How hard money costs add up
Loan cost = Interest + Points + Fees
Hard money loans are short, usually 6–18 months, and interest-only. Lenders often fund a percentage of the purchase and rehab (loan-to-cost) and charge points upfront, where one point is 1% of the loan.
Example
On a $200,000 purchase with a $50,000 rehab, a lender funds 85%: $212,500. At 11%, the interest-only payment is about $1,948 a month, so six months costs $11,688. Two points add $4,250 and fees $1,500, for a total loan cost of about $17,400. You bring about $43,250 in cash.
Rehab draws
Most lenders release rehab money in draws after work is inspected, so you pay interest only on what's been drawn. This calculator assumes the full amount from day one, which is the conservative case.
Common questions
Why use hard money instead of a bank?
Speed and flexibility. Hard money lenders focus on the property and can close in days, on houses a bank won't finance in their current condition.
What happens at the end of the term?
You sell the property or refinance into a long-term loan, as in a BRRRR.