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makeshortwork.com Hard Money Loan Calculator

Hard Money Loan Calculator

Enter the purchase, the rehab and the after-repair value. You get the interest-only carry month by month, what the loan really costs once the points are annualised, and the profit and ROI that survive the selling costs.

The deal Comparable sales for the finished house, not the asking price you hope for.
The bridge loan 65–75% is the usual band. This is the trap door most deals fall through.
85–90% of purchase and 100% of rehab is the common structure.
Charged at closing on the full loan commitment, not on what you draw.
6 to 18 months, interest-only, whole principal due at the end. A draw reimburses work already done, so it starts accruing interest the month after. Treating the whole budget as borrowed on day one overstates your interest. A contract clause, not a product feature. It erases the saving from draws entirely — turn it on and off to see what it costs you.
Holding costs while you own it These keep running when the job runs late. That is how a delay becomes a loss.

per year

per month

Buying and selling costs Deliberately kept out of the APR: you would pay these in a cash purchase too.
Commission, transfer tax and closing. 7–9% of the sale price is typical.

The outcome

Net profit on the flip —
— ROI on your cash — annualised — margin on sale price
What the money actually costs
— Rate you were quoted — Effective annual cost
Points are paid once, at the start, and the term is short — so they annualise into a rate. Three points over six months is six percent a year; the same three points over twelve months is three. Paying off early does not make the money cheaper, it makes it more expensive per year, because the same fixed cost is spread over less time.
The 70% rule The most you should pay for this house — cap × ARV − rehab The rule is not a lender's underwriting box, it is a margin habit. The lender's box is the ARV cap on the line above, and the two bind at different times.
The loan
Nothing amortises. The balance on the last day equals the balance on the first.
Cash you have to bring
This is the denominator of the ROI above — your money, not the lender's.
Carry, month by month
Month Balance charged Interest Holding Running total
What a delay costs
Nothing on the income side changes. Only interest and holding costs keep running.
Where the money goes
Not just the sum of costs: the commission is a percentage of the sale price itself, so the break-even solves for it.

Interest-only with a balloon, which is what this product is — there is no amortisation schedule here on purpose. Nothing on this page is a loan offer, and every lender writes its own draw, fee and extension terms. Everything runs in your browser.

Interest-only with a balloon. There is no amortisation schedule.

This is the structural error of the topic, and a surprising number of calculators on the first page of results make it. A hard money loan is a bridge: you borrow for six to eighteen months, you pay interest and only interest each month, and on the final day the entire principal comes due in one lump. Nothing amortises. The balance on the last day equals the balance on the first.

Run a $224,000 loan at 11.5% through a mortgage amortisation formula over a six-month term and it returns a payment near $38,600 a month. The real number is 224000 × 0.115 ÷ 12, which is $2,146.67. Being wrong by a factor of eighteen is bad enough, but the amortisation table also quietly deletes the balloon — it shows the loan reaching zero on its own, which is precisely the thing that does not happen. The balloon is repaid out of the sale, and if the house has not sold you are negotiating an extension, refinancing into a rental loan, or handing back the keys.

That is why there is no amortisation table anywhere in this tool. What replaces it is a month-by-month carry schedule, which is the thing you actually have to fund out of pocket while the work is going on.

The rate is not the price. The points are.

Every hard money advert leads with the note rate, and on a short term the note rate is close to a decoy. The origination points are charged once, at closing, on the whole loan commitment — and a one-time cost divided by a fraction of a year turns into a rate.

The arithmetic is simple enough to do in your head. Three points held for six months is 0.03 ÷ 0.5, which is six percent a year. So a loan quoted at 11% with three points has an effective annual cost around 17%. The same three points held for twelve months costs only three percent a year, because the fixed charge has twice as long to spread. That relationship has a consequence most people find backwards: paying off a hard money loan early does not make it cheaper. It makes it more expensive per year, because the identical closing cost is compressed into less time. What saves you money is selling quickly, which reduces the interest and the carry — not prepaying, which does not reduce the points at all.

