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Hard Money Broker Guide: 15 Questions to Ask Before You Submit a Deal

21 min readBuckle Up CapitalBusiness-purpose transactions only

Business-purpose disclosure: All financing facilitated through our network of third-party capital sources. Buckle Up Capital is a broker, not a lender. Business-purpose transactions only.

Not every hard money broker can close your deal. Some are generalists who dabble in hard money loans on the side. Others specialize in the residential real estate investor market and know which capital sources will fund a distressed property in 10 days versus which ones will drag it to 30. Choosing the wrong broker costs you the deal. Choosing the right one means quick access to funding, competitive rates and a file that moves.

This guide covers what a hard money broker actually does, how hard money loans work, what rates and terms to expect and the 15 questions that separate brokers who can execute from those who will waste your time.

What Is a Hard Money Broker?

A hard money broker is an intermediary who connects real estate investors with private capital sources that offer short-term, asset-based bridge financing. Unlike a mortgage broker who works primarily with banks and conventional lenders, a hard money broker maintains relationships with private lenders, debt funds and specialty finance companies that underwrite on the property value and exit rather than on tax returns and W-2 income.

The broker's job is to package your deal correctly, match it to the right capital source in their network and shepherd the file through underwriting to a fast close. A skilled broker knows which lenders fund small residential fix and flip loans, which ones prefer commercial bridge deals, which ones close in 7 days and which ones need 21 days even when they say otherwise.

Brokers earn a fee, typically 1 to 2 origination points paid at closing. In most cases, that fee is worth it because the broker delivers speed, network access and competitive rate discovery that an investor working directly with a single lender cannot replicate.

How Hard Money Loans Work

Understanding hard money loans helps you evaluate whether a broker is giving you honest guidance or selling you on a deal that does not fit.

Asset-based underwriting. Hard money loans are underwritten primarily on the property value, not on your personal income or credit history. The capital source wants to know the after-repair value (ARV) of the investment property, the loan-to-cost (LTC) ratio and your exit plan. That is the file. Credit still matters at many programs but it is secondary to the deal math.

Short-term bridge financing. Hard money is short-term financing, typically 6 to 24 months. Real estate investors use it to bridge from acquisition and rehab to a refinance or sale. It is not long-term mortgage debt. The interest rate reflects the short duration, the speed of funding and the flexibility of the program.

Interest-only payments. Most hard money loan programs are interest-only during the term, which keeps monthly cash flow manageable during a rehab. You pay down the principal at exit when you sell or refinance into permanent financing.

Rehab draws. Fix and flip loans typically fund the acquisition upfront and release rehab funds in draws as work is completed and inspected. Your broker should know which capital sources in their network do construction draws quickly versus which ones cause delays that stall your project.

Properties and asset types. Hard money loans cover a wide range of investment properties: single-family residences, 2- to 4-unit properties, multifamily, commercial real estate, mixed-use properties and ground-up construction. Not every capital source covers every asset type. A good broker knows the match before they submit.

Hard Money Loan Rates and Terms

Rates on hard money loans run higher than conventional mortgages because the financing is short-term, fast and asset-based. Real estate investors pay a premium for speed and flexibility. Here is what to expect when working with a broker:

Interest rates. Most hard money loan programs start at 9 to 12 percent, depending on the property type, leverage, borrower experience and deal location. Lower rates are available for experienced investors with a strong track record, lower leverage and properties in high-demand markets.

Origination points. Capital sources charge 1 to 3 origination points at closing. Your broker may also charge a fee on top of that, or the broker fee may be built into the origination. Clarify exactly how the broker is paid.

Loan-to-value and loan-to-cost. Most programs lend up to 70 to 75 percent of ARV and up to 85 to 90 percent of LTC. Higher leverage is available for experienced borrowers on strong deals in competitive markets.

Term length. Standard hard money terms are 6, 12 or 24 months. Extensions are usually available for a fee, typically 0.5 to 1 point per extension period.

Prepayment. Some programs have a minimum interest period, meaning you owe interest for at least 3 to 6 months even if you sell or refinance early. Ask before you sign.

Loan size. Most hard money programs start at $100,000 and go up to $5 million or more for larger investment properties and commercial deals. Small deals under $100,000 are harder to place because the economics do not work for many capital sources.

What Real Estate Investors Use Hard Money For

Understanding the common use cases helps your broker match you to the right program and helps you spot a broker who does not actually understand the real estate investor market.

Fix and flip. The classic use case. An investor buys a distressed property at a discount, funds the rehab through the hard money loan, then sells at ARV. The quick close speed, condition-blind underwriting and draw structure all fit the fix and flip model. Our broker network includes fix and flip lenders that specialize in acquisition and rehab loans for investors at all experience levels.

