Compare hard money loans with 100% financing

Written by Gerri Detweiler

Reviewed by Robin Saks Frankel

May 5, 2026 | 26 min read

Summary

• Real estate investors often leverage financing when purchasing investment property.
• 100 percent financing allows an investor to minimize the cash needed to acquire property, leaving cash for other purposes.
• Hard money loans are typically underwritten differently from traditional bank loans, with more emphasis on the property and deal structure. These loans can be fast, but can also be expensive and are subject to specific qualification requirements. In addition, 100% financing may not cover closing costs, reserves, fees, or all project costs.
• Learn how 100% hard money financing works and whether it may be the right option for your next deal.

Compare hard money lenders for 100% financing

These lenders may offer high-leverage structures but terms can vary by deal, state, and borrower profile.

All loan program information was gathered independently by Nav and is current as of April 30, 2026. Program terms may change. Information is for comparison only and is not an offer of credit. Confirm current terms directly with the lender.

What is a hard money loan?

A hard money loan is a short-term, asset-based loan used primarily in real estate investment. The term “hard” refers to the hard asset; in this case, the property itself.

Unlike a traditional mortgage which takes a very close look at your income, credit score, and debt-to-income ratio, a hard money loan is underwritten based on the property itself, specifically its value after renovations are complete.

Many investors use these loans to purchase then flip properties, and hard money lenders are private lenders (or private money lenders) looking for a high return without having to rehab or property themselves. They are most interested in the fundamentals of the deal: the property’s value or, in particular, the after-repair value (ARV).

Because hard money lenders focus on the deal rather than the borrower's financial profile, they can move fast depending on the lender, documentation, appraisal/title, and deal complexity.

Hard money loans are sometimes compared to bridge loans. While they are both short-term, asset-backed loans, bridge loans typically refer to commercial or transitional properties that don't yet qualify for conventional financing, while hard money is most commonly associated with fix-and-flip investing or situations where conventional lending isn't available.

Hard money loans are most commonly used for:

• Fix-and-flip projects, where an investor buys, renovates, and sells a property for a profit
• Buy-and-hold investing (sometimes called the BRRR strategy: buy, renovate, rent, refinance), where a property is rehabbed and then refinanced into a long-term loan
• Time-sensitive acquisitions, such as auction purchases or deals that require a fast close to be competitive
• Properties that don't qualify for conventional financing due to their condition

What does “100% financing” mean in hard money lending

The phrase "100% financing" is one of the most searched, but often misunderstood, terms in real estate investing. In hard money lending, it doesn't mean what you may think.

In conventional lending, 100% financing means borrowing the full purchase price with no down payment. In hard money lending, the meaning is different and more nuanced.

True 100% financing in a hard money loan typically means two things:

• 100% of the purchase price is covered by the loan, and
• 100% of the rehab budget is also covered

Here's the critical part: The total of both those amounts must still fall within the lender's maximum limit, which is usually based on the property's after-repair value (ARV). The ARV is what the property is expected to be worth after it is fixed up. It’s common for lenders cap the total loan at 70% to 75% of ARV.

To clarify: 100% financing in hard money lending is not 100% LTV (loan-to-value based on the current property value). It's 100% LTC (loan-to-cost), meaning the lender covers your full cost to acquire and renovate the property, as long as that total stays within the ARV cap.

Here's a simple example:

• Purchase price: $150,000
• Rehab budget: $50,000
• Total project cost: $200,000
• After-repair value (ARV): $300,000
• 70% of ARV: $210,000

In this scenario, a lender offering 100% LTC could cover the full $200,000 cost because it stays within 70% of ARV. That's a workable deal for high-leverage financing.

But if the numbers don't leave meaningful room below the ARV cap, 100% financing will be very difficult to qualify for.

This type of financing is possible, but it isn't common. Most lenders offering high-leverage structures require significant investor experience and a strong deal.

If you're just starting out, you may need to begin with more conservative leverage and build toward 100% financing as your track record grows, or find a private investor willing to take more risk.

Do hard money loans require down payments?

