How Hard Money Loans Work for Arizona Property Investors

What Is a Hard Money Loan?

A hard money loan is a short-term loan from a private person or company, not a bank. The loan is backed by the property. The hard money lender, the person or company that makes the loan, looks at the property's value and your plan more than your pay stubs or tax returns. It is a business-purpose loan, which means the money is for an investment, not for a home you live in. Investors use hard money for fix-and-flips, new construction, bridge loans, land, commercial buildings and multi-family buildings, always on investment or business-purpose property. Mortgage Brothers is not a hard money lender. We broker these loans to hard money lenders. We do not fund them.

How Do Hard Money Loans Work in Arizona?

1. You pick a property and make a plan: the price, the repair budget, and how you will sell or refinance.
2. The hard money lender checks the property's value and your plan.
3. The lender sets the loan size as a share of the property's current value. That share is the loan-to-value, or LTV: up to 75% of the property's current value.
4. You pay points, a fee at closing shown as a percent of the loan: 2 to 4 points.
5. You pay interest each month. The loan is interest only, which means each payment covers the interest and not the loan balance. The term is 6 to 24 months. At the end of the term, a balloon payment is due, which means the full balance at once.
6. The loan closes within days of a clear title report. A title report is a check of the property's records. It shows who owns the home and whether anyone else has a claim on it. A clear report means no problems turned up.

The rate, fees and terms come from the hard money lender, not from Mortgage Brothers.

How Do Fix-and-Flip Loans Work?

A fix-and-flip is when you buy a home that needs work, repair it and sell it for more. A fix-and-flip loan pays for the home and the repairs. The lender sizes the loan on the price you pay and on the after-repair value, or ARV, which is what the home is worth once the work is done. A fix-and-flip loan covers up to 85% of the total cost. The 75% LTV and the 85% do not conflict, because they measure different things: the LTV is a share of the property's current value, and the 85% is a share of the total cost. The repair money comes in draws, which are payments released before each stage of the work starts. Your exit plan is how you pay the loan back: you sell the home, or you refinance into a longer loan. The lender asks for it up front. These loans are for investment properties only, never a home you live in.

What Is a Bridge Loan on an Investment Property?

A bridge loan is a short loan that covers the gap until a longer loan or a sale is ready. For an investor, it pays for a purchase before a refinance or a sale closes. The same LTV of up to 75% of the property's current value and 2 to 4 points apply, as in Table 1, along with the balloon payment. A bridge loan here means one on an investment property only, never a home you live in.

How Do Construction Loans Work for Arizona Investors?

A construction loan pays to build a new home. For an investor, the hard money lender funds the build in draws, which are payments released before each stage starts. A spec build is a home you build to sell. You repay the loan when you sell the new home or refinance it into a longer loan. The same LTV of up to 75% of the property's current value and 2 to 4 points apply, as in Table 1, along with the balloon payment. This section covers new construction on investment properties only, never a home you live in.

Land, Commercial and Multi-Family Hard Money Loans

A land loan buys a lot or acreage for an investment. The loan covers up to 70% of the land's value for residential land and up to 65% for commercial land. The lender looks at the access, the utilities and your plan for the land. A commercial loan buys or refinances a business building, such as an office, a shop or a warehouse. A commercial hard money loan is short term, with a plan to sell or to refinance into a long-term loan. A multi-family loan covers a building with two or more units, from a duplex to an apartment building. It pays for the purchase and the renovation, and you repay it when you sell or refinance. A building of up to four units that you plan to rent for years fits a DSCR loan instead. All three are for investment and business-purpose property only, never a home you live in. The term, points and balloon payment in Table 1 apply to all three.

What Do Hard Money Loans Cost, Require and Risk?

These are general hard money facts, not Mortgage Brothers terms. The hard money lender sets the real numbers.

Table 1. General hard money facts (not Mortgage Brothers terms)

Sources: loan-to-value, points and term supplied by Eddie Knoell on 10/30/2026; the other general terms come from a hard money lender's published terms, accessed Oct 30, 2026

• Cost: hard money costs more than a bank loan, because of the points and the interest.
• Short term: if the home does not sell or refinance in time, the full balance is still due.
• Repair costs: a repair that costs more than planned cuts into your profit and your cash.
• Extension fees: a lender can charge a fee to give you more time.
• Prepayment penalty: a prepayment penalty is a fee for paying a loan off early. Read the note, which is the loan's promise-to-pay paper, before you sign.
• Foreclosure: if you miss payments, the lender can foreclose, which means take the property.
• Fee scams: do not pay any fee before you see written terms.

When a DSCR Loan Fits Better Than Hard Money

Hard money is for buying and fixing a property fast. A DSCR loan is for holding a rental. A long-term rental purchase fits a DSCR loan instead of hard money. DSCR means debt service coverage ratio. The lender divides the monthly rent by the monthly payment. A DSCR loan ties approval to the property's rent, not to your job income. A DSCR loan fits when you plan to rent the property for years instead of selling it. You can buy and fix with hard money, then refinance into a DSCR loan once the property is rented. Mortgage Brothers places DSCR loans through wholesale lenders. A wholesale lender funds loans that brokers send in. See our page on DSCR loans in Arizona.

Table 2. Hard money loan and DSCR loan side by side

Sources: Mortgage Brothers page on DSCR loans in Arizona, accessed Oct 30, 2026; hard money term supplied by Eddie Knoell on 10/30/2026

How Does Mortgage Brothers Broker Hard Money Loans?

Mortgage Brothers brokers hard money loans to hard money lenders. We do not fund the loan. The lender approves it and sets the terms. We broker these loans for fix-and-flips, new construction, bridge loans, land, commercial buildings and multi-family buildings, on investment and business-purpose property across all of Arizona, including Phoenix, Scottsdale and Tucson. A broker is the middle person who matches your deal to a lender and handles the file.

1. You send us the property and your plan.
2. We match your deal to a hard money lender.
3. The lender reviews the deal, approves the loan and gives you terms.
4. You compare the terms and decide.

This is for investment and business-purpose property only, never a home you live in. For a home you live in, see our loan programs page.

How Do You Check a Hard Money Lender in Arizona?

Use this checklist with any hard money lender.

1. Look the company up on Nationwide Multistate Licensing System (NMLS) Consumer Access, a free site where you check any lender or broker.
2. Ask which Arizona license applies, and check it with the Arizona Department of Insurance and Financial Institutions, or DIFI.
3. Get the terms in writing: points, term, extension fees and prepayment penalty.
4. Read the note and the balloon payment date before you sign.
5. Do not pay any fee before you see written terms.