Hard money lending is short-term, asset-focused financing secured by real estate, usually used by investors for business-purpose, non-owner-occupied investment property. Texas investors use hard money when speed, collateral value, renovation plans, or a clear exit strategy matter more than fitting a traditional bank loan box.
Cedar Top is a Texas private money lender. This guide explains how hard money works, when investors use it, what lenders review, and when it is not the right tool. For the programs and current terms, see our hard money loan programs.
What is a hard money lender?
A hard money lender is a private company or individual that makes short-term loans secured by real estate, funded with private capital rather than bank deposits. The "hard" refers to the hard asset securing the loan. A bank lends depositors' money, so it underwrites the borrower first. A hard money lender lends private capital, so it underwrites the property first.
Cedar Top is an example. We are a direct private lender in Fort Worth. Our team has worked Texas real estate since 1998, we are real estate investors ourselves, and we underwrite every file in house with no outside underwriter and no third-party appraisal to wait on. That is how a hard money loan can close in days, in some cases in as little as 24 hours pending title work. Every deal is still subject to underwriting, collateral review, title review, documentation, and approval.
Asset-focused, not credit-score-only
Hard money is driven primarily by the property: its collateral value, the equity in the transaction, the project plan, and the exit strategy. That is the core difference from a bank loan, which leans heavily on your income, credit score, and debt-to-income ratio.
That does not mean credit is ignored. Depending on the deal, we may still review borrower and entity information, experience, liquidity, credit, title, insurance, the scope of work, and the exit strategy. The property leads, but the borrower profile still matters.
We review the property, project plan, borrower profile, and exit strategy before determining whether a deal fits.
Because hard money is asset-focused and business-purpose, it is for non-owner-occupied investment property, not a home you intend to live in.
How hard money compares to other financing
Hard money trades cost for speed and flexibility. It closes faster and fits more property types than a bank loan, and it costs more while you hold it. The table below compares the main routes investors use to finance property. These are general industry descriptions, not Cedar Top terms. For a line-by-line comparison of our terms against a typical bank's, see hard money vs. a bank loan.
| Financing type | Best for | What the lender focuses on | Speed / documentation | When it may not fit |
|---|---|---|---|---|
| Hard money loan | Short-term, business-purpose investment property and renovation or construction projects | The property, collateral value, project plan, and exit strategy, plus a borrower review | Typically faster with lighter documentation than a bank, still subject to title and underwriting | Long-term holds at the lowest rate, or owner-occupied property |
| Traditional bank loan | Long-term holds and owner-occupied or conforming purchases | Borrower income, credit, debt-to-income, and full documentation | Slower, with heavier documentation and outside underwriting | Time-sensitive purchases, heavy renovation, or unconventional property |
| Seller finance / private note | Situations where the seller or a private party carries financing | Terms negotiated between the parties and the property | Varies widely by the parties and the agreement | When no seller or private party is willing to carry the note |
| Cash purchase | Speed and the strongest negotiating position | The buyer's available capital | Fastest, with the least third-party process | When the investor wants to preserve capital or use leverage |
What a hard money loan costs
Our Texas hard money loans start at 12% interest, with an origination fee of 2% to 4%, a $995 document fee, interest-only monthly payments, and no prepayment penalty. Terms run from a 6 month initial term on a fix and flip to 6 to 24 months on raw land, many with extension provisions. Loan amounts run $50,000 to $1,000,000, and up to $2,500,000 on raw land.
| Program | Pricing | Term | Max leverage |
|---|---|---|---|
| Fix and flip | Starting at 12% | 6 month initial term, extension provision | Up to 75% of ARV |
| New construction | Starting at 12% | Set by the length of the project | Up to 90% loan to cost, within 70% LTV |
| Bridge | Starting at 12% | 6 to 12 months, extension provisions | Up to 75% LTV |
| Raw land | Starting at 12% | 6 to 24 months | Up to 65% of market value |
| Commercial | Starting at 12% | 6 to 12 months, extension provisions | Up to 75% LTV |
| Transactional funding | 1.5% fee or $1,500 minimum, no upfront fees | Same-day funding may be available, subject to a confirmed end buyer at title | 100% of the purchase price and closing costs |
These are our published terms, not a national survey. National guides quote wide industry ranges; we would rather show our numbers. The rates and terms page is the full table, and the hard money loan calculator will put a monthly payment on a specific deal. Every loan is subject to underwriting, collateral review, title review, documentation, and approval.
