Hard money lenders are licensed or regulated private lending companies charging 9–13% interest plus 2–4 points; private money lenders are individuals—friends, family, or accredited investors—often offering 6–10% with less rigid terms. Hard money closes in 10–14 days with predictable underwriting; private money takes 21–35 days but provides flexibility and lower rates if you have an existing relationship.
What's the interest rate on private money vs hard money?
In 2026, hard money lenders charge between 9.5% and 13% annual interest, plus 2–4 points (origination fees) due upfront. Private money lenders—individuals or accredited investors—typically offer 6–10% annually, often with no points or just 0.5–1 point. The gap exists because hard money companies operate under SAFE Act licensing, maintain capital reserves, and face compliance costs that private individuals do not.
According to Q1 2026 rate sheets from Kiavi, RCN Capital, and Lima One Capital, the market-leading hard money rates hover at 10–12% on fix-and-flip deals with strong equity. Private money rates fluctuate based on the individual lender's alternative uses of capital—a high-net-worth individual might accept 6% if they trust you; a family office might demand 9% if the deal carries rehab risk.
| Dimension | Hard Money Lender | Private Money Lender |
|---|---|---|
| Typical rate | 9.5–13% | 6–10% |
| Points (origination) | 2–4 | 0–2 |
| LTV cap | 70–75% ARV | 60–75% purchase price |
| Close time | 10–14 days | 21–35 days |
| Credit check | Yes | Optional |
| Appraisal required | Yes | No |
| Best use case | Speed-dependent flips, institutional investors | Relationship-based deals, lower cost of capital |
Is a private money lender the same as a hard money lender?
No—they are structurally different. Hard money lenders are licensed or regulated companies that operate under state SAFE Act rules and federal Truth in Lending Act (TILA) / Regulation Z oversight. Private money lenders are individuals—family, friends, accredited investors, or self-directed IRA LLCs—who lend their own capital directly. The distinction matters for terms, documentation, and regulatory risk.
Hard money companies like Kiavi, RCN Capital, Lima One Capital, and Visio Lending maintain a pool of institutional capital (often from private equity funds or family offices), employ loan officers, and follow standardized underwriting. Private money comes from an individual's liquidity and operates on handshake-plus-promissory-note or more formal Regulation D investment agreements. Hard money is repeatable and scalable; private money is one-off and relationship-dependent.
Do private money lenders require an appraisal?
Most private money lenders do not order formal appraisals. They instead rely on the investor's property analysis, comparable sales (comps), and after-repair value (ARV) estimates provided by the borrower. Hard money lenders almost always order an independent appraisal to validate the property's current market value and ARV within 70–75% LTV limits.
The absence of an appraisal requirement in private money deals accelerates closing and reduces costs (appraisals typically run $400–$800 per property). However, it puts onus on the borrower's credibility—if an investor has a track record of accurate rehab estimates and successful property exits, private lenders will trust the ARV. First-time flippers or those with poor track records may struggle to secure private capital without an appraisal.
Can you refinance out of a hard money loan?
Yes—refinancing is the intended exit strategy for hard money loans. After you complete repairs and stabilize the property (or achieve a certain rent level), you refinance into a conventional Fannie Mae, Freddie Mac, or portfolio loan with a traditional bank. This typically happens within 6–12 months of the initial hard money close.
The refinance must appraise at a value high enough to cover the hard money payoff plus the new lender's LTV cap (usually 75–80% LTV). Extension fees apply if you need to extend the hard money term beyond the initial period—typically 1–2 additional points charged quarterly or annually. Many hard money lenders are equipped with refinance networks and will assist you in selecting conventional lenders.
Which is better for a BRRRR deal?
Hard money is the superior choice for BRRRR (Buy, Renovate, Rent, Refinance, Repeat) strategies because of speed, predictability, and equity build. The 10–14 day close lets you move fast in competitive markets; the clear ARV-based underwriting lets you model your refinance rate and exit precisely; and the institutional framework ensures no personal drama derails the deal.
Private money can work for BRRRR if you have a pre-existing relationship with an accredited investor who trusts your renovation timeline and the property class. For example, if a family office or high-net-worth individual has backed three of your flips successfully, they may fund a fourth BRRRR deal at 8% because they've de-risked you. However, if you're sourcing capital cold, hard money is faster and more certain.
