Hard Money Loans in Florida: How They Work and When to Use One

Short answer

A hard money lender in Florida makes short-term loans secured by investment real estate, sized mainly on the property's value and the deal, not on your tax returns. These are business-purpose loans only, used for flips, bridges and fast closings, not for a home you will live in. Under Florida law, interest above 18% a year is usurious on loans of $500,000 or less, so the full cost, including points, matters as much as the rate.

What a hard money loan is

A hard money loan is private, asset-based financing. The lender looks first at the property: what it is worth today, what it will be worth after repairs (ARV), and how you plan to pay the loan off. Your credit and income still count, but far less than on a bank mortgage.

What usually sets hard money apart:

• Speed. Private lenders can close much faster than a bank because there is less underwriting. That speed wins auction, estate and cash-offer deals.
• Short terms. Loans usually run months, not decades, and are built to be paid off by a sale or refinance.
• Interest-only payments. You pay interest while you work on the property, then pay the balance at the end (a balloon).
• Points and fees. Lenders charge upfront points, origination and draw fees. These add up, so compare total cost, not just the rate.
• Leverage based on value. The loan is sized against the purchase price, the rehab budget and the ARV. Each lender sets its own caps, and they change with the market and your experience.

Rates and terms vary by lender, deal and track record, and change daily. Call 305-425-1990 for current pricing on a specific property.

Business purpose only: no owner-occupied homes

Hard money is for investors and businesses. Federal Truth in Lending rules (Regulation Z) exempt credit made primarily for a business purpose, and the CFPB's official commentary treats a loan to buy, improve or maintain a rental property the owner does not live in as business purpose. That rule does not apply if the owner expects to live there more than 14 days in the coming year.

What that means in practice:

• The property is a flip, a rental, a commercial building or land you are developing. Not your primary home or a second home you will use.
• You sign a business-purpose and occupancy statement at closing. Many lenders also want the loan in an LLC or corporation.
• If you want to buy a home to live in, you need a consumer mortgage instead: conventional, FHA, VA, or a non-QM option like a bank statement loan.

Do not misstate occupancy to get a hard money loan. Occupancy fraud is a federal crime, and it can also strip away protections you would otherwise have.

Fix-and-flip, bridge and other uses

• Fix-and-flip. The most common use. The lender funds part of the purchase and holds the rehab money back, paying it out in draws as work is inspected and completed. You sell, pay off the loan and keep the spread. See our fix-and-flip loans page.
• Bridge. You need to close now and refinance or sell later: buying the next property before the current one sells, taking out a partner, or carrying a building through lease-up. See bridge loans and what a bridge loan is.
• Fast or unusual closings. Auctions, estate sales, properties a bank will not finance yet because of condition, and deals with a short contract deadline.
• Value-add rentals. Buy and renovate with hard money, place a tenant, then refinance into a long-term DSCR loan based on the rent.
• Business cash-out. Pull equity from an investment property you own free and clear to fund another deal, when speed matters more than cost.

In South Florida, condition is often the reason. Older homes with roof, electrical or plumbing issues can fail a bank appraisal or insurance inspection. Hard money funds the fix, and a long-term loan takes over once the property is insurable and rented.

Florida rules that affect cost: usury and closing taxes

Florida's usury law is Chapter 687 of the Florida Statutes. The basics, as of October 2026:

• Loans of $500,000 or less: interest above the equivalent of 18% a year simple interest is usurious (s. 687.02 and s. 687.03).
• Loans over $500,000: the 18% cap does not apply, but the criminal usury limits in s. 687.071 still do. Willfully charging more than 25% a year is a misdemeanor, and more than 45% is a felony. A loan made in violation of s. 687.071 is not an enforceable debt in Florida courts.
• Points count. Under s. 687.03, fees and other charges that work as interest are spread over the stated term of the loan and added to the rate to test for usury. On a short loan, upfront points weigh more per year.
• Doc stamps and intangible tax. Florida charges documentary stamp tax on the note at $0.35 per $100 and nonrecurring intangible tax of 2 mills ($0.002) on the mortgage amount. On a $400,000 loan that is $1,400 plus $800. Recording one loan is cheaper than refinancing twice, so plan your exit.

This is general information, not legal advice. Lenders and borrowers with questions about a specific note should talk to a Florida attorney.

Your exit strategy is the real underwriting

Every hard money lender asks one question: how does this loan get paid off? Have a clear answer, with numbers.

• Sale. Show comparable sales that support your ARV, a realistic rehab timeline and a budget with a contingency. Overestimating ARV is the most common way flips lose money.
• Refinance to a long-term loan. If you plan to keep the property, check before you buy that it will qualify for a DSCR loan or conventional investment loan: rent that covers the payment, insurability, and any seasoning rules on using the new appraised value. See what seasoning is.
• Sale of another asset. For a bridge, show the property or asset you are selling and its timeline.

Build in time. Permits, contractors, insurance and condo or HOA approvals in South Florida often take longer than planned, and extension fees on a short loan are expensive. Ask up front what an extension costs and whether there is a prepayment penalty.

Documents a hard money lender will ask for

• Purchase contract, or the deed and payoff statement if you already own the property.
• Rehab budget and scope of work, line by line, plus your contractor's details.
• Comparable sales supporting the ARV, or a rent estimate if you will hold.
• Entity documents: articles of organization, operating agreement, EIN letter and good standing from Sunbiz.
• Government ID for each guarantor and authorization to pull credit.
• Bank statements showing funds for the down payment, closing costs and reserves.
• Your track record: a list of past flips or rentals with addresses and dates, if you have one.
• Insurance quote for the property (builder's risk or vacant property coverage during the rehab).

QMS Lending (NMLS #1781090) is an independent broker in Miami, FL, with access to 100+ lenders, including private and non-QM investor lenders. We compare leverage, points, draw rules and extension costs side by side, so you see the full cost before you sign. Start on our hard money loans page or call 305-425-1990. In English or Spanish. Business-purpose loans only. Subject to credit and property approval.