Maybe. Many real estate investors are looking for deals that involve no money down. Whether a down payment is required depends on the lender, the deal structure, and even your experience as an investor.

Some hard money lenders will cover 100% of acquisition and rehab costs for borrowers who bring a strong deal; one where the total loan stays comfortably within the ARV threshold. In those cases, no cash down is required at closing.

A few main factors that influence whether you'll need a down payment:

• The deal fundamentals: The stronger the spread between your all-in cost and the ARV, the more comfortable a lender will be putting more capital in.
• The lender's program: Some lenders specialize in high-leverage products. Others cap their loan amounts at a lower percentage regardless of deal quality.
• Your experience: Lenders are more willing to offer high leverage to borrowers with a track record of completed projects. First-time investors often face more conservative terms.

One more note: Hard money loans are short-term loans. If you sell the investment property quickly enough, you may not make many monthly payments before the loan is repaid from sale proceeds.

Do you need good credit for a hard money loan?

You may not need good personal credit to qualify for a hard money loan for an investment property. However, lenders may still review credit, liquidity, experience, entity structure, and reserves.

With a hard money loan, the lender or investor is typically more interested in the property and the deal than in the borrower’s credit score.

That makes it a more flexible option for some investors with bad credit scores. Some lenders require a credit check, though, and some have minimum credit score requirements. Make sure you understand the lender’s policy.

Of course, even if you don’t need a good credit score to qualify, good personal FICO scores and strong business credit may help you or your business qualify for more financing options. Establish business credit as early as possible in your business journey.

Definitions: LTV, LTC, and ARV

If you're new to real estate investing, you'll encounter three acronyms and terms when working with hard money lenders. Understanding what they mean will help you evaluate offers.

What is loan-to-value (LTV)?

Loan-to-value (LTV) is the ratio of the loan amount to the current value of the property.

Formula: Loan amount ÷ current property value = LTV

Example: A $130,000 loan on a property currently worth $160,000 = approximately 81% LTV.

In hard money lending, LTV is typically calculated on the “as-is value”, that’s what the property is worth before any renovations. Because hard money lenders are comfortable with distressed properties, they can still lend when the current value is low, as long as the deal makes sense based on what the property will be worth after repairs.

What is after repair value (ARV)?

After repair value (ARV) is the estimated market value of the property once all planned renovations are complete. It's the most important number in hard money underwriting.

How it's determined: Lenders typically use a broker price opinion (BPO) or an independent appraisal to estimate ARV, based on the value of comparable renovated properties nearby.

Hard money lenders care most about ARV because it determines whether the deal makes sense financially for both the lender and the borrower. If a borrower defaults, the lender wants to know the property will likely be worth enough after repairs to recover their investment.

Most hard money lenders cap how much they'll lend based on ARV, and that cap is often 70% to 75%.

What is loan-to-cost (LTC)?

Loan-to-cost (LTC) compares the loan amount to the total cost of the project; specifically, the purchase price plus rehabilitation costs.

Formula: Loan amount ÷ (purchase price + rehab costs) = LTC

Example: A $190,000 loan on a project with a $150,000 purchase price and $50,000 in rehab costs ($200,000 total) = 95% LTC.

LTC is the key metric when evaluating whether a lender will cover your full project cost. A lender offering 100% LTC is offering to fund your entire cost of acquisition and renovation — which is what investors mean when they say "no money down."

Common leverage caps and what they mean

Lenders use leverage caps — expressed as a percentage of LTC or ARV — to limit their exposure on any given deal. Here's how the most common caps play out in practice:

• 70% ARV cap: The lender will lend up to 70% of the after-repair value. This is the most conservative and most commonly cited benchmark in hard money lending. Your all-in cost — including acquisition, rehab, and loan costs — must stay below this threshold.
• 80% LTC: The lender will cover 80% of your total project cost. You'll need to bring the remaining 20% to the table.
• 90% LTC: The lender covers 90% of total project cost — common among more aggressive programs for experienced borrowers.
• 100% LTC: The lender covers the full project cost, subject to the ARV cap. This is the "no money down" scenario. It's rare and typically reserved for strong deals and experienced investors.

