Hard money loans are funded by private lenders or investor groups and are primarily underwritten based on the property's value and the deal's potential rather than the borrower's credit score or income. They typically feature higher interest rates (8-15%), shorter terms (6-36 months), and lower LTV ratios (60-75%). Investors favor hard money for fix-and-flip projects, land acquisitions, or situations where speed of closing is critical. The ability to close in days rather than weeks gives hard money borrowers a competitive edge in tight markets.