Hard Money Loan Calculator

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What You Should Know

  • A hard money loan is a high-interest short-term loan that is secured by real estate, and it is usually offered by private lenders.
  • This hard money loan calculator enables you to estimate your monthly payments and a balloon payment on your hard money loan given four simple inputs.
  • Hard money loan lenders usually do not look at the creditworthiness of a borrower, but they look at the quality and value of the collateral instead.
Loan Principal
Interest Rate
Amortization Length
Pay Off in Full in
Your Monthly Payments Will be Equal to $2,458.82 for 7 Months.
You Will Have a Balloon Payment of $NaN in 8 Months.
Hard Money Loan Total Cost Over 8 Months
Total Principal$140,000
Total Interest$19,672
Show Amortization Schedule

What Is a Hard Money Loan?

A hard money loan is usually a short-term loan that is secured by real property. Hard money loans tend to be risky loans, so they usually have a high interest rate. Hard money loan lenders usually originate hard money loans in the form of a long-term mortgage with the expectation that it will be paid off in the short term or refinanced into a low-interest mortgage. Unlike mortgage loans, hard money loan lenders usually look at the value of the collateral rather than the creditworthiness of a borrower because there is usually a high probability that the borrower may default on the loan.

Hard Money Loan Rates And Other Loan Rates Comparison Chart
Loan TypeAverage Rate
Cash-out Refinance4.80%
Conventional Mortgage5.50%
Construction Loan6.25%
Hard Money Loan10% - 20%
Personal Loan12.00%
Credit Card20.00%

Hard money loan lenders are usually private lenders because banks and institutional lenders cannot issue hard money loans because they are unregulated and often have a high risk associated with them. Hard money loans can be issued for many different purposes. Some borrowers may simply have a bad credit history, so they cannot get a conventional loan while other borrowers may look to finance a fix-and-flip project or a renovation project. One specific type of hard money loan is a bridge loan that is used as temporary financing of a house purchase when the existing house is not sold yet. You can check out a bridge loan calculator if you want to estimate the cost of your bridge loan. Regardless of the purpose of the loan, the main characteristic of a hard money loan is that it is a high-interest secured loan that is expected to be paid in a short term.

About This Hard Money Loan Calculator

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This hard money loan calculator allows you to estimate your monthly payments and a balloon payment required to cover your loan when it is needed. This hard money loan calculator assumes that the loan provided is amortized over a specific number of years with the expectation that it may be paid off in full before the end of the loan term. This allows you to see how much you would have to pay in interest over the lifetime of the loan and compare the interest expense to the principal amount. At the end of the result section of the hard money loan calculator, you can find an amortization schedule to see exactly how your hard money loan will be amortized over the loan term. You only need to adjust four inputs to estimate your hard money loan payments. The following inputs are required for the calculator.

  • Loan Principal
  • The amount you are amortizing with the loan. It is important to note that a hard money loan can be used for different purposes such as buying a property or getting a loan against an existing property owned, so it may have different fees associated with it. Loan Principal should only include the amortized amount, and it should not include a down payment or any other upfront fees a hard money lender may charge.
  • Interest Rate
  • The Interest Rate a hard money lender charges on your loan. Hard money loans tend to have a high interest rate, so you should estimate your interest rate to be in the range of 10% to 20% on your hard money loan. These loans are not regulated and are usually offered by private lenders, so the interest rate on your loan may range dramatically depending on the lender. It is best to shop around to find a private lender who can provide you with the best rate for a hard money loan.
  • Loan Term
  • The length of the loan. Depending on the lender and the agreement, the length of the loan can vary. Generally, a hard money loan is issued as a long term loan, similar to a mortgage, to create an amortization schedule and estimate monthly payments. Once monthly payments are estimated, the borrower has the option to pay the hard money loan off in full at any time.
  • Pay Off in Full in
  • Number of months or years before you pay the loan in full with a single payment. Hard money loans are expensive, so hard money loan borrowers usually try to pay it off as soon as they have enough money to do so. Paying off the loan may be done in the form of selling a property and using the proceeds to pay off the principal, or refinancing a hard money loan into a mortgage with a lower interest rate. Regarding the way the loan will be paid off, it is important to know when you are planning to pay off your loan to estimate how much money you will need to do so.

Frequently Asked Questions

How Does a Hard Money Loan Work?

A hard money loan works in a similar way to how a mortgage loan works for a borrower. A borrower has to apply for the loan with appropriate collateral, pay upfront fees to originate the loan, get the loan and pay it off with monthly payments. The largest differences between a hard money loan and a mortgage are the interest rate charged, the purpose for getting the loan, and the intention to pay it off. Hard money loans are expensive because they have much higher interest rates than other loans secured with collateral, and because they are expensive, they are usually issued with the expectation that they will be paid off quickly. They are usually taken to flip a house, complete a BRRRR deal, or get a cash-out refinance with bad credit. In all of these cases, the lender does not look at the creditworthiness of the borrower as much as they look at the value of the collateral and loan-to-value (LTV) ratio of the loan.

How to Get a Hard Money Loan?

Banks and institutional lenders do not offer hard money loans. A borrower who is looking to get this type of loan should look for private lenders. Hard money lenders will likely require collateral, so a borrower should ensure that they have an asset that could be used as collateral for the hard money loan. A borrower should also make sure to shop around and find the best hard money loan rate possible because different lenders may offer different loan terms and different interest rates.

What Do You Need for a Hard Money Loan?

A hard money loan lenders may require a set of documents proving that a borrower can pay off the loan. It may be pay stubs, income statements or projected cash flows from the project the loan will be used for. Different lenders may require different documents for the loan, so if one lender declines to offer the loan, it might be worthwhile to look for another lender. A collateral is also an important part of the loan because hard money lenders require a collateral for the loan with an LTV ratio of 50% to 70%. A borrower may need to use an asset as collateral with up to double the value of the loan to be approved for the hard money loan.

How to Refinance After Hard Money Loan?

One exit strategy out of an expensive hard money loan is refinancing it into a mortgage. To refinance a hard money loan, a borrower should satisfy all refinance conditions that usually include the following:

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