When Texas investors use hard money
Investors typically reach for hard money when an acquisition or project is time-sensitive and driven by the property and its economics. Common scenarios include:
Fix-and-flip projects
For a fix-and-flip project, an investor buys, renovates, and resells, and the renovation portion is funded in draws as work is completed.
New construction or spec builds
For new construction and spec builds, ground-up financing can move faster than a conventional construction loan, subject to the project plan and underwriting.
Bridge scenarios
A bridge loan is short-term financing used to acquire or hold a property now and refinance or sell later.
Raw land or rural property acquisitions
A raw land acquisition covers lots and acreage that many traditional lenders avoid, where collateral value and the plan for the property drive the review.
Commercial and value-add investment property
For commercial investment property, investors use hard money on retail, office, and value-add transactions where speed and the property economics matter.
Transactional funding and double-close transactions
A transactional funding request supports a same-day double close, where short-term funds bridge an A-to-B and B-to-C transaction.
What hard money lenders usually review
When a lender evaluates a deal, the review usually centers on the property and the project, then the borrower. Items reviewed can include:
- Property value and condition
- Purchase price
- ARV or projected value, when relevant
- Scope of work and budget
- Borrower experience
- Liquidity or capital position
- Entity documents
- Title status
- Insurance
- Exit strategy
- Texas market fit
- Loan-to-value, loan-to-cost, or loan-to-ARV, where relevant
Terms like ARV and LTV are defined in the private money loan glossary, and you can estimate figures with the hard money loan calculator or the fix and flip profit calculator. For current program terms, see rates and terms, and for a fuller checklist of what to expect, see hard money loan requirements in Texas.
The hard money loan process
Every lender runs its own process, but a deal generally moves through these steps:
- Submit the property for review.
- The lender reviews the collateral and how the project fits.
- Borrower and entity information and documentation are reviewed.
- Terms are discussed.
- Title and collateral review.
- Closing.
- If the loan includes rehab or construction funds, money is released through a draw process as work is completed and inspected.
Each step is subject to underwriting, title review, documentation, and approval.
When hard money is not the right tool
Hard money is a specific tool, and it is not the right fit for every situation. It is generally not suited to:
- Owner-occupied homes
- Homestead purchases
- Long-term, low-rate financing needs
- Deals with an unclear exit strategy
- Transactions with serious or unresolved title issues
- Properties outside Texas
- Projects where the borrower cannot support the project plan
- Deals where the economics do not support private lending
Hard money costs more than a bank loan. If your timeline is long and a bank will do the deal, the bank is usually the cheaper answer.
Documents to prepare before contacting a hard money lender
Depending on the property and project, a lender may ask for items such as:
- The purchase contract
- The property address
- Photos
- A scope of work
- A rehab or construction budget
- Entity documents
- Borrower identification
- Insurance information
- A title company contact
- The exit strategy
- Comparable sales or ARV support, if available
Not every deal requires every item, and a lender may ask for more once it reviews the property. For a fuller checklist, see the documents for a Texas investment property loan.
Texas-specific considerations
- We lend on Texas investment real estate.
- Non-owner-occupied investment property only.
- Title review matters on every Texas real estate transaction.
- Rural property, raw land, and smaller-market properties may require extra documentation.
- Confirm local, legal, title, tax, and project-specific questions with the appropriate professional.
See where we lend across the state on the service areas page.
Example hard money financing scenarios
Here is a hard money loan with real numbers on it, using our fix and flip terms. These are illustrative scenarios, not real customers, quotes, or commitments to lend. Every deal is reviewed on its own.
- Purchase price: $180,000
- Rehab budget: $60,000
- ARV (after-repair value): $320,000
- Estimated loan amount: up to ~$240,000, which is our 75% of ARV cap
- Payments: interest-only on the outstanding balance
- Rehab funds: placed in escrow at funding and released in draws as work passes inspection
The borrower brings the down payment, points, fees, and reserves to close, then repays the loan by reselling the renovated property or refinancing into a longer-term rental loan. Run your own numbers in the fix and flip profit calculator.
The same structure carries across project types:
- A new construction investment property. A builder finances a ground-up, non-owner-occupied build, where the project plan and budget drive the review.
- A raw land or rural property acquisition. An investor acquires raw land or rural property where bank financing does not fit, and collateral value and the plan for the property matter most.