A hard money loan is a short-term loan secured by real estate. Unlike traditional bank loans that focus heavily on your credit score and income, hard money lenders primarily assess the value of the property itself. This makes them a faster and more accessible funding option, especially for real estate investors

Qualification is based on the value of the property before and after renovations rather than credit score, making it accessible for many investors.

Key terms to understand include the Loan-to-Value (LTV) ratio, which determines how much you can borrow against the property, and the After-Repair Value (ARV), which allows lenders to consider the property’s potential after renovations. While these loans often come with higher interest rates and upfront fees (points), they offer the significant advantages of rapid funding and flexibility, making them ideal for time-sensitive real estate investments like fix-and-flips. Loan terms are typically short, designed for quick projects, emphasizing a fast return on investment.