Three loan types come up again and again with real estate investors. They overlap, and lenders use the names a little differently, but the core idea behind each is simple. Matching the loan to the deal is half of placing it well.
Hard money (asset-based short-term loans)
A hard money loan is a short-term loan underwritten mainly on the property and the plan. It fits purchases and renovations where speed and flexibility matter more than long-term cost. Fix and flip and ground-up construction loans are common examples.
DSCR (rental property loans)
A DSCR loan, short for debt service coverage ratio, looks at whether a rental property's income covers its debt payments. It fits investors who are buying or refinancing a rental and plan to hold it. The property's income is the center of the underwriting.
Bridge (short-term loans between stages)
A bridge loan covers the gap between one stage and the next: buying before a refinance, stabilizing a property before permanent financing, or closing quickly while a longer-term loan is arranged. The exit, usually a refinance or sale, is a central part of the file.
A simple way to choose
Ask your client three questions:
- Will the property be renovated or built, or is it ready to rent?
- Does the client plan to sell, refinance or hold?
- How long will the client realistically need the money?
All three are business purpose loans
These loans are for investment and business purposes, not for a borrower's own home or consumer use. If you are unsure whether a deal qualifies, ask us before you submit.