Frequently Asked Questions — Sab Tera Lending

Understanding Hard Money Lending — A Complete Guide

What Is a Hard Money Loan?

A hard money loan is short-term, asset-based financing secured primarily by real property rather than a borrower's credit profile or income. Instead of underwriting your paycheck, a direct lender like Sab Tera Lending evaluates the deal itself — the purchase price, the after-repair value, the rehab scope, and your exit strategy. Because the collateral does the heavy lifting, hard money loans close faster than conventional mortgages (often in 7 days versus 45–90+ days at a bank) and are available to borrowers that traditional underwriting would reject outright, including self-employed investors, LLCs, and foreign nationals. The tradeoff is a higher interest rate and a shorter term than a 30-year conventional mortgage, which is why hard money is typically used as bridge financing until a property is stabilized, resold, or refinanced into permanent debt such as a DSCR Rental loan.

How Hard Money Loan Rates Are Determined

Rates on hard money loans are driven by four factors: loan-to-value, property type, borrower experience, and exit strategy strength. A lower-leverage deal (say, 65% LTV) with an experienced flipper and a clear resale plan will price closer to Sab Tera Lending's 9.5% starting rate. A first-time investor requesting maximum leverage on a distressed property will typically see a modest rate premium to offset the added risk. Unlike many competitors, we do not add a credit-score-based rate adjustment — because we don't use credit score in underwriting at all, the deal's fundamentals do all the pricing work. As of August 2026, the national average hard money rate sits near 10.57% (Lightning Docs data), which puts our 9.5% starting rate for Fix & Flip, Bridge, Multifamily, and Commercial loans below the industry average.

LTV vs. ARV vs. LTC: Understanding the Metrics

Loan-to-Value (LTV) is the loan amount expressed as a percentage of a property's current value, used to size acquisition and bridge loans. After-Repair Value (ARV) is the projected value of a property once renovations are complete — Sab Tera Lending caps Fix & Flip loans at 75% of ARV, which is what allows us to also finance 100% of verified rehab costs on top of a 90% purchase-price advance. Loan-to-Cost (LTC) is used on Ground-Up Construction loans, where the loan is sized against total project cost (land plus hard and soft construction costs) rather than an existing property's value. Confusing these three metrics is one of the most common mistakes new investors make when comparing quotes from different lenders, since a "90% LTV" quote and a "90% LTC" quote can represent very different loan amounts on the same project.

Attorney States vs. Title States: What It Means at Closing

Across our 20 service states, closings are handled differently depending on local law. In "attorney states" such as New York, New Jersey, Connecticut, and Massachusetts, a real estate attorney must review and often conduct the closing, which can add a modest attorney fee but also adds a layer of legal review. In "title states" such as Florida, Texas, Ohio, and Virginia, a title company typically handles the closing directly, which can be faster and lower-cost. Sab Tera Lending closes deals in both types of states every week and factors these differences into your term sheet upfront, so there are no surprises about who is handling your closing table or what it will cost.

Fix & Flip vs. DSCR vs. Bridge: Choosing the Right Program

Choosing the right loan program comes down to your exit strategy. If you plan to renovate and resell within 6–18 months, a Fix & Flip loan at 9.5% IO with 90% LTV plus 100% rehab funding is typically the most efficient structure. If you plan to hold the property as a long-term rental, a DSCR Rental loan at 6.5% fixed for 30 years lets you qualify on the property's income rather than yours. If you need short-term acquisition capital without a major renovation component — for example, to win a competitive bidding situation or bridge to a future refinance — a Bridge loan at 9.5% IO gives you speed without the draw-schedule complexity of a rehab loan. Many of our most active investors use two or three of these programs in sequence across a single deal's lifecycle.

Why a Direct Lender Beats a Broker

Many hard money "lenders" advertised online are actually brokers who place your loan with an outside capital source and mark up the rate or fees for their commission. Sab Tera Lending funds every loan from our own capital, which means there is no broker markup, no third party approving or delaying your file, and no disconnect between the person quoting your rate and the person who actually controls the money. It also means our underwriting decisions are final — we don't have to resubmit your file to an investment committee at another company, which is a major reason we can issue same-day commitment letters and close in as few as 7 business days across all 20 of our service states.

