to do the rehab, and the combination of those two is limited by the After Repair Value (ARV) and Total Loan to Cost (tltc). The latter is basically how much they have in a deal total vs you.

Ground Up Loans: Lender will pay for a percentage of the land you are buying to build on and pay some large percentage of the house to be built. Some require a ‘shovel ready’ lot. Virtually no lender is giving a Ground Up loan if you don’t have FnF experience.