Key Takeaways

  • Short term real estate loans carry a 12 to 24 month term and are typically repaid through a property sale or refinance into a longer-term mortgage.
  • Common use cases include fix & flip projects, new construction, and bridging the gap while arranging long-term financing.
  • The most important qualification factor for hard money lenders is the property’s after-repair value (ARV), not the borrower’s personal income.
  • ABL short term loans range from $75K to $50M, with a minimum FICO credit score of 660, a maximum LTARV of 70%, and no prepayment penalty.
  • Getting pre-qualified before finding a deal, estimating ARV conservatively, and having proof of funds ready are the three most important steps investors can take to improve their odds of approval.
  • Not all hard money lenders are equal. Loan size limits, draw schedules, LTARV maximums, and funding speed vary significantly and should factor into your lender decision alongside interest rate.

The best deals don’t wait. When you find a great investment property, you must act fast to avoid losing the deal to another buyer. That’s where short-term real estate loans come in. They can help you secure a property while you arrange for longer-term financing. 

At Asset Based Lending (ABL), we specialize in providing fast, hard money loans with minimal paperwork, so you can make an offer and close quickly. No need to wait endlessly on personal income verifications or employment checks. Just real funding, real fast.

What Is a Short-Term Real Estate Loan

A short-term real estate loan is a mortgage with a 12-24 month term, after which the loan balance is due. Most investors repay the loan with sale proceeds from flipping the house or by refinancing into a longer-term mortgage. 

When to Get a Short Term Real Estate Loan

A short term real estate loan can be a good option if you intend to:

  • Fix & flip a property: A short-term loan can provide the funds you need to rehab a distressed home before selling, repaying the loan, and pocketing the profit. 
  • Build a new construction home: A short-term loan can fund the land acquisition and construction costs of building a new home. Once it’s finished, you can sell it or refinance into a long-term rental loan.
  • Secure a property while you arrange long-term financing: Getting a long-term loan requires digging into your finances or verifying the property’s income potential (for DSCR loans). A short-term loan can help you buy the property while you wait.

How Short Term Real Estate Loans Work

A short-term real estate loan works like this:

First, you reach out to a lender like ABL to request funding. We’ll ask you to provide some basic details about you and the property to determine whether we’re a good fit.

From there, we ask for some additional information and documents, such as construction plans, property title history, and your cash availability. 

Once you’re approved for the loan, you’ll sign a mortgage note and personal guarantee to repay the loan at the end of its term. Depending on the loan structure, we’ll disburse funds in a lump sum upfront or in stages as the project progresses. 

Finally, you’ll repay the loan with sale proceeds or by refinancing the loan. Asset Based Lending offers rental loans, too, making it easy to convert your short-term loan into a long-term one. Plus, you can always repay an ABL loan early without incurring a pre-payment penalty.

How to Qualify for a Short-Term Real Estate Loan

To qualify for a short-term real estate loan, the property’s expected after-repair value (ARV) must justify the investment risk. This is the single most important factor that hard money lenders like Asset Based Lending consider.

That said, borrowers must also meet other eligibility criteria. Here are the requirements to get a short-term real estate loan from ABL:

Minimum Credit Score 660
Origination fee (points) 0-2%
Loan term 12-24 months
Loan size $75K to $50M
Maximum loan-to-after-repair-value (LTARV) 75%

5 Tips for Getting a Short-Term Real Estate Loan

To improve your odds of qualifying for a short-term real estate loan, follow these best practices:

Have a Clear Exit Strategy

Lenders want to see how you’ll repay the loan, whether that’s a sale or refinance. Having this mapped out (i.e., showing how you’ll do it) speeds up underwriting.

Estimate ARV Conservatively

Since after-repair value (ARV) drives loan approval, estimate the property’s value based on similar nearby properties that recently sold (aka “comps”) and set a realistic rehab budget. Overly optimistic ARVs can lead to deals getting re-negotiated or delayed.

Line Up Your Down Payment and Reserves Early

Most hard money lenders like Asset Based Lending require some cash to close plus reserves for holding costs (taxes, insurance, interest, etc.). Having proof of funds ready avoids last-minute scrambling.

Choose a Reputable Local Lender

A local lender familiar with fix & flip or new construction projects in your area can move faster and anticipate issues like permitting delays better than a generalist lender could. ABL has local teams nationwide who know their markets inside and out.

Build a Relationship with a Direct Lender

Working directly with the lender funding the deal rather than a broker often means faster communication, more flexible terms, and a smoother path to financing on future deals.

Common Mistakes to Avoid

You should also avoid these common pitfalls:

Waiting Too Long to Get Pre-Qualified

Time-sensitive deals move fast. Investors who start the loan conversation only after they’re under contract often lose valuable time, or the deal itself.

Underestimating Renovation Costs or Timelines

Going over budget or over schedule eats into your loan term and your profit margin, and can put your ability to repay the loan on time at risk.

Not Accounting for Carrying Costs

Interest, taxes, insurance, and utilities add up during the loan term. Failing to budget for these can strain cash flow even if the deal is otherwise profitable.

Ignoring the Fine Print and Pre-Payment Terms

Origination points, extension fees, and pre-payment penalties vary by lender. Not reviewing these upfront can lead to costly surprises at closing or repayment.

Assuming All Hard Money Lenders Are the Same

The truth is, not all hard money lenders are equal. Some offer better loan size limits, LTARV maximums, draw schedules, and funding speeds. Choosing based on interest rate alone can be a risky approach. Consider the lender’s other terms, reliability, and experience, too.

Get a Short Term Real Estate Loan from ABL

Asset Based Lending has funded thousands of short-term loans for fix & flip, new construction, and bridge financing projects nationwide. Yours could be next!

If you value speed and flexibility, an ABL loan could be the right choice. Pre-qualify today to see how fast real funding can happen.

What is a short term real estate loan?

A short term real estate loan is a mortgage with a 12 to 24 month term. Instead of making payments over decades like a traditional mortgage, you repay the full loan balance at the end of the term, typically through a property sale or a refinance into longer-term financing.

What can I use a short term real estate loan for?

Short term real estate loans are commonly used for fix and flip projects, new construction, and securing a property while you arrange permanent financing. They are designed for investment properties, not primary residences.

How does ABL determine loan approval?

The primary factor is the property’s expected after-repair value (ARV). ABL also reviews your credit, cash availability, and deal fundamentals. Unlike traditional banks, ABL does not require extensive personal income documentation for short term loans.

Can I pay off my loan early?

Yes. ABL does not charge prepayment penalties, so you can repay your loan ahead of schedule without incurring additional costs. This is especially useful if your flip sells faster than expected.

What is the difference between a hard money lender and a traditional lender?

Hard money lenders like ABL make loan decisions based primarily on the property value and deal strength rather than personal income verification. This allows for faster approvals and closings, which is critical when pursuing time-sensitive investment opportunities.

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