Common Mistakes First-Time Hard Money Borrowers Make

The most common mistake is underestimating renovation costs and being under-leveraged for the actual scope of work, which can stall a project mid-rehab. The second is confusing a lender's advertised "up to" rate with the rate you'll actually receive, since headline rates typically apply only to the lowest-leverage, most experienced borrower profile. The third is failing to get a Proof of Funds letter before making an offer, which can cost you a deal to a faster-moving buyer in a competitive market. Sab Tera Lending addresses all three by disclosing full terms in writing before you commit, funding 100% of verified rehab costs rather than a partial estimate, and issuing free same-day Proof of Funds letters across all 20 states.

How Construction Draw Schedules Work in Detail

On a Ground-Up Construction loan, funds are not disbursed in one lump sum. Instead, the project budget is broken into milestones — typically foundation, framing, rough mechanicals, drywall, and finishes — and Sab Tera Lending releases a draw after each milestone is completed and verified by inspection. You submit a draw request, an inspector confirms the completed work matches the budget line item, and funds are wired within 3–5 business days. This protects both parties: you're not paying interest on undisbursed funds sitting idle, and the lender confirms progress before releasing additional capital. Builders who plan their draw requests around this cadence, rather than requesting funds ahead of completed work, see the fastest turnarounds.

Refinancing Out of a Hard Money Loan

Because hard money loans are short-term by design, most borrowers plan their exit before they close. On a Fix & Flip loan, the two standard exits are a resale to a retail buyer or a refinance into a long-term DSCR Rental loan if the investor decides to hold the property instead. Sab Tera Lending streamlines this second path: once a rehabbed property is stabilized and either rented or ready to rent, we can refinance the same deal into our 30-year DSCR program at 6.5% fixed, up to 80% LTV, using projected or in-place rent to qualify. Planning your exit before you close — and confirming which lender will handle the refinance — avoids the scramble that happens when a short-term loan approaches maturity with no clear next step.

Hard Money vs. Conventional vs. Private Money: What's the Difference?

Conventional mortgages come from banks or agency lenders (Fannie Mae, Freddie Mac), require full income and credit underwriting, and typically take 30–60+ days to close — they're built for owner-occupied or fully stabilized rental purchases, not fast-moving investment deals. "Private money" is a broader term that can mean an individual lending their own capital, often a friend, family member, or local investor group, usually with less formal terms and inconsistent availability. Hard money lenders like Sab Tera Lending sit between these two: we're an institutionalized, licensed direct lending business with published rates and standardized underwriting, but like private money, we lend on the asset rather than the borrower and close in days rather than months. For investors who need speed and flexibility on repeatable terms, hard money is typically the more reliable and scalable option once deal volume grows beyond what a single private-money relationship can support.

About Sab Tera Lending

Sab Tera Lending is a direct private hard money lender headquartered at 15 Artisan Ave., Huntington, NY 11743, funding real estate investors across 20 states with six dedicated loan programs. As a direct lender, we do not broker loans out to third-party capital sources — every dollar we fund comes from our own balance sheet, which is why we can issue same-day commitment letters and close short-term loans in as few as 7 business days without waiting on an outside investment committee.

What sets Sab Tera Lending apart from bank-affiliated and brokered hard money platforms is our asset-based underwriting philosophy: no minimum credit score, no income verification, no upfront application or documentation fees, and no prepayment penalties on our core short-term programs. We work with first-time flippers, seasoned portfolio investors, LLCs, corporations, trusts, and foreign nationals on equal footing, evaluating every deal on property value and exit strategy rather than a borrower's personal financial history. Call (516) 336-9293 or apply through our Loan Products page to get same-day preliminary terms.

All loans made by Sab Tera Lending are business-purpose loans for investment real estate — we do not offer owner-occupied residential mortgages, and our programs are intended for licensed and unlicensed real estate investors, contractors, and entities acquiring property for renovation, rental, or resale. Loan terms, rates, and eligibility are subject to underwriting review and may vary by state; nothing on this page constitutes a binding loan commitment until a formal commitment letter is issued following appraisal and underwriting. For state-specific licensing information or to confirm current terms, contact our team directly at info@sabteralending.com.