Real Estate Tips |6 min read

Most Common Types of Hard Money Loans for Investors

You may consider a hard money loan if you’re looking for quick financing for a real estate property. Hard money loans are great for investors who don’t qualify for traditional mortgage loans or want quick access to funds. That said, there are different types of hard money loans to consider, depending on your investment strategy. Read along as we go over the different types and how to find a lender for your investment. 


Contents of This Article:

When Would You Need a Hard Money Loan?

A hard money loan is a type of financing that investors use to buy real estate. Hard money lenders differ from traditional lenders, like banks, because they don’t have the same requirements. For instance, banks usually look at a borrower’s creditworthiness, while hard money lenders look at the investment property as collateral. 


However, it’s important to note that hard money loans generally have higher interest rates and shorter loan terms. So, if you’re planning to get a hard money loan, you’ll want to be able to pay it back quicker than a traditional loan. 

There may be several instances where a hard money loan is more convenient than traditional lending. Here are a few examples: 

  • You Need Money Quickly- Instead of waiting for 30 or more days for approval for a bank loan, you can get a hard money loan in just a few days or weeks.
  • You’re Buying a Fix and Flip Property- Hard money loans generally have shorter loan terms, so they’re great if you’re looking to fix and flip a property quickly. Otherwise, traditional mortgages often have 15 to 30-year repayment terms
  • You Don’t Qualify for a Bank Loan- Bank lenders often look at your credit history and debt-to-income ratio to determine if you qualify for a loan. However, while hard money lenders may look at these factors, they’re primarily concerned with the property’s value. 

Different Types of Hard Money Loans for Investors

Depending on the investment strategy you’re looking at, there are different loan types to consider. For instance, if you plan to buy a fixer-upper and sell it, you may look for a fix-and-flip loan. If you want to learn more about the different types of hard money loans, just keep reading. 


  1. Fix and Flip Loans
  2. New Construction Loans
  3. Bridge Financing
  4. Rental Property Loans
  5. Commercial Loans

Fix and Flip Loans

One of the most common hard money loans is a fix-and-flip loan. Fix and flip loans are a short-term financing method that investors use to buy and renovate a property. Then, they sell it for profit. Fix and flip hard money loans are great for investors that plan to fix and sell a property quickly, as loans are paid off in 6 to 18 months. 

That said, most lenders look at your after-repair value to determine your loan amount. The after-repair value (ARV) is the value after the property is renovated. As such, it’s important to have a solid plan for how much your project will cost and how long it will take to complete. 


New Construction Loans

Hard money construction loans are great for investors that need funds for a new development project but don’t want to go through a traditional lender. After all, it’s often difficult for developers to get the money they need through traditional financing in a timely manner. 

As such, hard money construction loans are great for investors that need financing quickly. With new construction, there’s no time to sit around and wait for mortgage approval. Instead, hard money lenders fund projects quickly, allowing investors to take advantage of land or real estate deals. 

Bridge Financing

Bridge loans are another type of short-term financing. Bridge financing is popular for investors that need access to cash quickly. For instance, they’re most common for investors who need short-term funding for a new property while waiting for an existing one to sell. 

Bridge loans usually have rapid approval and closing rates compared to other loan types. Additionally, you have a year to pay back a bridge loan. So, it’s crucial to ensure you can use the money from selling your existing property to pay off the loan.

Rental Property Loans


Another way to use hard money loans is to buy rental properties. Using hard money for rental properties is common for investors that don’t qualify for traditional financing. Hard money loans can be useful if you have a low credit score or need more money than a conventional lender offers. 

It’s important to note that hard money loans often have higher interest rates than traditional bank loans. As such, if you’re looking for long-term financing, a hard money loan may not suit your investment type. However, a hard money loan can come in handy if you need quick financing to obtain a property. 

Commercial Loans

As the name suggests, commercial hard money loans help investors fund commercial real estate. These loans are great for several investment types. For instance, you can use a commercial hard money loan for multifamily, office, retail, and industrial real estate. 

Commercial hard money loans generally have higher limits than other loan types, so you can fund a larger project. Additionally, commercial hard money loans are based on the loan-to-value (LTV) ratio. You can find the LTV ratio by taking the total loan amount and dividing it by the value of the property. Most lenders offer loans that are around 60% to 75% of the property’s value. 

Next, we’ll go over how you can determine which type of lender you need for your investment.

What Type of Hard Money Lender Do You Need?

Before choosing a hard money lender, it’s essential to take a step back and look at your investment strategy. After all, the type of hard money loan you need depends on your goals and type of investment.


For instance, if you’re looking to buy a property to renovate and sell for profit, you’d probably consider a fix-and-flip loan. First, however, it’s important to recognize that most types of hard money loans have higher interest rates than traditional mortgage loans.

On the other hand, you may need a bridge loan while you’re waiting for an investment to pay off. Bridge loans are extremely convenient for investors that are eager for their next project. However, working out the terms with your lender is crucial to ensure you’ll have the capital to pay off your loan in time. 

Ultimately, it’s important to look at your goals and investment strategy before applying for financing. Once you know how much capital you need, how long you need to pay it back, and how much interest you’re willing to pay, it’s time to find a lender. 

Find a Hard Money Lender Near You

Finding a hard money lender is the first step in funding your next investment. So, if you’re looking for a hard money lender for your next real estate property, look no further than Maryland Hard Money Lenders. We offer several options, such as fix and flip loans, new construction loans, and bridge financing for investors in need. 

Whether you want to expand your current portfolio or start your investment journey, hard money loans can help you get started. Contact Maryland Hard Money Lenders today to learn more about our loans and how we can help you today.

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