BRRRR strategy. Buy, Rehab, Rent, Refinance, Repeat. Investors use hard money to acquire and rehab, stabilize the investment property with tenants, then refinance into a long-term DSCR loan. The hard money is the short-term bridge that makes the strategy work.

Bridge financing. Real estate investors sometimes need short-term capital to bridge between a property purchase and a pending sale or refinance. Hard money provides that quick bridge without requiring the borrower to qualify on income.

Commercial real estate acquisition. Bridge loans on commercial properties, office buildings, retail centers, mixed-use and multifamily assets are a common use of commercial hard money. Capital sources that cover commercial real estate are different from residential fix and flip lenders. Your broker needs to know the difference.

Ground-up construction. New construction hard money loans fund vertical construction on land the borrower already owns. These are more complex transactions with different draw schedules, and not all capital sources in a typical broker network handle them. Confirm this if construction is your deal type.

Distressed property purchase. Properties that do not meet conventional lending standards, such as vacant homes, properties with structural damage or properties in need of major renovation, are exactly what hard money is designed to fund. Banks will not touch them. Hard money will.

15 Questions to Ask Your Hard Money Broker

These are the questions that separate brokers who know their network from those who are guessing. Ask all of them before you hand over a deal package or pay an upfront fee.

1. Which Capital Sources in Your Network Cover This Asset Type and Market?

A broker's network is only valuable if the capital sources in it fund your specific deal. Hard money lenders specialize. Some do residential fix and flip only. Some require a minimum deal size of $500,000. Some will not touch ground-up construction. Some are licensed only in certain states.

Ask the broker to name two or three capital sources they would submit your deal to and explain why they are the right fit. A broker who knows their network answers immediately with specifics. A broker who hedges, generalizes or asks to "check" is guessing.

If your deal is a $180,000 single-family fix and flip in Colorado, you want a broker who has closed similar deals in that price range in that same state with capital sources who actually respond fast.

2. What Are the Real All-In Costs?

Hard money is more expensive than conventional financing. That is understood going in. What is less understood is how fees stack up across origination points, broker fees, appraisal, draw inspection fees, title and potential extension charges.

Ask for a detailed cost estimate that includes:

Origination points (typically 1 to 3 percent of the loan amount)
Broker fee, if charged separately from origination
Draw inspection fees on rehab holdbacks
Extension fee if the project runs long (typically 0.5 to 1 point)
Prepayment penalties or minimum interest periods
Appraisal cost and who pays if the deal does not close

A broker who is upfront about all-in cost is a broker worth working with. A broker who quotes a rate and avoids the fee conversation will cost you more than you budgeted.

3. How Fast Can You Actually Close?

Seven to 14 days is the hard money standard for a straightforward purchase with a clean title, a willing borrower and a ready appraisal. But the real question is not how fast the capital source can close. It is how fast the broker can get your file through underwriting cleanly.

Ask what typically slows a file down and what you can do in advance to prevent it. A good broker tells you exactly what is needed on day one: entity documents, insurance binder, scope of work, investor experience and a clear exit strategy. Brokers who request documents in stages slow your deal down and may cost you the contract.

4. Do You Have Recent Closes in This State at This Price Point?

Capital source licensing, state usury laws and market-specific title practices all affect how a deal moves. A broker who primarily closes deals in Texas may not have the same relationships or local title contacts in Colorado. State matters more than most investors realize.

Price point also matters. A broker who works mostly on $1 million commercial deals may not have capital sources willing to fund a $150,000 residential fix and flip. Ask for one or two recent comparable closes: similar asset type, similar state, similar deal size. Not a pitch, an actual close.

5. What Happens If the Deal Falls Through Mid-Process?

Deals die. A title issue surfaces. The inspection reveals structural damage that changes the ARV. The seller backs out. You need to know the broker's policy before you are in that situation.

Ask specifically:

Are any fees owed if the deal does not close?
What portion of an upfront deposit is refundable?
Who pays for the appraisal if the transaction does not move forward?

Every broker handles this differently. The ones with clear written policies have been through it before and know how to handle it professionally. Verbal reassurances are not enough.

6. What Is Your Experience With My Property Type?

A broker who specializes in residential fix and flip loans may not have deep relationships with capital sources that fund commercial real estate, ground-up construction or land loans. The hard money market is segmented by asset class and deal size.

Ask how many deals in your specific property category they have closed in the past 12 months. Experience with your deal type means they already know which capital sources will move fast and which ones will pass.

7. How Do You Get Paid, Exactly?

Broker compensation in hard money lending is not standardized. Some brokers are paid by the borrower. Some are paid by the capital source. Some split between both sides. Some build their fee into the origination and some charge it as a separate line item.

You need to know the exact fee structure before you submit. Hidden fees that surface at closing are a red flag and erode the trust you need in a broker who is representing your interests.

