Hard Money Loan and Downpayment

[Rachel Pratt]

Hi, new RE investor here. I am looking at flip properties. I'm trying to understand exactly how hard money loans work. I've done a lot of research, but am left with one question.

So I've found that a HML will loan up to 80% of the ARV, if I provide a 20% downpayment. This is to insure that I, the investor, has "skin in the game" so to speak, makes sense. So here's my question stated a couple different ways:

- Is the downpayment towards the physical house, or is it for the loan? Is the downpayment a sort of security deposit for the loan? 

- Is the downpayment the amount I invest into the property, or do I get that money back at the end of the day once everything is said and done because it's collateral?

Help!