Hard Money Loan Calculator

About the Hard Money Loan Calculator

Hard money loans are the fuel of house flipping. They provide fast funding (often within 7–14 days) based primarily on the property's value rather than the borrower's credit. But speed and accessibility come at a cost: interest rates of 10—14%, origination fees of 1–3 points, and various processing fees that can add up to $5,000–20,000 or more over the life of a short-term flip.

This calculator shows the full cost of a hard money loan: monthly interest payments, origination points in dollars, additional fees, and the total financing cost over your hold period. It also calculates the effective APR when all fees are included, which is often significantly higher than the stated interest rate.

Understanding the true cost of hard money is essential for accurately projecting flip profits. A 12% rate with 2 points on a $200,000 loan costs significantly more than most new flippers expect, and that cost comes directly out of your profit.

When This Page Helps

The stated interest rate on a hard money loan is misleading because it doesn't include points and fees. This calculator shows your all-in financing cost so you can accurately budget for the flip and compare costs between multiple lenders.

How to Use the Inputs

1. Enter the loan amount (typically 70–85% of purchase price or ARV).
2. Input the annual interest rate (commonly 10—14%).
3. Enter the loan term in months (typical: 6–12 months).
4. Add origination points (usually 1–3 points, where 1 point = 1% of loan).
5. Include any additional fees (appraisal, processing, draw fees).
6. Review total cost, monthly payment, and effective APR.

Example Calculation

Tips & Best Practices

• Always compare total cost, not just the rate — a 10% rate with 3 points may cost more than 12% with 1 point.
• Negotiate points aggressively; lenders often have flexibility, especially for repeat borrowers.
• Ask about draw schedules — some lenders release rehab funds in stages, reducing your interest carrying cost.
• Factor in the prepayment schedule; some hard money loans have minimum interest periods.
• Request a rate lock if the loan won't fund immediately to avoid rate increases.
• Compare at least 3 hard money lenders before committing.

The True Cost of Fast Money

Hard money's speed and accessibility come at a premium. A 12% loan with 2 points over 6 months costs about 8.5% of the loan amount. On a $200,000 loan, that's $17,000+ in financing costs — money that comes directly out of your flip profit. Understanding this cost is essential for deal evaluation.

Comparing Hard Money Lenders

Don't just compare rates. A lender charging 10% with 3 points may cost more than one charging 13% with 1 point, depending on your hold period. The total cost formula is: (monthly interest × months) + (points × loan amount) + fees. Run this for each lender to find the cheapest option for your timeline.

Reducing Hard Money Costs

The best way to reduce hard money costs is to minimize your hold time. Every month saved is one fewer month of interest. Additionally, bringing a larger down payment reduces the loan amount and total interest paid. Building a relationship with one lender can also lead to better rates and terms over time.

Frequently Asked Questions

• What is a hard money loan?

  A hard money loan is a short-term, asset-based loan used primarily by real estate investors. Unlike conventional mortgages, approval is based on the property's value (collateral) rather than the borrower's income or credit score. They fund quickly but charge higher interest rates and fees.

• What are origination points?

  An origination point equals 1% of the loan amount. If you borrow $200,000 and pay 2 points, that's $4,000 in upfront fees. Points are paid at closing and compensate the lender for processing the loan. They significantly increase the effective cost of borrowing.

• How is hard money interest calculated?

  Most hard money loans are interest-only, meaning you pay only interest each month with the principal due at the end (balloon payment). Interest is calculated as: loan amount × annual rate / 12. A $200,000 loan at 12% = $2,000/month in interest.

• What is a typical hard money interest rate?

  Rates typically range from 10—14% annually, depending on the lender, borrower experience, loan-to-value ratio, and property type. Experienced flippers with strong track records can sometimes negotiate rates as low as 8–9%. First-time flippers often pay the highest rates.

• Can I use hard money for a rental property?

  Hard money works best for short-term projects like flips. For rentals, the high interest rate makes long-term holding unprofitable. However, some investors use hard money to acquire and rehab a property, then refinance into a conventional loan (the BRRRR strategy) for long-term holding.

• What is the difference between hard money and private money?

  Hard money comes from lending companies with standardized terms, while private money comes from individual investors (family, friends, wealthy individuals). Private money is typically more flexible on terms and sometimes cheaper, but harder to find consistently. Hard money is more accessible but more expensive.