8. How Do You Handle Competing Term Sheets?

A well-connected broker submits your deal to multiple capital sources and brings you competing term sheets. That competition drives down your rate, reduces points and gives you optionality. A broker who only has access to one or two lenders cannot create that competition.

Ask how many capital sources typically see a deal like yours and how the broker presents competing offers. If the answer is vague, the broker may not have the network they claim.

9. What Does Your Draw Process Look Like?

If your deal involves a rehab component, the draw process is as important as the initial funding. Slow draws mean your contractor stops work and your project timeline slips. Slipped timelines extend your holding period, which increases the cost of the interest-only loan.

Ask the broker how long draw inspections take, whether the capital source does them in-house or uses a third party, and how quickly funds are wired after an approved draw. Fast capital sources fund draws in 2 to 3 business days. Slow ones take 7 to 10 days and cause real problems on active job sites.

10. Do You Work With New Investors or Only Experienced Borrowers?

Some hard money programs in a broker's network require investor track records, minimum deal counts or demonstrated experience with similar properties. Others are open to first-time real estate investors with a strong deal and sufficient down payment.

If you are newer to investing in real estate, ask directly whether the broker has access to programs designed for borrowers without a long track record. A good broker knows which capital sources are investor-experience-friendly and will not waste your time submitting to programs you cannot qualify for.

11. What Credit Score Do Programs in Your Network Require?

While hard money is asset-based, credit still matters at most programs. Some capital sources in a typical broker network will work with scores as low as 600 or even lower on certain bridge programs. Others require 660 or 680 minimum. A small number of equity-heavy programs bypass credit entirely when the LTV is conservative enough.

Know your credit score going in and ask the broker which programs in their network are a realistic fit. A broker who understands their capital sources will tell you quickly.

12. How Do You Handle Loans on LLC-Owned Properties?

Most serious real estate investors hold investment properties in a limited liability company or other business entity. Hard money lending is designed for business-purpose transactions, so entity-owned purchases are standard. But some capital sources require additional documentation or have specific entity requirements.

Ask whether the broker is familiar with LLC operating agreements, registered agent documentation and entity certificates of good standing. A broker who routinely closes deals for real estate investors already has this process dialed in.

13. Can You Fund Bridge Loans on Stabilized Properties?

Not every hard money deal is a rehab. Some investors need short-term bridge financing on a stabilized property while waiting for a refinance, a sale closing or a value-add lease-up. Bridge loans on stabilized investment properties require capital sources that do not mandate a rehab component.

If your deal is a bridge on a stabilized asset, confirm the broker has capital sources in their network that handle this. It is a different product from a fix and flip loan.

14. What Is the Minimum Loan Amount You Can Broker?

This is a practical question that many investors forget to ask. Many capital sources in a hard money broker's network have minimum loan amounts of $100,000, $150,000 or even $250,000 because smaller loans do not pencil out economically after their underwriting and servicing costs. If your deal is below the network's typical floor, the broker may not be able to help you regardless of how good the deal is.

Know the floor before you invest time in the relationship.

15. What Is Your Track Record on Deal-to-Close Rate?

A broker who submits deals that rarely close is not adding value. They are wasting both your time and the capital source's time. Ask the broker what percentage of deals they submit actually close and what the most common reasons are when deals fall apart.

A strong broker has a high deal-to-close rate because they pre-screen deals honestly and only submit files that match the capital source requirements. A broker with a low close rate is either over-promising to borrowers or does not know their network well enough to match deals correctly.

Working With a Broker vs Going Direct

Some real estate investors wonder whether to use a hard money broker at all. The argument for going direct: cut out the middleman and save the fee. The reality is more complicated.

Most institutional and semi-institutional hard money capital sources prefer broker submissions because it reduces their underwriting noise. They receive pre-screened files from brokers who understand their programs. Going direct to a private lender or fund often means slower response, less competition and no advocacy if the file hits a problem in underwriting.

A good broker adds speed, not cost. They know which capital source will fund your deal at what rate before you even submit. They shepherd the file through underwriting. They have relationships that get phones answered when a problem surfaces. The broker fee is worth paying when the broker actually delivers.

A bad broker delays your deal, obscures costs and submits to capital sources who are the wrong fit for your investment property type. The 15 questions above help you tell the difference before you start.

How to Evaluate a Hard Money Broker's Network Quality

Beyond the 15 questions, a few qualitative signals help you assess broker network depth:

References from real estate investors. Ask for two or three borrower references who have closed deals similar to yours. Not testimonials on a website, actual investors you can call. Ask them specifically about close time, transparency on costs and how the broker handled problems when they came up.

Turnaround on term sheets. A broker with genuine capital source relationships can turn a preliminary term sheet in 24 to 48 hours. If you are waiting more than a week for even a soft indication, the network is thin.

