Hard money (and private money) loans are short-term, higher-rate loans used mainly for fix-and-flip and bridge deals. Banks are slow and often will not lend on a distressed property, so investors use hard money to buy and renovate, then sell or refinance into long-term debt.
The sticker interest rate is only part of the cost. Hard money is usually priced with origination points (a percent of the loan paid at closing) and interest-only payments, with the full principal due at payoff. This calculator pulls those pieces together so you can compare lenders on total cost of capital, not just the headline rate.
Formula
Loan amount = purchase price × purchase LTV + rehab cost × rehab LTC
Hard money lenders typically cap the loan at a percentage of the purchase price (LTV) plus a percentage of the rehab budget (LTC, loan-to-cost). Points are charged on the total loan amount and paid in cash at closing along with any flat fees. Because most hard money loans are interest-only, the monthly payment is just loan × annual rate ÷ 12, and the full principal comes due when the property sells or refinances.
How to calculate it
- Enter the purchase price and the renovation budget.
- Set the purchase LTV and the rehab LTC the lender allows (a lender might do 85% of price and 100% of rehab).
- Add the interest rate, origination points and any flat closing fees.
- Set the term in months and compare the monthly interest-only payment, cash to close and total cost of capital. Add an ARV to see the loan-to-ARV ratio.
Worked example
Assume a $300,000 fix-and-flip with a $50,000 rehab, financed at 85% of the purchase price and 100% of the rehab, at 12% interest, 3 points, a 12-month term and $1,500 in other fees. Running those numbers through the RentScope hard-money engine gives:
Open the free calculator with your own numbers →
FAQ
What is a hard money loan?
A hard money loan is a short-term loan secured by real estate, usually from a private lender rather than a bank. It is priced on the property and the deal rather than primarily on the borrower’s credit, which makes it fast but expensive. It is most often used for fix-and-flip and bridge financing.
What are points on a hard money loan?
Points are an origination fee equal to a percentage of the loan amount, paid at closing. Two to four points is common. On a $300,000 loan, 3 points is $9,000 in cash at closing.
Why is the monthly payment interest-only?
Most hard money loans are interest-only because they are short-term: the borrower pays interest monthly and repays the full principal when the property is sold or refinanced. That keeps the payment low and the exit simple.
What LTV and LTC will a hard money lender allow?
It varies. A common structure is up to 80–90% of the purchase price and up to 100% of the rehab budget, often capped by a maximum loan-to-ARV (after-repair value) of around 65–75%. Always confirm the lender’s current guidelines.
What does “total cost of capital” include?
It is origination points plus any flat closing fees plus all interest paid over the term. It excludes the purchase price, the rehab spend and selling costs, so it isolates the financing cost of the deal.
Does this calculator include the profit on a flip?
No. It models the cost of the loan, not the sale. To estimate flip profit you also need the ARV, selling costs, holding costs and the full project budget. This tool tells you what the financing layer adds.
Is this financial advice?
No. It is an educational estimate. Hard money rates, LTV/LTC caps and fee schedules vary widely, and loan terms carry legal consequences. Verify the numbers with the lender and a qualified professional.
More free calculators
Cap Rate Calculator · DSCR Calculator · Cash-on-Cash Return Calculator · 1% Rule Calculator · BRRRR Method Calculator · Net Operating Income (NOI) Calculator · Gross Rent Multiplier (GRM) Calculator · Break-Even Occupancy Calculator · 50% Rule Calculator · House Hack Calculator · 1031 Exchange Calculator · Rental Property Depreciation Calculator · Seller Financing Calculator