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Hard Money Lenders, Real Estate Classifieds, Hard Money Resource
Posted On January 17, 2013

What is Hard Money?

Hard money is a type of loan that can be used to finance real estate. It is an alternative to conventional mortgages that can be obtained through banks. A borrower generally qualifies for a hard money loan not based on their own credit, income and assets, but on the strength of the equity in the property they are using as collateral.

Hard money is essentially the same as private money. It might be argued that the distinction between hard money and private money is based on the actual source of funds. According to this classification, private money lenders lend their own funds whereas hard money lenders are brokers of money from other parties. These categorizations aren’t universally used, however.

Article Glossary

Collateral - A safety net used by lenders to make sure that they get their money back even if the borrower defaults. For example, a lender may use a car to collateralize a car loan. If the borrower stops making car payments, the lender can seize the car and sell it to cover its losses.