The higher the leverage, the more scrutiny the deal will face. Lenders offering 100% LTC are taking on more risk and will look closely at every aspect of the deal before approving it.

How hard money loans work (step-by-step)

Getting a hard money loan can be a lot faster than getting a conventional mortgage, but the process still has clear stages. Here's what to expect from application to payoff:

Step 1: Submit your deal and borrower information

You'll provide the lender with details about the property, including the address, purchase price, planned scope of work, estimated rehab budget, and your exit strategy (sell or refinance). Many lenders also ask for your borrower profile, including your investing experience and whether you have financial reserves.

Step 2: Underwriting

The lender evaluates the deal. This typically includes an ARV analysis (often using a BPO or independent appraisal), along with a review of your LTC math, experience level, title status, and whether you have adequate reserves to carry the project.

Step 3: Term sheet

If the deal clears underwriting, the lender issues a term sheet outlining the loan parameters: interest rate, points charged at closing, fees, the draw schedule for rehab funds, and the loan term.

Step 4: Closing

If you accept the terms, closing can happen quickly – in as little as a week, though timelines vary by lender and deal. Funds are wired to complete the purchase.

Step 5: Rehab draws and inspections

Rehab funds aren't typically handed over all at once. They're released in stages (called “draws”), as phases of the renovation are completed and verified by an inspection. More on this below.

Step 6: Exit — sale or refinance — and loan payoff

At the end of the loan term, you either sell the property or refinance into a longer-term loan. The hard money loan is paid off in full, along with any outstanding interest and fees.

Rehab draws and holdbacks

Understanding how draws work is essential to making one of these loans work for you. Here’s the typical process:

• Rehab loan funds are held by the lender.
• You complete a phase of renovation work.
• You request a draw, and the lender sends an inspector to verify the completed work.
• The lender releases funds for that phase.
• You move to the next phase.

Lenders may charge a draw fee or inspection fee each time you request funds. These add up over a long renovation, so it's worth asking upfront: How many draws are allowed? What are the fees? How long does it take from when you request a draw to actually getting funding?

Hard money loan costs and fees

Hard money loans are more expensive than conventional mortgages. These loans are riskier than conventional loans, and that’s the price you pay for faster approval and flexible underwriting. Make sure you understand the full cost of borrowing, and most importantly, that the return on investment (ROI) is still there after these costs.

• Interest rate: Hard money interest rates are often significantly higher than conventional mortgage rates. Rates vary widely depending on the lender, the deal, your experience, and current market conditions. It may be helpful to get quotes from multiple lenders before committing.
• Points (origination fees): Points are charged upfront at closing as a percentage of the loan amount. One point equals 1% of the loan. Hard money lenders may charge between 2 and 5 points, though this varies.
• Closing costs: In addition to points, expect standard closing costs that vary by lender and deal.
• Draw and inspection fees: Each draw request may come with a fee, either a flat amount or a percentage of the draw. These can meaningfully affect total project cost.
• Extension fees: If your project takes longer than the original loan term, extensions are often available — but they come with fees and aren't guaranteed.
• Prepayment penalties: Some lenders charge a fee if you pay off the loan early. Ask about this before signing, and where possible, avoid lenders with prepayment penalties.

Hard money loans are often structured as interest-only during the loan term. That means your monthly payments cover only interest and the principal (the amount borrowed) is repaid in a lump sum (balloon payment) when you sell or refinance at the end of the term.

How to get 100% financing with a hard money loan

Not every deal qualifies for 100% financing, and not every borrower will be approved for the full amount of financing they need. But there are steps you can take to help fall into the approval category:

1. Make sure your deal falls within the ARV cap

Most lenders that offer high-leverage financing cap the total loan at 70% to 75% of ARV. Your purchase price, rehab costs, and loan costs all need to fit within that threshold. If they don't, 100% financing won't be an option, regardless of the lender's program.

2. Build a track record

The first deal is the hardest, and it can be challenging to get full financing as a first-time investor. You may need to start with smaller deals to demonstrate to lenders that you can execute. Start conservatively and work toward higher-leverage structures as your experience grows.