Direct contact with capital sources. Some brokers will introduce you directly to the capital source underwriting your deal. Others keep you at arm's length. Direct contact is a sign of a confident broker who knows their lenders.

Engagement on deal structure. Strong brokers tell you if something in your deal does not work before they submit. They suggest structuring changes that improve your approval odds. Brokers who submit blindly and hope for the best are not adding the value they charge for.

When Hard Money Loans Make Sense

Hard money is not always the right tool. Here is when it makes sense for real estate investors:

Speed is the competitive edge. If a seller wants a 10-day close or you are buying at auction, hard money is often the only option. Conventional mortgage underwriting cannot move that fast.

The property does not meet conventional standards. Vacant, distressed or heavily damaged investment properties that banks will not finance are the core market for hard money lending.

Your exit is clear. Hard money is a bridge. It makes sense when you know exactly how you will pay it off, whether that is a sale at ARV or a refinance into a long-term DSCR loan.

You need the flexibility. Hard money does not require income documentation, employment verification or the restrictions that come with government-backed mortgage programs. For real estate investors operating through entities, that flexibility matters.

Short-term cost is justified by deal economics. Even at 10 to 12 percent interest, a hard money loan makes sense if the deal math works. Run the full holding cost including interest, fees and carrying expenses against your projected profit before you commit. When the numbers work, apply for hard money financing through our broker network for competing term sheets in 24 to 48 hours.

FAQ

What does a hard money broker do?

A hard money broker connects real estate investors with private capital sources that offer short-term, asset-based loans. The broker packages your deal, matches it to capital sources in their network, submits the file, manages the underwriting process and works to close the funding on your timeline. Brokers typically earn 1 to 2 origination points at closing.

How do hard money brokers make money?

Most hard money brokers earn an origination fee, typically 1 to 2 points of the loan amount, paid at closing. Some charge the borrower directly, some are paid by the capital source and some split between both. Ask upfront for the exact fee structure so you know the all-in cost before you submit your deal.

Can I use a hard money broker for a commercial property?

Yes, but confirm the broker has capital sources in their network that cover commercial real estate. Residential fix and flip lending and commercial bridge lending are often handled by different groups of capital sources. A broker who specializes in residential may not have the right relationships for a commercial deal. Ask specifically about asset type before you submit.

Do hard money brokers require an upfront fee?

Some do, some do not. Upfront fees are typically used to cover appraisal and processing costs. They are not inherently a red flag, but get clarity in writing on exactly what is refundable if the deal does not close. Never pay a large upfront fee without a written agreement.

How long does it take a broker to find a capital source?

A broker with an active network should have preliminary indications from capital sources within 24 to 48 hours of reviewing your deal. A formal term sheet typically follows within 2 to 5 business days depending on the complexity of the investment property. If a broker needs more than a week to identify a fit, their network may be thinner than claimed.

What credit score do I need for a hard money loan?

Most hard money programs in a broker's network work with credit scores of 600 to 640 minimum, though requirements vary by capital source. Some equity-heavy programs on properties with low LTV are more flexible on credit. Asset-based underwriting means the deal quality and property value carry more weight than the credit score, but having a score above 640 gives you access to more programs and better rates.

Do hard money loans require a down payment?

Yes, most hard money loans require the borrower to contribute equity. A typical hard money program funds 70 to 90 percent of the total project cost, meaning the borrower brings 10 to 30 percent as a down payment or equity contribution. Programs that advertise 100 percent financing typically require a second lien, a cross-collateralized property or other equity contribution from the borrower.

How do hard money loans differ from private money loans?

Hard money loans and private money loans are often used interchangeably, but there is a distinction in practice. Private money loans are typically sourced from individual investors, friends, family or small funds. Hard money loans usually come from institutional or semi-institutional capital sources with defined programs, underwriting criteria and draw processes. A hard money broker generally works with institutional capital sources that have consistent programs and reliable funding.

Is a hard money broker the same as a mortgage broker?

No. A mortgage broker primarily works with conventional lenders, banks and government-backed loan programs for owner-occupied residential properties. A hard money broker works with private and specialty capital sources that offer short-term, investment-property bridge loans. Hard money is business-purpose financing for real estate investors, not consumer mortgage lending. The licensing requirements, deal structure and borrower profile are entirely different.

Can I refinance a hard money loan into a conventional mortgage?

You can refinance a hard money loan into a long-term mortgage on an investment property once the property meets conventional standards. After a rehab is complete and the property is stabilized, a DSCR loan (underwritten on rental income, not personal income) is the most common refinance path for real estate investors. Your broker can often connect you with DSCR lending through the same network that placed the hard money loan.

Related Resources

Explore related financing options through our network of capital sources:

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