Hard Money Loans for Commercial Real Estate: Rates, Requirements & When to Use Them

Hard money gets a bad reputation — high rates, aggressive lenders, last resort. That framing misses the point. Hard money is a tool. Used in the right situation, it's how experienced investors close deals that nobody else can touch, execute fast, and create value that conventional financing would never have funded in the first place. Here's what you need to know to use it correctly. For the full picture of what's available, see our loan programs page.

What Is a Hard Money Loan?

Hard money is asset-based lending. The lender's primary collateral is the property itself — not your income, credit history, or tax returns. They're lending against the value of the asset, which means their underwriting is faster, more flexible, and less dependent on the borrower's financial profile than any conventional loan.

Hard money lenders are typically private individuals, family offices, or small lending companies — not banks. They use their own capital or raise it from private investors, which gives them the freedom to make decisions quickly and outside the rigid guidelines that govern bank lending.

Hard Money Loan Terms in 2026

Parameter	Typical Range
Loan amounts	$100K – $5M (most lenders)
Interest rates	10% – 14% (interest-only)
Points (origination)	2 – 4 points at closing
Max LTV	60–70% of current "as-is" value
After-repair LTV	Up to 70–75% of ARV (for fix-and-flip)
Term	6 – 18 months
Amortization	Interest-only
Closing time	5 – 14 days
Credit minimum	600–620 (some lenders no minimum)
Income verification	Minimal to none

When Hard Money Is the Right Tool

Distressed property acquisitions

REO sales, foreclosure auctions, and distressed sellers often require proof of funds and fast closing timelines that conventional lenders can't meet. Hard money closes in a week. You capture the deal, stabilize or renovate it, then refinance into permanent financing once the property qualifies.

Fix-and-flip

The classic hard money use case. You buy a property under market value, use the loan to fund acquisition and renovation, sell at improved value, pay off the loan. Hard money lenders understand this model and underwrite to the after-repair value (ARV), not just the purchase price — meaning they can fund a larger portion of the deal.

Credit or income challenges

If your credit score is below 680, you're self-employed with complex tax returns, or you've had a recent credit event — hard money may be the only path to financing. The lender cares about the asset, not your credit profile. You'll pay more, but the deal gets done.

Commercial properties that don't qualify conventionally

High vacancy, deferred maintenance, environmental issues, non-standard property types — conventional lenders won't touch these. Hard money will, assuming there's sufficient equity and a clear business plan to resolve the issue.

Speed above all else

Competing with cash? An all-cash buyer can close in 7 days. Hard money can match that. In competitive markets, the ability to close as fast as cash is worth the rate premium many times over if it means winning the deal.

What Hard Money Lenders Actually Evaluate

Despite the loose qualification requirements, hard money lenders do underwrite carefully — just differently:

• Property value and equity — the lender needs to be confident they can recover their capital if you default. LTV is the core metric.
• Exit strategy — how are you getting out? Sale, refinance, or another clear path to repayment. No exit = no deal.
• Experience — first-time investors face tighter LTV requirements. Experienced investors with a track record get better terms.
• Scope of work (for value-add) — if you're renovating, the lender wants a detailed budget and timeline. Vague "I'll fix it up" answers don't close deals.
• Market — lenders are more comfortable in primary and secondary markets with strong resale liquidity. Tertiary markets get tighter terms or pass.

The Difference Between Hard Money and Predatory Lending

Hard money has a reputation for shadiness that's partially deserved — there are bad actors in the space. Here's how to tell the difference:

Legitimate Hard Money	Predatory Lending
Fees disclosed upfront, in writing	Fees buried or changed at closing
No upfront fees before closing	Requires "processing" or "commitment" fees before approval
Clear term sheet with all costs	Vague or verbal terms only
Realistic exit timeline	Structures that make default likely
Will provide lender references	Can't or won't provide references

Work with lenders your broker has closed deals with before. The referral channel exists precisely because it filters out the bad actors.

Hard Money vs. Bridge: The Practical Difference

For smaller deals and maximum speed, hard money wins. For larger deals ($2M+) where you have a bit more time, institutional bridge lenders typically offer lower rates with more predictable terms. The line between the two has blurred — many "bridge lenders" are really institutional hard money, and vice versa. What matters is matching the right lender to your specific deal.

Building a Hard Money Strategy

Successful investors use hard money as a repeating tool — not a one-time emergency. The model:

1. Identify a deal with significant upside (distressed, below market, value-add)
2. Close fast with hard money
3. Execute the business plan (renovate, stabilize, reposition)
4. Refinance into permanent financing (DSCR, conventional CRE) — recover equity, lower the rate
5. Repeat

The key is always having the refinance path underwritten before you pull the trigger on hard money. Don't assume you'll figure out the exit later.