Add the underwriting, appraisal, document preparation and inspection fees to the points before you annualise, and check whether the term sheet carries a minimum interest guarantee — a clause promising the lender three or six months of interest regardless of when you repay. If it does, a fast flip pays for months it did not use, and the effective cost rises again.

The 70% rule, and the question it is really answering

Maximum offer = 70% of ARV − rehab budget. With a $320,000 after-repair value and $45,000 of work, that is $224,000 − $45,000 = $179,000. Pay more and the rule says the deal has stopped working.

The 30% held back is not your profit. It is the shock absorber for everything the purchase price does not include: the points, the interest, the property tax and insurance while you hold it, the agent commission on the way out, and — most reliably — the part of the scope nobody found until the walls came off. Investors who treat the withheld 30% as margin they are entitled to keep are the ones who discover at closing that there is nothing left.

It is worth being clear about what the rule is and is not. It is a discipline that experienced buyers use to filter deals quickly, and it tightens to 65% in a soft market and loosens toward 75% for cheap cosmetic work in a market with strong absorption. It is not your lender's underwriting box. The lender applies its own cap on ARV — usually 65% to 75% — and that cap is what determines how much money you are handed. The two constraints bind at different moments, which is why the calculator shows both and tells you which one is doing the limiting. When the ARV cap binds, improving your loan-to-cost buys you nothing.

Draws mean the rehab budget is not borrowed on day one

Rehab money is almost never wired at closing. The lender holds it and reimburses work that has been completed and inspected, in tranches — typically three to five on a cosmetic project, more on a gut. That has a direct effect on cost: a draw only starts accruing interest after it funds, so a $50,000 budget released across three draws over six months carries meaningfully less interest than $50,000 borrowed on day one. Treating the whole budget as outstanding from the first month overstates the loan cost, sometimes by a thousand dollars or more on a small project.

It also has a cash-flow effect that catches first-time flippers. You pay the contractor, then request the draw, then wait for an inspector, then wait for funding. That cycle runs one to two weeks, and during it the money is yours, not the lender's. The draw structure reduces your interest and increases your working capital requirement at the same time.

Then there is the clause that cancels all of it: Dutch interest, where the lender charges interest on the entire commitment from day one whether or not the funds have been released. It is legal, it is disclosed, and it is easy to miss in a term sheet. The calculator has a switch for it — turn it on and the saving from draws disappears, and the difference is exactly what that clause is worth to the lender.

Carry is what a delayed job actually costs

Interest is only part of the monthly bleed. Property tax keeps accruing, the insurance is a vacant-dwelling or builder's risk policy that costs several times a normal homeowner's policy, the utilities have to stay on for the trades, and any association dues carry on regardless. Add the interest and you have the monthly carry — the number that turns a schedule overrun into a measurable loss.

The reason this deserves its own section is that nothing on the income side moves when the job runs late. The ARV does not rise because your plumber did not show up. So each extra month subtracts its full carry from the profit, and the profit is usually a small number sitting on top of very large ones. On a deal carrying $2,150 in interest and $650 in holding costs, three months of delay costs $8,400 — which on a $20,000 projected profit is more than a third of the return, gone, for a slip most renovations experience. That is why the tool shows the profit and ROI at your term and at one, two and three months beyond it. Price the delay before it happens, not after.

The exit is where the profit quietly disappears

Selling is not free, and leaving it out is the fastest way to produce an ROI that reads beautifully and never arrives. Agent commission, transfer taxes, title and escrow, the owner's policy where custom puts it on the seller, and the concessions that appear in the last week of negotiation add up to roughly seven to nine percent of the sale price. On a $320,000 sale that is around $25,600 — frequently larger than the entire projected profit.

