What Is a Hard Money Loan? DSCR Loan? Bridge Loan? — 8 Definitions Explained
Plain-language definitions of the 8 most common real estate investor loan types — with exact rates, terms, and program details from Sab Tera Lending for each.
What Is a Hard Money Loan?
A hard money loan is a short-term, asset-based real estate loan funded by a private lender rather than a bank, where approval is based on the value of the property — not the borrower's income, employment, or credit history.
Because approval is driven by the asset rather than the borrower's personal financial profile, hard money loans close far faster than conventional mortgages — typically 7–21 days versus 45–90 days — and are accessible to borrowers banks routinely decline: those with irregular income, low credit scores, LLC-structured entities, foreign nationals, and investors purchasing distressed or vacant properties.
What Is a DSCR Loan?
A DSCR loan (Debt Service Coverage Ratio loan) is long-term financing for investment properties that qualifies the borrower based on the rental income the property generates rather than the borrower's personal income — no W-2s, no tax returns, and no pay stubs required.
DSCR is calculated by dividing the property's monthly gross rent by its monthly debt payment. A ratio of 1.0 means rent exactly covers the debt; above 1.0 means positive cash flow; below 1.0 means the rent does not fully cover the payment. DSCR loans are the dominant financing vehicle for self-employed investors, high-net-worth borrowers with non-traditional income, and LLC-structured rental portfolios — because they eliminate personal income from the underwriting equation entirely.
What Is a Bridge Loan?
A bridge loan is a short-term, interest-only real estate loan that finances the gap between two transactions or financing stages — such as purchasing a new property before an existing one sells, or acquiring and stabilizing an asset before refinancing into permanent financing.
Bridge loans are asset-based, close quickly, and require no income verification. They are used in time-sensitive acquisitions (auctions, off-market purchases), asset transitions (holding a stabilized property until a DSCR refinance), and situations where a borrower needs to close on a new property before the sale of a current one completes. The "bridge-to-DSCR" strategy — where an investor buys with a bridge loan, stabilizes the property, then refinances into a long-term DSCR rental loan — is one of the most widely used portfolio-building approaches in 2026.
What Is a Fix and Flip Loan?
A fix and flip loan is a short-term, asset-based real estate loan used to purchase a distressed or undervalued investment property, fund its renovation, and resell it for a profit — with the renovation costs disbursed in draws as work is completed rather than all at closing.
Unlike a conventional mortgage, a fix and flip loan does not require the property to be in livable condition at purchase, does not require income verification, and is sized against both the acquisition price and the renovation budget — capped against the after-repair value (ARV) of the completed property. The loan is interest-only, so monthly payments cover only the accrued interest on drawn funds, keeping carrying costs low during the renovation period. When the renovated property sells, the loan is repaid from the sale proceeds.
What Is a Ground-Up Construction Loan?
A ground-up construction loan is short-term financing for building a new property from scratch — covering land acquisition, site work, foundation, framing, mechanicals, and all construction phases through to a certificate of occupancy, with funds released in draws as each phase completes.
Because the property does not yet exist in finished form, the loan is sized as Loan-to-Cost (LTC) — the loan amount as a percentage of total project cost (land plus hard construction costs plus soft costs like permits and engineering) — rather than against a current appraised value. Interest accrues only on funds actually drawn, not the full committed loan amount, which keeps monthly carrying costs low during early construction phases. Ground-up construction loans fund spec homes, small multifamily new builds, townhome clusters, and teardown/rebuild projects.
What Is a Multifamily Bridge Loan?
A multifamily bridge loan is short-term financing secured by a residential property with 5 or more units — an apartment building, garden-style complex, or mixed-use building — used to acquire or reposition the asset before it qualifies for permanent agency financing (Fannie Mae, Freddie Mac, or HUD).
At 5+ units, a property is classified as commercial real estate, which places it outside the eligibility criteria for residential lenders — but below the typical deal size targeted by institutional multifamily funds and CMBS conduits. This gap — apartment buildings typically in the $500,000 to $3,000,000 range — is where multifamily bridge loans are most valuable. They fund acquisitions of vacant, distressed, or partially occupied buildings that agency lenders decline, giving the investor the time to renovate, lease up, and stabilize before refinancing into permanent financing at a lower rate.
What Is a Commercial Hard Money Loan?
A commercial hard money loan is a short-term, asset-based real estate loan secured by a commercial property — such as retail, office, mixed-use, warehouse, self-storage, or hospitality — where approval is based on the property's value, not the borrower's income or credit score.
Commercial hard money loans serve investors and operators who need to close on a commercial acquisition, refinance, or transition faster than a bank's timeline allows — typically 14–21 days vs. a bank's 60–90+ days — or who own a property type or have a financial profile that conventional commercial lenders decline. Use cases include value-add acquisitions, bridge financing ahead of a conventional commercial refinance, and time-sensitive purchases where speed determines the outcome. Loan amounts can be substantially larger than residential hard money programs, supporting major commercial transactions.
What Is a No-Income-Verification Loan?
A no-income-verification loan is a real estate financing product that approves borrowers without W-2s, tax returns, pay stubs, or debt-to-income ratio calculations — with the loan underwritten instead on the property's value, the deal's strength, and (for rental loans) the property's rental income relative to its debt service.
No-income-verification loans are the primary financing tool for self-employed real estate investors, business owners with complex income, borrowers who hold properties through LLCs or corporations, and foreign nationals who have no U.S. income history. There are two main types: asset-based hard money loans (where the deal is underwritten on property value and exit strategy) and DSCR rental loans (where a long-term loan is underwritten on the property's rental income ratio). Both types are available from Sab Tera Lending across all six loan programs and all 20 states.
Apply for Any of These Loan Types Today
Same-day commitment. No credit minimum. Zero upfront fees. No income verification. 20 states and Long Island.