Hard money vs the alternatives
Six honest product comparisons. No lenders are named or ranked - just what each kind of money is actually for.
Hard money is expensive. It is worth using when it buys you something the alternatives cannot, and a poor choice in every other case - so the useful question is never "is hard money good" but "is it better than the specific thing I could use instead".
Hard money vs a HELOC
A line of credit on property you already own is far cheaper money. It is also slower, recourse to an asset you care about, and capped by your existing equity.
Hard money vs a DSCR loan
These are not competitors. One buys and renovates the property, the other holds it - and using the wrong one costs you two sets of points.
Most confusedHard money vs conventional financing
Conventional money is three to four points cheaper. The entire question is whether the property and the timeline can survive conventional underwriting.
Hard money vs seller financing
Seller financing is the cheapest capital in real estate and almost nobody asks for it. It is also entirely dependent on one motivated person saying yes.
FHA 203(k) vs hard money
For an investor this comparison ends in one line: 203(k) is owner-occupant only. Here is what that means, and what you can use instead.
Investors: read firstHard money vs a bank construction loan
Banks lend on ground-up construction at roughly two points less. They also want a builder, a balance sheet and sixty days - which is why private construction money exists.
The one-sentence version
If the property will finance conventionally in its current condition and you can wait six weeks, almost anything on this page beats hard money on price. If it will not, or you cannot, nothing else on this page can do the job at any price - and that access is precisely what you are paying for.
Questions people actually ask
Are DSCR loans considered hard money loans?
No, though they are often sold by the same lenders and confused constantly. A DSCR loan is long-term rental financing - typically 30 years, amortising, qualified on the property's cash flow instead of your tax returns. Hard money is short-term, interest-only, asset-based bridge capital. They are complements, not substitutes: hard money buys and renovates the property, the DSCR loan takes it out.
What's the downside of a DSCR loan?
Rates above conventional owner-occupied pricing, prepayment penalties that are common and sometimes steep, a hard floor on the debt-service ratio that a vacancy can breach, and reliance on a market-rent opinion that may not match what you actually collect. It is still usually far cheaper than staying in hard money.
How risky is hard money lending?
For the borrower, the risk concentrates in the term ending before the exit is ready, and in the personal guarantee that usually sits behind the loan. For the lender, the risk is a collateral value that turns out to be wrong. The product is not inherently dangerous; a short term against an uncertain exit is.