Private Money Loan
Direct definition
A short-term real estate loan funded by private individuals or funds rather than banks.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Private money — sometimes called hard money — is fast, flexible, and asset-based. Rates and fees are higher; terms are short. It's a tool for investors, fix-and-flips, and time-sensitive purchases.
Why it matters
It solves speed and complexity problems traditional lenders can't, at a premium.
Where you may see it
- Loan program disclosures
- Promissory note
- Underwriting conditions
A real-world example
A flipper closes a $400,000 private money loan in 10 days to secure an off-market deal, then refinances into a DSCR loan after stabilization.
Educational and illustrative only
A common misunderstanding
Private money loans aren't inherently predatory — they're simply funded by non-bank sources and typically used for short-term or investment purposes.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026