How the numbers are calculated
Hard money is simple arithmetic once the terms are on the table. The calculator runs four formulas.
- Interest only payment: the loan amount times the annual rate, divided by 12.
- Amortizing payment: the standard mortgage formula on a 30 year schedule. The unpaid balance is repaid when the loan ends.
- Points: the loan amount times the points, divided by 100, paid once at closing.
- Total cost: the interest for the months you hold the loan plus the points.
Loan to value is the loan divided by the value or price. It is the first number a lender checks, because it decides how much cushion sits between the loan and a loss. Our post on LTV, LTC and ARV explains the three ratios and how they combine.
A worked example
A $750,000 loan at 10.00% interest only costs $6,250 a month, or $75,000 over twelve months. If the quote carries 2 points, that adds $15,000 at closing, so the loan costs $90,000 over the year before third-party costs.
Now sell or refinance in month six instead. The interest stops at $37,500 and the loan costs $52,500 in total. That is why the months you actually hold the loan matter more than the rate, and why a prepayment penalty matters so much on a short project. Our bridge loans and fix and flip loans carry no prepayment penalty.
What the calculator leaves out
The calculator covers interest and points, the two parts of the price that scale with the loan. Three more belong in your total before you decide.
- Lender fees: processing, underwriting, document preparation, wires, draw inspections and extensions.
- Third-party costs: the appraisal or broker price opinion, title insurance, escrow and recording.
- Carrying costs: property taxes, insurance and utilities while you hold the property.
On a rehab loan, ask whether interest is charged on the full loan or only on the funds drawn. Our fix and flip and construction programs charge interest on the drawn balance, which lowers the real cost of a renovation. The pricing guide covers every part of the price.
How to compare two quotes
Run each quote through the calculator with the same loan amount and the same number of months, then add each lender's fees. The lower total wins, not the lower rate. A quote at a lower rate with heavier points and a prepayment penalty can cost more on a six month project than a higher rate with neither. Our post on how to choose a hard money lender lists the questions that expose the difference.
How much you can borrow
Our published limits, by program:
- Bridge loans: up to 75% LTV on residential and 70% on commercial property, from $150,000 to $25,000,000, rates from 9.00% to 13.00%.
- Fix and flip loans: up to 85% of the purchase and 100% of the rehab, capped at 75% of the after repair value, rates from 9.99% to 12.00%.
- Construction loans: up to 80% LTC of the lot, the build and the interest reserve, priced per project.
- Rental property loans: up to 80% LTV, rates from 6.50% to 9.99% on the Non-QM tier, 30 and 40 year fixed terms. The DSCR calculator sizes a rental loan on its rent.
Send us the address, the amount, the purpose and the exit and we will tell you what the loan looks like. Start a loan request or call (619) 617-2797.