A hard money loan is a short-term loan secured by real estate, made by a private lender rather than a bank. RevitaLending is a direct hard money private lender: we fund our loans ourselves and make every credit decision in-house. The lender's decision rests mainly on the property and the plan for it, not on your tax returns or a minimum credit score. That is why investors use hard money when speed matters, when a property is not in shape for a bank loan, or when their own income is hard to document.
How hard money is different from a bank loan
A bank looks at you first: income, debt-to-income ratio, credit score and reserves. A hard money lender looks at the deal first: what the property is worth today, what it will be worth after work is done, and how the loan gets repaid. The trade-off is cost. Hard money carries higher rates and fees than a 30-year mortgage, because it is short-term, it is often used on properties that need work, and it closes in days rather than weeks.
| Bank or agency loan | Hard money loan | |
|---|---|---|
| Main focus | Borrower income and credit | Property value and exit plan |
| Typical closing | 30–60 days | Days to a few weeks |
| Property condition | Must be livable | Distressed or vacant is fine |
| Term | 15–30 years | Usually 6–36 months |
| Payments | Principal and interest | Usually interest-only |
What hard money is used for
- Fix and flip. Buy a dated or distressed house, renovate it and sell. The loan can cover the purchase and the rehab budget, with rehab funds released in draws.
- Bridge to a refinance. Close fast, stabilize or lease the property, then refinance into long-term debt.
- Commercial value-add. Buy a mixed-use, retail or small multifamily building that a bank won't finance yet, fix the vacancy or condition problem, then refinance or sell.
- Time-sensitive purchases. Auctions, estate sales and off-market deals where the seller wants a quick, certain close.
How lenders size a hard money loan
Three ratios do most of the work:
- Loan-to-value (LTV): the loan divided by what the property is worth today.
- Loan-to-cost (LTC): the loan divided by your total cost, purchase price plus rehab.
- Loan-to-after-repair-value (LTARV): the loan divided by the value once the work is finished.
Example: purchase $400,000 + rehab $100,000 = $500,000 total cost. After-repair value (ARV) = $800,000. A $500,000 loan is 100% of cost but only 62.5% of ARV.
That is why a strong deal can be financed at or near 100% of cost: the lender is protected by the gap between the loan and the finished value. On RevitaLending's Fix & Flip program, qualified borrowers can reach 100% of cost when the loan is 65% or less of ARV, with overall leverage up to 70% of ARV.
What it costs
Cost comes from three places: the interest rate, origination points paid at closing, and third-party costs such as title and recording. Because payments are usually interest-only and the loan is short, what matters most is the total cost over the months you actually hold the loan. A loan that closes a week sooner, or saves you from losing a deal, often pays for its higher rate.
When comparing lenders, ask for the rate, points, any draw or inspection fees, extension fees and the prepayment terms, then compare the total dollars over your expected hold.
What a hard money lender will ask for
- The purchase contract, or the payoff if you're refinancing
- Your scope of work and rehab budget
- Comparable sales that support the after-repair value
- Your exit plan: sale, refinance or lease-up
- Entity documents if you're buying in an LLC
- A summary of past projects, if you have any (first-time investors can still qualify)
When hard money is the wrong tool
If you plan to hold a stabilized property for years and it already qualifies for long-term financing, a hard money loan only adds cost. Hard money works best as a bridge with a clear end: a sale, a refinance or a stabilization milestone. If you can't explain how the loan gets paid off within the term, slow down and fix the plan first.
Hard money in DC, Maryland and Virginia
The DC Metro is a strong market for renovation and value-add, but it comes with local friction: permitting timelines, historic-district review in parts of DC, and tenant rights on occupied buildings. Build those into your term. A local lender that knows the neighborhoods can size the after-repair value realistically and move faster on the draw schedule.
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Explore Fix & Flip Loans→This guide is general education, not a loan offer or financial, legal or tax advice. Examples are illustrative. All loans are subject to underwriting approval, and rates and terms can change.