LOAN GOAT PRICING GUIDE

Every borrower asks the same first question: what does the money cost? The honest answer is that the rate on a term sheet is the last number to be decided, not the first. It follows from the collateral, the leverage, the borrower, the exit and the source of the capital. This guide walks through each of those inputs so you can read any hard money quote, ours included, and know why the price is what it is. We keep our own published starting rates in one table near the end; every other figure in the market changes too often to print.

I. The principles that set the price

Hard money is priced like any other risk: the more the lender can lose, and the harder it is to get the money back, the more the money costs. Three things decide that risk before anyone opens a rate sheet: the kind of loan, the kind of lender, and whether the loan is business purpose or consumer purpose.

Hard money vs private money

Hard money is priced off the asset; private money is priced off the relationship. In practice the two words describe the same short-term, real-estate-secured loan written outside the bank system, and the price difference between them comes from who the capital belongs to and how they underwrite.

A hard money lender sizes the loan against the value of the property and the strength of the exit. Credit, income and the borrower's story matter, but they adjust the price rather than decide the approval. A private money lender may be an individual, a family office or a fund that knows the borrower and prices the loan around that history. Loan Goat funds both, which is why our programs range from bridge loans that close on the property alone to long-term rental loans that qualify on cash flow. Read the full breakdown in our guide to hard money loans.

The types of hard money loans

The loan type sets the baseline before any borrower detail is known. A 12-month bridge loan on a finished, rented property carries the least risk of the short-term family, so it starts lowest. A fix and flip loan adds a renovation the lender must fund through draws and a resale that has to happen before the term ends. A ground-up construction loan adds permits, a general contractor and a building that does not exist yet. A second mortgage sits behind someone else's lien, so the lender is paid last if the property is sold at a loss.

Term loans are a different family. A rental DSCR loan runs for years, amortizes and qualifies on the rent the property earns, so its starting rate is closer to a conventional mortgage than to a bridge loan. Our published table at the end shows the pattern: the short-term programs start higher, the long-term programs start lower.

The types of private money lenders

The capital source sets the floor on price. Individual trust deed investors lend their own money one loan at a time and want a yield that beats what the bank pays them; mortgage funds pool many investors and price around a target return for the fund; family offices lend from a balance sheet and can be flexible on structure; conduit lenders originate to a formula because they sell the loan on. Each source has a cost of capital, and the borrower's rate is that cost plus the lender's margin plus a premium for the specific risk. Understanding which source is behind a quote explains a lot of the difference between two lenders on the same deal.

II. The costs of a hard money loan

The price of a hard money loan has five parts. Two of them are printed in large type and three are easy to overlook until the closing statement arrives. Compare lenders on all five, never on the rate alone.

The interest rate

The rate is the annual cost of the money, usually paid monthly and usually interest-only on short-term loans. Because the loan is short, the rate matters less than it looks: on a loan you hold for six months, the rate produces half a year of interest, not a lifetime of it. What matters more is whether the rate is fixed for the term, whether interest is charged on the full loan or only on the funds you have drawn, and whether the lender requires a minimum number of payments through an interest guarantee.

Our fix and flip and construction programs are non-Dutch: interest is calculated on the drawing balance, so you pay for the rehab money as it is released, not from day one. An interest reserve is available on both, which sets aside the payments inside the loan so the project does not have to carry them from cash. Both lines come straight from the published terms of those programs.

Points

Points are the origination fee, expressed as a percentage of the loan amount and paid at closing from the proceeds. One point on a $1,000,000 loan is $10,000. Points are how the lender earns for the work of underwriting and closing, and they move with the same risk factors as the rate: lower leverage and a clean exit tend to earn fewer points, higher leverage and a rough property earn more. Points are quoted per deal on our term sheets; we do not publish a flat figure because there is no honest flat figure.

Lender fees

Beyond points, a lender may charge for processing, underwriting, document preparation, wire, draw inspections on a rehab loan, and extensions if the loan runs past maturity. These are usually fixed dollar amounts rather than percentages. Ask for the full list before you sign a letter of intent, and ask which fees are refundable if the loan does not close. A lender that hides fees in the fine print is telling you how the rest of the relationship will go.

Third-party fees

The appraisal or broker price opinion, the title insurance policy, escrow, recording, notary and any legal review are paid to third parties, not to the lender, but they are part of the cost of the loan. On a fast close some of these can be compressed: a lender that accepts a recent appraisal or does a site inspection with comparable sales saves both time and money. Our hard money residential bridge program publishes that an appraisal is not needed in some cases; when it is not, that line item disappears.

The cost of time

The fifth cost is the one that never appears on a closing statement: the deal you lose because the money was slow. A bank quote at a lower rate is not cheaper if the seller takes another offer, the auction closes, or the contractor walks off because the draw was late. Loan Goat's process is built to close in 5-7 days because for most of our borrowers speed is the point of the loan, and the price of hard money is judged against the profit it makes possible, not against a bank rate they could not get in time.

III. What drives the price up

Five factors push a quote above the starting rate. Most borrowers can influence at least three of them before they apply.