How do you find a private money lender?
Private money typically comes from three sources: (1) your personal network—friends, family, past employers, or business partners; (2) real-estate investor meetups and REIA clubs where accredited investors actively seek deals; and (3) online platforms like Fundrise, Fund That Flip, or Groundfloor that connect borrowers to accredited investors under Regulation D offerings.
The key is trust. Private money doesn't scale without a proven track record. Start with people who know you personally or investors who have backed peers. Document every deal heavily—provide monthly updates, property photos, rehab milestones, and transparent financial reporting. Once you've successfully returned capital to three or four private investors, others will follow based on referral.
What documentation do hard money lenders require?
Hard money lenders request a standard commercial loan package: purchase agreement, proof of funds (or pre-approval letter), personal credit report and tax returns, past 2 years' personal and business returns, proof of experience (prior successful deals), an itemized scope of work and rehab budget, contractor bids or estimates, and a detailed after-repair-value (ARV) projection with comparable sales analysis.
They also order a property appraisal once your application is under review. The entire process typically takes 3–5 business days before conditional approval, and 7–10 days to full underwriting and clear-to-close. Private money requires a simpler package—usually a letter of intent, the deal's general financial snapshot, and the promissory note or Regulation D subscription documents, but documentation demands vary widely based on the individual lender's sophistication.
When should an investor use each type of capital?
Use hard money for: Fix-and-flip deals where speed is critical, BRRRR plays where you need predictable underwriting, institutional or fund deals requiring transparent documentation, your first few flips before you've built a private lending network, and deals in competitive markets where 10–14 day closings give you an edge.
Use private money for: Relationship-based deals where you've already de-risked the investor, larger spreads where 6–8% is available (saving 200+ basis points vs hard money), deals with non-standard property types (vacation rentals, commercial conversion, unusual rehab) where hard money won't move, and portfolio builds where you're acquiring 3+ properties per year and need flexible terms.
Frequently Asked Questions
What's the interest rate on private money vs hard money?
Hard money lenders charge 9.5–13% annual interest plus 2–4 points (origination fees) upfront in 2026. Private money lenders—typically individuals or accredited investors—offer rates from 6–10% annually, often with no points. Hard money rates reflect regulatory overhead and institutional lender costs; private money rates depend on the individual lender's cost of capital and risk appetite.
Is a private money lender the same as a hard money lender?
No. Hard money lenders are licensed or regulated private lending companies that operate under state SAFE Act rules. Private money lenders are individuals—friends, family, accredited investors, or self-directed IRA LLCs—who loan directly to investors. Hard money is institutional and predictable; private money is personal and flexible but requires an existing relationship.
Do private money lenders require an appraisal?
Private money lenders typically do not require a formal appraisal. Most base their LTV on the purchase price or after-repair value (ARV) without a lender-ordered appraisal. Hard money lenders, by contrast, almost always order a professional appraisal to justify their 70–75% ARV loan-to-value caps. Private lenders rely on the investor's credibility and deal underwriting.
Can you refinance out of a hard money loan?
Yes, hard money loans are specifically designed to be short-term bridge financing before refinance or sale. Most borrowers refinance into conventional mortgages (Fannie Mae, Freddie Mac) or portfolio loans once the property is stabilized or completed. Hard money lenders expect 6–12 month terms with a refinance exit. Extension fees typically run 1–2 additional points if you need extra time.
Which is better for a BRRRR deal?
Hard money is superior for BRRRR (Buy, Renovate, Rent, Refinance, Repeat) deals. The 10–14 day close speed lets you move fast in competitive markets, and the predictable terms allow you to underwrite your refinance exit precisely. Private money works if you have a pre-existing relationship with an accredited investor and they trust your repair timeline and property class.
Do hard money lenders check credit?
Hard money lenders do check credit as part of due diligence, but it is typically a secondary factor—the deal's equity and the property's collateral matter more. Most will lend to borrowers with a FICO in the 650+ range if the deal math is strong. Private money lenders often skip credit checks entirely and rely on personal trust and the deal.
Founder of Home Pros, operator across 48 markets, closed 300+ investor transactions since 2021. Trevor writes for investors and sellers navigating cash-buyer transactions, distressed property deals, and wholesale fundamentals. More about Trevor →