Hard Money Loan Calculator

Why the rate is the wrong comparison

Investors compare hard money lenders on the interest rate, but on a short term loan the rate is often not the largest cost. Origination points are charged once, up front, regardless of how long you hold the loan. On a six month project, two points is the equivalent of adding roughly four percentage points to the annual rate.

The effective annualized cost in this calculator makes that visible. It spreads points and fees across the actual term so you can compare two quotes that look different on paper but cost the same in practice.

How hard money is priced

Interest only and what it means for cash

Almost all hard money is interest only, so the monthly payment is the balance multiplied by the rate and divided by twelve. Nothing amortizes. The full principal is due at payoff, which is fine because the loan is repaid by a sale or a refinance rather than paid down over time.

What this means practically is that your monthly carrying cost is predictable, but it also means the loan does not get smaller. Every month of delay is pure additional cost with no offsetting principal reduction.

Model the term you will actually need

Set the term to the realistic timeline, not the optimistic one, then use the extension months field to see what a delay costs. Investors who model a six month project and then take nine months are frequently surprised by a five figure difference. Terms are on the hard money loan page.