Hard Money Loan

Hard money loans are loans collateralized by real estate. In 'hard money', higher interest rates and lower LTVs (loan-to-value ratios) are common because the lender is not backed by a government institution (unlike mortgages given by banks).

A loan that is backed by real-estate is unique because the lender assumes a lien position on the property that has been collateralized for the loan. If the borrower cannot repay the hard money loan, the lender may take the property and sell it to re-pay the loan.