ARV, LTC, DSCR, holdback, Dutch interest, stips — every hard money term defined in plain English.
Glossary
An Account Executive (AE) is the broker's primary contact at a hard money lender — your internal champion through underwriting. Here is what AEs do, why the relationship matters, and how to build one that works.
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ARV stands for After-Repair Value — the projected value of a property after all planned renovations are complete. Here is what ARV means, how it is calculated, and why hard money lenders care about it more than current value.
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As-Is Value (AIV) is the appraised value of a property in its current condition before renovation. Here is how AIV is used in hard money underwriting and how it differs from ARV and market value.
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A Broker Price Opinion (BPO) is a property value estimate prepared by a licensed real estate agent or broker. Hard money lenders sometimes use BPOs instead of full appraisals for speed and cost. Learn what a BPO includes, how it differs from an appraisal, and when lenders accept them.
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BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a real estate investment strategy that uses hard money loans to acquire and renovate properties, then refinances into long-term debt to recover capital and repeat. Learn how BRRRR works, where hard money fits, and what makes a deal work.
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Cap rate (capitalization rate) is a property's Net Operating Income divided by its value or purchase price. It measures the return on an income-producing property independent of financing. Learn how cap rate works, how it applies to hard money deals, and what cap rates signal about market conditions.
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Capital recovery in real estate investing means pulling your original invested capital back out of a deal after adding value — typically through a cash-out refinance or sale. Learn how capital recovery works, why it matters for scaling, and how hard money loans fit into the strategy.
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Cash-to-close is the total amount a borrower must bring to the closing table. Here is what is included in the CTC calculation and how to avoid surprises at closing.
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A Certificate of Occupancy (C of O) is the official government certification that a building is complete and safe to occupy. Here is what it means in ground-up construction lending and why delays in getting one matter.
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Clear to Close (CTC) is underwriting's confirmation that all loan conditions are satisfied and the loan is ready to fund. Here is what CTC means, what happens after it is issued, and why responsiveness during this phase matters.
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A credit box is the set of criteria a hard money lender uses to define what deals they will and will not fund. Here is what every component means and why matching your deal to the right credit box is the most important skill in hard money brokering.
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DSCR stands for Debt Service Coverage Ratio — the ratio of a property's rental income to its debt obligations. Here is what DSCR means, how it is calculated, and what lenders require.
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A draw schedule is the plan for releasing holdback funds as renovation milestones are completed. Here is how draw schedules work, what triggers each draw, and what to look for when comparing lenders.
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A draw structure defines how renovation or construction funds are released during a hard money loan. Learn how draws work, how many are typically allowed, what retainage is, and what draw fees and timelines to expect before you close.
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Dutch interest means paying interest on the full committed loan amount from day one, including holdback funds not yet drawn. Non-Dutch means paying only on disbursed funds. Here is why it matters.
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An exit strategy is the borrower's plan for repaying a hard money loan. Lenders underwrite it carefully because without a credible exit, the short-term loan becomes a long-term problem. Here is what counts.
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Extension terms define what it costs to extend a hard money loan past its original maturity date. Standard extension costs are 0.5-1.5 points per month or a flat extension fee. Learn when extensions are available, how to request one, and how to avoid needing one.
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A hard money broker connects real estate investors with the right hard money lender for their specific deal. Here is exactly what brokers do, how they get paid, and when it makes sense to use one.
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A hard money loan is a short-term, asset-based loan used by real estate investors who need to close fast or finance properties that conventional lenders will not touch. Here is everything you need to know.
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A holdback is the portion of a hard money loan reserved for renovation that the lender holds at closing and releases in draws as work is completed. Here is exactly how holdbacks work.
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An interest reserve is a portion of a hard money loan set aside to make monthly interest payments on behalf of the borrower during the project. Here is how it works and when it makes sense.
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The loan term is how long you have before a hard money loan matures and must be repaid or refinanced. Standard hard money terms are 12-18 months. Learn what term length means, what happens at maturity, and how to evaluate extension options.
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LTC stands for Loan-to-Cost — the loan amount as a percentage of total project cost. Here is how LTC is calculated, how lenders use it, and how it differs from LTV.
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LTV stands for Loan-to-Value — the loan amount as a percentage of the property's current value. Here is how LTV is calculated, when lenders use it, and how it differs from LTC.
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A personal guarantee means you are personally liable for repaying a hard money loan if the collateral property does not cover the balance. Most hard money loans are recourse and require a personal guarantee. Learn what this means, what you are agreeing to, and how it differs from non-recourse lending.
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Points are upfront fees charged by hard money lenders at closing, expressed as a percentage of the loan amount. One point equals 1%. Here is how points work, what is typical, and how to compare them across lenders.
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A prepayment penalty charges the borrower for paying off a loan early. In hard money, this often appears as a minimum interest period. Here is how to identify it and when it affects your deal.
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Recourse loans let the lender pursue the borrower's personal assets if the property doesn't cover the debt. Non-recourse limits the lender to the property only. Here is what this means in hard money lending.
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A scope of work is the itemized renovation plan submitted to a hard money lender for underwriting. Here is what a SOW must include, how to build one that moves through underwriting, and the common mistakes that slow deals down.
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A term sheet (also called a Letter of Intent or LOI) is a lender's non-binding proposal outlining loan terms. Here is what every line means and what to look for before you commit.
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Underwriting conditions — also called stips (stipulations) — are items the lender requires before funding. Here is what common stips look like and how to clear them without losing your closing date.
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