“Hard” money is a term often bandied about without truly understanding its full meaning. Certainly it must mean the opposite of “easy” money, right? Well, sort of. But hard money is simply a nickname applied to loans with terms a bit more taxing than ahard money private money conventional mortgage.

Hard money is typically a private fund, financed by an individual, a group or individuals or a hard money firm. But hard money doesn’t mean it’s hard to qualify for. In fact, hard money loans are relatively easy to get approved for as long as you know what to expect.

Hard money lenders are private lenders which means they set their own lending rules. Yet while they set their own rules, hard money lenders know they’re not the only hard money game in town so they need to be aware of what competitors are charging.

A typical hard money loan will require anywhere from 30 to 50 percent down from the borrower, based upon the type of property. A single family rental home will require less down payment than a piece of raw land, for example.

Hard money loans are also very short term, just long enough for the borrower to acquire the subject property then sell it. Hard money lenders need to know not only how long you’ll need the loan for but how you’re going to get rid of it and for how much. This process is known as the “exit” strategy.

Hard money lenders will generally require a credit report review of the borrower but can be much more lenient with regard to a credit score compared to a bank and often, if the credit score is extremely low, more down payment might grease the approval wheel after all.

You can expect interest rates to be in the low ‘teens and some points will be involved, but if the math works, you can acquire, sell and profit from an investment in a streamlined fashion. When applying, make sure you have sufficient down payment, average to good credit and a sensible exit strategy. Once you understand the process, hard money loans are actually easier to get than a conventional one.