Hard Money Definition

Hard Money Definition

Published On: November 23rd, 2015Last Updated: November 23rd, 2015Categories: Hard Money


A hard money loan is one that can provide capital quickly. This type of financing is typically used by investors who need to purchase and renovate non-owner occupied properties (both residential and commercial) because in many cases, it makes more sense than traditional financing does.

Hard Money Definition

A hard money loan is an asset-based loan. That means there must be some form of collateral; in this case, it’s most often the house the investor is buying.

Typically, interest rates on hard money loans are higher than they are on conventional loans. They’re usually short term, as well. Often, hard money loans can be borrowed for around 65 percent of a home’s after-repaired value (what it will be worth once the investor has purchased and improved it).

Qualifying for a Hard Money Loan

In order to qualify for a hard money loan, borrowers do not need to meet the same requirements that they do when taking out a traditional loan. While qualification requirements may vary between hard money lenders, one of the most important variables is how much the property will be worth.

Before making a loan, most hard money lenders require that the borrower provide a copy of the purchase contract and a detailed construction budget from a contractor. Further, many require that the borrower contribute around 15 percent of the cost of closing, as well as have been acceptable exit strategy to close out the loan when the time comes.

Credit scores are not as important with a hard money loan as they are with a traditional mortgage. However, borrowers still need to have adequate financial reserves to cover the expenses of closing and the lone itself.

Do You Need a Hard Money Loan in Atlanta?

If you need a hard money loan, we may be able to help you.

Call us at 404-814-1644, contact us online or apply for a hard money loan here.