Conventional vs Hard money
Hard money funds time-sensitive acquisitions + rehabs (7-14 day close, 9-13% rate + points). Conventional investment loans fund stable rental acquisitions (30-45 day close, 6-7.5% rate). Hard money is wrong for buy-and-hold (interest eats yield); conventional is wrong for distressed properties (won't underwrite without livable condition).
| Conventional | Hard money | |
|---|---|---|
| Speed to close | Conventional: 30-45 day close. | Hard money: 7-14 day close. |
| Cost | Conventional: 6-7.5%, 20-25% down. Cheapest investor financing. | Hard money: 9-13% + 1-4 points. Expensive but acceptable for short-term use. |
| Qualifying | Conventional: W-2 income, DTI, 680+ FICO, 2 years tax returns. | Hard money: ARV + borrower experience. Less FICO-sensitive. |
| Best use case | Conventional: turnkey rental acquisitions, stabilized properties, investor first-10 financed. | Hard money: flips, rehab projects, distressed-property acquisitions, BRRRR rehab phase. |
Which to use when.
Conventional for buy-and-hold rentals you can close in 30-45 days. Hard money for flips, rehab-needed properties, or any 7-14 day close. They serve different deals — most active investors use both within the same portfolio.
Frequently asked.
What's the difference between conventional and hard money loans?
Hard money funds time-sensitive acquisitions + rehabs (7-14 day close, 9-13% rate + points). Conventional investment loans fund stable rental acquisitions (30-45 day close, 6-7.5% rate). Hard money is wrong for buy-and-hold (interest eats yield); conventional is wrong for distressed properties (won't underwrite without livable condition).
Which is cheaper — conventional or hard money?
Conventional: 6-7.5%, 20-25% down. Cheapest investor financing. Hard money: 9-13% + 1-4 points. Expensive but acceptable for short-term use.
Which closes faster?
Conventional: 30-45 day close. Hard money: 7-14 day close.
When should I use conventional vs hard money?
Conventional for buy-and-hold rentals you can close in 30-45 days. Hard money for flips, rehab-needed properties, or any 7-14 day close. They serve different deals — most active investors use both within the same portfolio.
More head-to-head.
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