What is Hard Money Lending?

Hard money lending is borrower-focused requiring borrowers to meet specific underwriting qualifications, i.e. strong credit scores, provable documented income, proven net-worth, substantial reserves and extensive financial paperwork. An appraisal for the property is always a requirement with hard money loans.

What is Private Money Lending?

Private money lending is short-term, asset-based real estate financing provided by individuals or non-bank entities using their own capital. Unlike traditional banks, private money lenders underwrite the property and deal (purchase price, ARV, rehab plan & exit strategy) rather than the borrower's credit score or W-2 income. Appraisals are not required with private money financing.

Hard Money vs. Private Money

Hard money financing is borrower focused; private money financing is property focused. Both exist for investors with different strengths.

Hard Money Financing has stricter requirements:
• Experienced Investors
• Strong personal credit scores
• Substantial reserves
• Provable & documented income
• Property Appraisal

Private Money Financing offers easier qualifying guidelines:
• New or less-experienced investors
• Lower credit score requirement
• Strong deal w/ great equity
• Limited financial documentation
• No Appraisal required