Calculator
True cost of a hard money loan
Models the five things ordinary hard money calculators leave out: the accrual basis, minimum interest, the full fee stack, draw fees and the months you run over.
Almost every hard money calculator online is published by a hard money lender, and almost every one of them computes cost as loan x rate x months + points. That formula omits five things, and all five omissions run in the same direction.
- Interest charged on the undrawn rehab holdback, which many lenders do.
- Minimum or guaranteed interest clauses, which fix part of your bill regardless of how fast you finish.
- The flat fee stack - underwriting, doc prep, processing, valuation - which dominates on smaller loans.
- Draw fees, at $150-$350 a time, several times over.
- Extension fees for the months you run past the term, which most projects do.
This one models all of them, and expresses the result as an effective annualised cost against the money you actually have the use of. Change one input at a time and watch which ones genuinely move the answer. It will not be the rate.
How the effective rate is calculated
Total cost of the money, divided by the average balance you genuinely had the use of, annualised over your actual hold period. The denominator is the purchase loan for the whole term plus the rehab holdback at an average of half, because rehab money is drawn progressively - regardless of what basis the lender charges interest on. That asymmetry is the entire point.
What to do with the answer
- Run the same deal against each quote you have, changing only the lender's terms. Compare total dollars, not rates.
- Set the hold three months longer than you plan. If the deal stops working, you are underwriting to a best case.
- Look at the break-even resale price. If it is within 5% of your ARV, the deal has almost no margin for the market moving.
- Toggle the accrual basis between full facility and drawn balance. That single line is usually worth more than a point of rate. See the arithmetic.
Questions people actually ask
What is the typical interest rate for a hard money loan?
Most quotes land in 10% to 12%, with fix-and-flip paper generally 9.0% to 14.0% and first-time borrowers or unusual collateral running up toward 18.0%. Ranges reflect pricing lenders and industry write-ups publicly advertised as of August 2026. They are advertised ranges, not transaction data - unlike conventional mortgages, private lending has no public loan-level dataset, so nobody can honestly claim to know the true national average. Treat them as a sanity check on a quote, not a benchmark you are entitled to.
But the interest rate is the least useful number on the term sheet. A loan at 10% with 3 points, a $1,495 doc fee, six months of guaranteed interest and interest charged on the undrawn rehab holdback is substantially more expensive than a loan at 12% without those terms. Compare all-in cost, never rates.
What's the typical interest on a hard money loan?
See above - 10% to 12% is the common band. The more useful question is what the loan costs in total dollars over the months you will actually hold it, which is what the true-cost calculator computes.
What do points mean on a hard money loan?
One point is one percent of the loan amount, charged up front. Two points on a $300,000 loan is $6,000, usually deducted from your proceeds at closing rather than billed.
The detail that costs people money: ask whether points are charged on the total loan facility or on the initial funding. If you are borrowing $240,000 for the purchase and $60,000 for rehab, two points on the $300,000 facility is $6,000 - but you only receive $240,000 at closing, so you paid 2.5% on the money you actually got. That gap is standard and rarely volunteered.
How much is 2 points on a $50,000 loan?
$1,000. Points are simply a percentage of the loan amount, so two points is 2% - and on a small loan the flat fees matter far more than the points. A $50,000 loan with 2 points ($1,000) plus a $1,495 doc fee and a $750 underwriting fee carries $3,245 of closing cost, which is 6.5% of the loan before a day of interest. Flat fees are why small hard money loans are disproportionately expensive.
What are the fees associated with hard money loans?
There are usually nine, and a term sheet typically leads with two. The full stack is origination points, underwriting or processing, document preparation, valuation, per-draw inspection, wire and servicing, extension, exit or back-end, and minimum or guaranteed interest. The fee stack, line by line walks through each one with the range you should expect and the question to ask about it.
How to calculate hard money loans?
Not the way most calculators do it. The typical online hard money calculator multiplies loan amount by rate by months and adds points. That undercounts real cost, often badly, because it ignores five things: interest charged on the undrawn rehab holdback, minimum-interest clauses, per-draw fees, extension fees on the months you run over, and the flat fees that dominate on smaller loans.
The honest calculation is: (all interest actually charged under the lender's accrual method) + (points on the basis the lender uses) + (every flat fee) + (draw fees x draws) + (exit fee) + (extension fees if you run long), then expressed as an annualised rate on the money you actually had use of. Ours does that: true-cost calculator.