Key takeaways
- Hard money is interest-only: monthly payment = loan × (rate ÷ 12).
- You also pay points (1% each) upfront, plus the principal as a balloon at payoff.
- Typical terms: 10–14% interest, 1–3 points, 6–18 months.
- Judge it on the all-in dollar cost against the deal's profit — not the rate alone.
What is a hard money loan?
A hard money loan is fast, asset-based, short-term financing for flips and bridge deals, usually interest-only with the principal repaid in one balloon. You pay for speed: rates and fees are high, but the loan only runs months.
Worked example
Using the defaults — a $200,000 loan at 11% for 12 months with 2 points and $1,500 in fees:
- Monthly payment: $200,000 × 11% ÷ 12 = $1,833
- Points: $200,000 × 2% = $4,000
- Total interest over 12 months: $22,000
- All-in cost of borrowing: $22,000 + $4,000 + $1,500 = $27,500 (plus the $200,000 principal at payoff)
That $27,500 is the real price of the money — run it against your flip profit before committing.
Typical hard money terms
| Term | Typical range |
|---|---|
| Interest rate | 10% – 14% |
| Points | 1 – 3 |
| Loan length | 6 – 18 months |
| Max LTV | ~70% – 75% of ARV |
Hard money is a private, non-bank product, so terms vary widely by lender and deal; 10–14% plus 1–3 points is a common range. See Investopedia's hard money loan overview.
Frequently asked questions
How is the payment calculated?
Interest-only: loan × (annual rate ÷ 12). Principal is repaid as a balloon at the end of the term.
What are points?
An upfront origination fee — each point is 1% of the loan, paid at closing.
What LTV can I get?
Often up to 70–75% of the after-repair value; limits vary by lender and deal.
What's a balloon payment?
The full principal due at the end of the short term, repaid when you sell or refinance.
Is hard money worth it?
For fast flips and bridges where speed beats cost, often yes — if the deal still profits after the all-in cost.
How do I compare lenders?
Compare the all-in dollar cost (interest + points + fees), not just the rate — points and term length swing the total a lot.