3. Maintain a solid credit profile

While credit is less critical in hard money lending than in conventional financing, it may still be a factor, especially when you're asking for no-money-down financing. A stronger personal credit profile signals lower risk and can improve your terms.

4. Have a clear, realistic exit strategy

Lenders offering 100% financing want to know how you're getting out of the loan. Is the plan to sell the property? Refinance into another loan? They need to see that your exit is realistic, and that your timeline is achievable.

5. Understand what "100%" actually covers

Some lenders cover 100% of the purchase price and 100% of rehab costs. Others cover the purchase price but not all ancillary costs (closing costs, holding costs, etc.). Make sure you know exactly what's included before you sign a term sheet.

6. Know the loan limit

Even if a lender offers 100% LTC financing, they'll likely have a maximum dollar amount per deal. If your project exceeds that limit, you'll need to cover the gap with other funds.

How to fund your down payment or cash to close

Some deals require cash at closing, whether that's a formal down payment, closing costs the loan doesn't cover, or reserves your lender requires you to demonstrate are available to pay for certain expenses.

While savings and cash on hand are ideal, if you need to borrow, here are potential options. Check the lender’s policy on using borrowed funds this way.

Business credit cards

Business credit cards can provide short-term access to cash, either through a cash advance or by using the card directly for renovation expenses. Some cards offer 0% introductory APR periods of up to 12 months or longer, which can make short-term financing affordable as long as you pay it off before the intro rate expires. Promotional APR availability, limits, fees, and eligibility vary by issuer. Cash advances may not qualify for promotional APRs.

Personal loans

A personal loan can be used for nearly anything, including a down payment on an investment property, though you should read the terms carefully before you apply.

Personal loans are unsecured, so your interest rate will often be based at least in part on your personal credit scores. Lower scores often mean higher rates, the higher your rate. Carefully plan for the added monthly obligation alongside your hard money loan payments.

Home equity line of credit (HELOC)

If you own a primary residence with equity, a HELOC can provide relatively affordable access to cash. Because the loan is secured by your home, rates are typically lower than unsecured options.

The significant downside: If you can't make payments on both the HELOC and your hard money loan, you can risk losing the home you live in.

Personal line of credit

A personal line of credit works similarly to a HELOC but doesn't require home equity as collateral. Because it's unsecured, you'll likely see higher rates and more stringent credit requirements.

401(k) financing

If your 401(k) plan allows participant loans, you may be able to borrow up to 50% of your vested account balance (capped at $50,000) without triggering taxes or early withdrawal penalties at the time of the loan. The loan must generally be repaid within five years. If the loan is not repaid according to plan rules, it may be treated as a taxable distribution and may trigger penalties. Note that IRA-based plans, including SEPs, SIMPLE IRAs, and SARSEPs, can’t be used for participant loans.

Business loan or line of credit

If you operate your real estate investing business as an LLC or corporation, you may qualify for a business loan or line of credit to cover your cash-to-close gap. Business lines of credit are particularly useful because they let you borrow only what you need, rather than taking a lump sum.

Family and friends

Borrowing from people who know and trust you personally can work when traditional financing isn't accessible. Friends and family are often more flexible on repayment terms. Make sure you get everything in writing — the loan amount, interest rate (if any), repayment schedule, and a payoff deadline. A written agreement protects everyone, and it may be needed for tax purposes and to protect your legal entity. Plus it can help save those relationships from misunderstandings.

Refinance options after hard money

Hard money loans are often short-term loans designed to be paid off or refinanced after the renovations are completed. You’re likely to get a term of six months to a year (with possible extensions) and that means you’ll either need to pay off the loan — often with a sale of the property — or refinance the balance.

But there may be times when you want to hold onto a property, and you may need to look for long-term financing. Here are several options.

DSCR rental loans (for buy-and-hold investors)

A debt service coverage ratio (DSCR) loan has become one of the most popular refinance options for rental property investors. Instead of qualifying based on your personal income, DSCR loans qualify you based on whether the rental income the property generates is sufficient to cover the monthly debt payments.

