JB PARCELHard Money Loan Calculator
Hard money is priced in points plus interest, and the quoted rate hides most of the cost on a short hold. This shows the monthly carry, the total dollars, and the real annualized rate.
How this calculator works
Hard money is almost always interest-only. You pay interest on the outstanding balance each month and return the principal at payoff, so the monthly carry is simply balance times rate divided by twelve. When there is a rehab holdback, you typically pay interest only on the funds actually drawn, which is why the calculator asks what share of the holdback is outstanding on average rather than assuming the full amount from day one.
Points are the part people underestimate. Two points on a $255,000 commitment is $5,100 charged the day you close, whether you hold it three months or twelve. Spread over three months, those two points alone amount to roughly eight percent annualized on top of the stated rate.
The effective annualized rate here adds points, interest, and every fee, divides by the loan commitment, then annualizes over your actual hold. That is the number to compare against other capital, including a partner's equity. If your effective cost is 22 percent and a money partner wants 50 percent of a $40,000 profit, run both.
Minimum interest clauses matter on fast flips. A three-month minimum means an eight-week turn still bills you for three months. Set that field to whatever your term sheet says.
Worked example: a Chattanooga flip
Purchase $210,000, rehab holdback $45,000, six-month hold, 11.5 percent and two points, with the usual fee stack.
| Points (2 on $255,000) | $5,100 |
|---|---|
| Interest (avg balance $232,500, 6 mo) | $13,369 |
| Underwriting, draws, appraisal | $4,295 |
| Total cost of money | $22,764 |
| Effective annualized rate | 17.85% |
Almost $23,000 of a flip budget, gone to financing, on a six-month project. Slip to nine months and it clears $30,000. That is the number that turns a thin flip into a loss, and it is why the holding period is the input to fight over, not the rate.
Questions investors ask
What is a normal rate and point structure for hard money?
In most Tennessee markets, expect roughly 10 to 13 percent interest with 1.5 to 3 points, on 70 to 75 percent of ARV or 85 to 90 percent of purchase plus 100 percent of rehab. First-time borrowers pay the top of that range. After three or four clean exits with the same lender, ask for a repeat-borrower tier.
Why is the effective rate so much higher than the quoted rate?
Because points and fees are fixed costs on a short clock. On a twelve-month hold, two points adds about two percent to your annual cost. On a three-month hold, the same two points adds about eight percent. Short holds are where hard money is expensive in percentage terms and cheap in dollar terms, which is the trade you are actually making.
Should I use hard money or a private partner?
Compare the total dollars, not the rate. This calculator gives you the all-in cost of the loan. Put a dollar figure on the equity split you would otherwise give up. On a deal with a large projected profit, expensive debt usually wins. On a thin deal that might slip, a partner who shares the downside can be worth more than the cheaper capital.
Do hard money lenders require a down payment?
Nearly always. Most lend on a percentage of purchase price plus a percentage of rehab, with an overall cap at 70 to 75 percent of after-repair value. You bring the gap plus closing costs plus your carry reserve. Run your all-in cash need through the MAO calculator before you commit.
What happens if the project runs long?
You either extend or you default. Extensions typically cost a fee of half a point to a full point plus a rate bump, and some lenders will not extend at all. Add the extension fee in Advanced options and re-run at your realistic timeline, not your optimistic one. Most flips take longer than the schedule.
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Screening a real property? Pull its appraised value, assessed value, acreage, land use, and last recorded sale off the JB PARCEL parcel map and drop the real numbers into this calculator instead of guessing. Coverage runs across every county we carry.