Fix and Flip Financing 101: How Hard Money Loans Work
When a deal needs to close in days, or a property is too rough for a conventional lender to touch, hard money is the tool investors reach for. Here's how it actually works.
The core idea
Hard money loans are short-term, asset-based financing secured primarily by the property itself and the strength of the deal, rather than the borrower's income or credit. That's what allows funding decisions and closings to move in days instead of the 30-45 days typical of conventional underwriting.
What a typical structure looks like
Why the higher rate is often worth it
Hard money rates run higher than a 30-year fixed mortgage, but investors aren't planning to keep the loan for 30 years — they're planning to sell or refinance within months. The cost of the loan is weighed against the speed and flexibility to win a deal a conventional buyer couldn't close on in time.
The exit strategy matters most
Every hard money loan should start with an exit plan: sell the renovated property (a flip), or refinance into a longer-term loan once it's stabilized and rented, most commonly a DSCR loan based on the property's new rental income. Lenders will often ask about your exit strategy upfront as part of underwriting.
Who this financing is built for
Fix-and-flip investors, BRRRR-strategy buyers (Buy, Rehab, Rent, Refinance, Repeat), and anyone purchasing a distressed or non-traditional property that wouldn't appraise or qualify for conventional financing in its current condition.
Have a deal on the clock?
Send us the property and timeline — we structure hard money and fix-and-flip financing to move as fast as your deal requires.
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