Two further points that live outside this calculator but not outside your bank account. Profit on a flip is ordinary income, not a long-term capital gain, and if you are doing this repeatedly the IRS may treat you as a dealer, which adds self-employment tax on top. And the break-even sale price is not simply the sum of your costs, because the commission is a percentage of the sale price itself: with an 8% cost of sale, break-even solves as total costs ÷ 0.92. The tool computes that and shows how much cushion sits between it and the ARV you typed. If that cushion is under ten percent, the deal depends on your ARV estimate being right, and ARV estimates are the least reliable input on the page.

Reading the term sheet before you sign it

Hard money is asset-based, so the underwriting looks at the property first: the ARV appraisal or broker price opinion, the scope of work, your track record of completed projects, and enough liquidity to cover the down payment plus several months of carry. Credit is checked but is rarely the gate. Approval is measured in days rather than weeks, which is what you are paying for — the ability to close on a distressed property against competitors who need forty-five days of financing contingency.

Ask five questions before you sign. Is there a prepayment penalty or a minimum interest guarantee? Is interest charged on drawn funds or on the full commitment? How many draws are included, what does each inspection cost, and how long does funding take? What does an extension cost, and is it automatic or discretionary? And is the loan recourse — nearly all are, so the LLC on the deed does not stop a personal guarantee from following you. Type the answers into the fields above and you will see, within a few seconds, whether the loan you were offered leaves a profit worth the risk.

Frequently asked questions

How is a hard money loan payment calculated?

Multiply the outstanding balance by the annual rate and divide by twelve. That is the whole calculation, because hard money is interest-only: $224,000 at 11.5% costs $2,146.67 a month, every month, and the principal never moves. On the last day you owe the full $224,000 back — the balloon — normally paid from the sale. Any calculator that hands you an amortisation table for a six-month bridge loan is modelling the wrong product, and it will overstate your monthly cash need by roughly ten times while hiding the balloon entirely.

What is the 70% rule and how do I use it?

Maximum purchase price equals 70% of the after-repair value minus the rehab budget. On a $320,000 ARV with $45,000 of work, that is $224,000 minus $45,000, so $179,000. The 30% that the rule holds back is not profit — it is meant to absorb the loan cost, the holding costs, the selling costs and the estimate you got wrong. Treat it as a margin habit rather than an underwriting rule: your lender's actual box is its cap on ARV, which is a separate constraint that binds at a different moment.

Why is the effective APR so much higher than the quoted rate?

Because points are charged once, at closing, on the full loan commitment, and the term is short. A fixed cost spread over half a year annualises at double its face value: three points over six months is six percent a year on top of the note rate, turning a quoted 11% into roughly 17%. The same three points over twelve months is only three. This is also why paying off early does not make hard money cheaper — it makes it more expensive per year, because the identical fixed cost is compressed into less time.

Do I pay interest on the rehab money before I draw it?

It depends on one clause. Under a normal draw structure the lender reimburses completed, inspected work, so each tranche only starts accruing interest after it funds, and a rehab budget released across three draws costs meaningfully less interest than the same amount wired at closing. Under a Dutch interest clause you pay on the entire commitment from day one whether the money is in your account or not, which erases the saving completely. Ask which one you are signing; the calculator has a switch so you can price the difference.

How much cash do I need for a hard money fix and flip?

More than the down payment. At 90% of purchase and 100% of rehab you still fund the 10% down, the origination points, the lender fees, the transfer tax and title costs, then the monthly interest and the holding costs for the whole hold, and finally the gap between what a draw reimburses and what your contractor wants paid this week. The calculator separates cash at closing from total cash in the deal for exactly this reason: the first tells you whether you can start, the second is what your return is measured against.

Is the ROI on a flip calculated on the purchase price or on my cash?

On your cash. Return on equity divides the net profit by what you actually put in — down payment, points, fees, out-of-pocket rehab, interest and carry — not by the value of the house, most of which was the lender's money. Dividing by total project cost is the common error and it produces a number three or four times too low. It is also worth annualising: 20% earned over six months is not comparable to 20% earned over a year, and this tool shows both.