DSCR loans offer longer terms and typically lower rates than hard money loans, making them a natural exit path for BRRR strategy investors. Because qualification is based on the property's cash flow rather than your personal tax returns, they're also accessible to self-employed investors and those with complex income documentation.

Conventional/investor cash-out refi

For investors who meet standard lending requirements, including documented income, strong credit, and sufficient equity, a conventional investment property refinance can offer competitive long-term rates. These loans come with stricter qualification standards and typically cap the total number of properties you can finance, which can be a limiting factor as your portfolio grows.

Portfolio/commercial loans for mixed-use or 5+ units

If your investment is a larger property — five or more units or a mixed-use building — you'll likely need a commercial or portfolio loan rather than a conventional mortgage. These loans are evaluated primarily on the property's income and the borrower's overall financial position. Terms and requirements vary significantly by lender.

Should you get a hard money loan?

• Add “must-have checklist” (spread, reserves, exit plan, contractor plan, timeline).
• Add “avoid if” list (thin margins, uncertain ARV, no reserves, no exit).

Hard money loans are an important financing tool for many investors, but they aren’t right for every investor or every deal. Here's a straightforward way to evaluate whether it's the right move.

Pros and cons

Pros

• Fast approval and funding — often in days rather than weeks
• Flexible underwriting focused on the deal, not just your credit or income
• May be available with lower credit scores or non-traditional income sources
• May finance properties that conventional lenders won't touch
• Rehab costs can often be included in the loan

Cons

• Higher interest rates than conventional mortgages
• Short loan terms create time pressure
• Points and fees increase costs
• Draw inspection processes can slow renovation timelines
• Default risk: if the project goes sideways, the lender can foreclose on the property

Must-have checklist before applying

Before pursuing a hard money loan, make sure you can check all of these:

• A clear deal spread: Your all-in cost should leave meaningful room below the ARV cap
• Adequate reserves: cash to cover carrying costs, unexpected delays, and expenses the loan doesn't cover
• A realistic exit plan: you know whether you're selling or refinancing, and the market supports your assumptions
• A solid contractor plan: a vetted contractor with a realistic budget and timeline
• A realistic project timeline: your renovation plan comfortably fits within the loan term

Avoid a hard money loan if:

• Your margins are thin and there's little buffer between your all-in cost and your ARV estimate
• Your ARV is speculative or unsupported by comparable sales in the area
• You don't have reserves for delays or cost overruns
• You don't have a clear, viable exit strategy
• This is your first real estate deal and you haven't yet worked through a renovation project with a contractor

Hard money isn't the only path to financing a real estate investment. Depending on your situation, one of these alternatives may be a better fit.

Business credit cards

Some business credit cards offer 0% introductory APR periods of up to twelve months or longer on purchases or balance transfers. For smaller renovation expenses or short-term financing gaps, this can be a surprisingly affordable option, as long as you have a plan to pay it off before the promotional period ends.

Business cash advance

If your business has strong, documented revenue, some lenders can advance funds within hours of approval. Like hard money, this type of financing typically carries a higher cost, so make sure you understand the full expense (not just the factor rate) before committing.

Business line of credit

A business line of credit is one of the most flexible financing tools available to investors who operate as a business entity. Once approved, you borrow only what you need, when you need it. It may be useful for covering down payments, renovation costs, or carrying costs on deals where hard money isn't the right fit.

DSCR loans (for stabilized rental properties)

If you're acquiring a property that's already generating rental income, a debt service coverage ratio (DSCR) loan may qualify you without the higher cost of a hard money loan. These loans are specifically designed for real estate investors and don't require traditional income documentation.

Conventional investment property loans

For investors with strong, documentable income, conventional investment property loans offer lower rates and longer terms than hard money. But qualification requirements will be higher, and down payments of at least 25% are often required. If your credit is strong and the property is in good condition, it's worth checking whether a conventional loan is an option.

Before applying for any financing, Nav can help you see business financing options matched to your profile including small business loans, lines of credit, and tools to help you monitor your business credit and cash flow.