Hard money lenders are private lenders — individuals or funds — who make short-term loans secured by real property. They evaluate the deal (property value, your exit strategy, your experience) rather than primarily your W2 income and credit score. Loans close in 7–14 days.
Interest rates: 10–13% annually. Points: 2–4 (paid at closing). Term: 6–18 months. LTV: 65–75% of purchase price. LTC: 70–80% of total cost (purchase + rehab). Extension fees: 1–2 points per extension period.
Most hard money lenders fund rehab in draws — you submit a draw request with photos and inspection, lender verifies work is complete, funds are released. Some lenders fund 100% of rehab; others require you to front work and reimburse. Clarify this before you sign.
Experience helps but isn't always required. Most lenders want: a real deal (not a wishful thinking ARV), skin in the game (10–30% of deal cost), clear exit strategy (sell or refi), and for first-time borrowers, sometimes a guarantor or co-borrower with experience.
Local REIA meetings are the best source. Ask title companies who they see funding flips. BiggerPockets lender directory. Get referrals from active flippers in your market. Interview 3–4 lenders before committing — rates, fees, draw processes, and responsiveness vary significantly.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has used hard money loans on dozens of fix-and-flip deals across Northern Virginia.