Borrower inexperience or indebtedness

A first project costs more than a fifth one, because the lender is underwriting a plan with no track record behind it. Our fix and flip program allows first time flippers and our DSCR program allows first time investors, which is unusual, but the price reflects the added risk. Heavy existing debt has the same effect: a borrower stretched across several loans has less room to absorb a delay on this one.

Property condition

A property that needs work is harder to sell if the loan goes wrong, and the work itself can go wrong. The heavier the rehab relative to the as-is value, the higher the price and the lower the leverage. Our published fix and flip terms say it plainly: up to 100% of the rehab and up to 85% of the purchase, with the whole loan capped at 75% of the after repair value.

Leverage

Loan-to-value and loan-to-cost decide how much cushion sits between the loan and a loss. A loan at the top of a program's leverage is priced higher than the same loan at the bottom, because the lender's margin for error is thinner. This is the factor the borrower controls most directly: bring more equity and the price falls.

Capital availability

When capital is scarce, money costs more, whatever the deal looks like. A lender whose investors are fully deployed, or whose fund has hit its allocation for a property type, prices the next loan to ration demand. This is why two quotes a month apart can differ with nothing else changed.

The rate environment

Hard money is not priced off a central bank rate the way a mortgage is, but it is not immune to it either. When bank and bond yields rise, the investors behind private capital expect more, and the floor under every hard money quote rises with them. When they fall, the floor follows, slowly.

IV. What drives the price down

The same factors, run the other way, earn a better quote. A borrower who arrives with these four in hand is negotiating from strength.

Track record

Completed projects, on time and on budget, are the strongest argument for a lower price. Bring the schedule of real estate owned, the before and after numbers, and the payoff history on previous loans. A lender who has closed with you before will usually price the next one better than the first.

Lower leverage

Asking for less than the program maximum is the fastest way to a lower rate. A bridge loan at 60% of value is a different risk from one at 80%, and it is priced as one.

Capital availability

A lender with capital to deploy competes for good loans. Timing a request for when a lender is looking to place money, and being the clean, well-documented file on the desk that week, is worth real basis points.

A clean exit

Every short-term loan ends in a sale, a refinance or a payoff from another source. A borrower who can show the exit, with comparable sales for a resale or a refinance quote for a hold, removes the lender's biggest fear. Part of Loan Goat's own underwriting is checking that a short-term loan can be refinanced into one of our long-term programs if the sale takes longer than planned; a borrower who shows us that path first has already done half the work.

V. What drives price up or down, side by side

Drives the price up	Drives the price down
A first project, or a borrower stretched across several loans	Completed projects on schedule, and a payoff history with the lender
Leverage at the top of the program	Equity beyond the program minimum
Heavy rehab relative to as-is value, or a property that is hard to resell	A finished, rented or easily sold property
A vague exit, or one that depends on a market move	A documented exit: comparable sales, a refinance quote, a signed lease
Scarce capital at the lender, or a property type the fund is full on	A lender with money to place and an appetite for the asset class
A rising rate environment	A falling rate environment
A thin file that needs chasing	Application, SREO and proof of funds ready on day one
Second or third lien position	First lien position

VI. Why some lenders cost more, or less

Trust deed investors

An individual funding a single loan wants a yield on that loan, so pricing is set deal by deal and can be very competitive on a clean first lien in a market the investor knows. The same investor may decline or price up anything outside that comfort zone. Speed depends on how quickly the investor can review the file and wire the funds.

Conduit lenders

A conduit originates loans to a set of rules so they can be sold to a buyer of loans. Pricing is formulaic and often keen for a borrower who fits the box exactly; anything that does not fit the box is not priced up, it is declined. Draws, extensions and changes mid-project are handled by policy rather than by a person.

Family offices and funds

A fund or family office lends from pooled or proprietary capital with a target return. Pricing is steadier across deals, structure can be creative, and the decision is made by a small group who can move fast. The price can be higher than a single investor's on a plain deal and lower on a complicated one.

Working through a broker or with the lender

A broker earns a fee for placing the loan, which can be paid by the borrower, the lender or both, and in return finds capital the borrower could not reach alone. A lender that funds its own loans removes that layer but only offers its own programs. The right question for any lender is not "are you direct" but "who decides, how fast, and what is the whole cost." Ask it on the first call.

VII. Where Loan Goat's pricing falls

We publish a starting rate for every program that has one, and we quote the rest on a term sheet built for the specific deal. The rates below are the same figures printed on each program page, and they are the only rates on this site. Everything a quote adds to them, points, fees, prepayment terms, comes from the factors in parts III and IV.

Starting rates for qualified borrowers, as published on each program page. Points, fees and prepayment terms are quoted per deal. Rates and pricing are subject to change without notice.

Second and third mortgages publish 12 to 36 month terms on business purpose files, and blanket loans run from 8.99% to 12.00% on a first lien over 1 to 3 years; both are quoted per deal. To see where your deal lands, send the address, the loan amount, the purpose and the exit through the form below, or call (619) 617-2797.