A type of loan that is funded by a private individual(s) rather than an institution, using real-estate or other assets as collateral. Although hard money loans tend to be more flexible than conventional loans in the sense of property condition and borrower requirements, they bear much higher interest rates with shorter terms.

Hard money lenders typically do not base their lending decision on the borrower's credit score, making it appealing for borrowers who are not yet qualified for traditional financing, or are in distressed situations such as default or foreclosure. Most private investors lending hard money will only accept a maximum loan to value (LTV) of 65-75 percent, as to protect themselves if the borrower cannot pay and is forced to foreclose on the property.