Hard money: short-term, asset-secured CRE loan. 10-15% APR, 1-3 weeks close, 60-75% LTV, 6-24 month term. Underwriting based on property value, not borrower credit. Conventional CRE: 8-12% APR, 6-10 weeks close, up to 75-85% LTV, 5-10 year balloon with 20-25 year amortization. Full underwriting. Hard money for speed and value-add; conventional for cost and stabilized assets. Many investors use hard money to acquire and renovate, then refinance to conventional once stabilized.
The hard-money-vs-conventional-CRE decision turns on speed, asset condition, and borrower profile more than on the property type itself. Both products fund the same property categories — office, retail, industrial, multifamily, mixed-use — with very different rules. This guide covers when each fits and how the math works. For broader context see commercial real estate loans; for related comparisons see SBA 7(a) vs conventional.
Side-by-Side
| Dimension | Hard Money | Conventional CRE |
|---|---|---|
| APR | 10-15% + 2-3 points | 8-12% + 0.5-1.5 points |
| Speed | 1-3 weeks | 6-10 weeks |
| Term | 6-24 months | 5-10 year balloon, 20-25 amort |
| Max LTV | 60-75% | 75% (investor) - 85% (SBA OO) |
| Min FICO | 600 (some 550) | 680-720 |
| Underwriting | Property value first | DSCR + borrower + property |
| Best for | Speed, value-add, distressed | Stabilized assets, long hold |
When Hard Money Fits
- Speed-sensitive deals — auction purchase, 30-day close, or competing bid where conventional close timing kills the deal
- Value-add projects — buying a property at 60% occupancy planning to bring it to 90%, renovate, then refinance
- Distressed acquisitions — foreclosures, short sales, properties with significant deferred maintenance
- Borderline credit — 600 FICO with strong asset value, conventional declines at this credit tier
- Self-employed or complex income — the borrower's income is hard to document conventionally; hard money is asset-driven so income matters less
When Conventional Fits
- Stabilized property with 90%+ occupancy and clean operating history
- Long hold horizon (5-10+ years) where the lower rate compounds significantly
- Strong borrower profile — 720+ FICO, 2+ years operating history, good DSCR
- Owner-occupied with SBA — SBA 7(a) or 504 covers up to 90% LTV at lower rates than hard money
- Refinance from hard money — once value-add is complete and property stabilized, refinance to conventional
Real Cost Example: $1M Office Property
- Hard money: $700K loan (70% LTV), 12% APR, 2 points, 12-month term. Total cost: ~$84K interest + $14K points = ~$98K. Plus closing costs ($5-10K).
- Conventional: $750K loan (75% LTV), 9.5% APR, 1 point, 7-year balloon / 25-year amort. Annual cost ~$71K interest + $7,500 points (year 1). Total cost over 12 months: ~$78K (plus appraisal and Phase 1).
Conventional saves ~$20K over a 12-month hold even after appraisal and environmental costs. The trade is 6-10 weeks vs 1-3 weeks to close. If the deal can wait, conventional wins on cost.
Next Step
Comparing speed-vs-cost on a CRE deal? Compare CRE financing options — one application reaches both hard money and conventional lenders.