Hard Money Loan Rates and Terms: What to Expect
Current hard money loan rates, points, LTV limits, and terms explained with cost comparison tables. Learn how to compare total financing cost across lenders.
Hard money loans are short-term, asset-based financing used primarily for fix-and-flip projects and BRRRR acquisitions. They are funded by private companies or individual investors rather than banks, which means faster closings and looser borrower requirements — at a significantly higher cost.
Understanding the full cost structure of hard money is critical. Investors who focus only on the interest rate often underestimate total financing cost by 30-50%. This guide breaks down every component: rates, points, fees, LTV, and terms, then shows you how to compare lenders using total cost rather than headline rate.
Typical Hard Money Rates and Terms
The table below reflects common ranges as of 2026. Your actual terms will depend on your experience, the deal’s LTV, and the lender’s risk appetite.
| Parameter | Typical Range |
|---|---|
| Interest rate | 10% – 14% |
| Origination points | 1 – 4 points |
| Loan-to-Value (LTV) | 65% – 90% of purchase price |
| Loan-to-ARV | 65% – 75% |
| Term | 6 – 18 months |
| Minimum credit score | 600 – 680 (some have no minimum) |
| Closing speed | 5 – 14 days |
| Prepayment penalty | None (most lenders) |
| Extension fee | 0.5% – 1% per month |
Interest Rate Breakdown
Hard money rates sit 3-7 percentage points above conventional mortgage rates. Where a conventional 30-year mortgage might be 6.5-7.5%, hard money will be 10-14%.
Rates are influenced by:
- LTV: Lower LTV = lower rate. A loan at 65% LTV might be 10%, while 90% LTV pushes toward 13-14%.
- Borrower experience: First-time flippers pay more. Lenders with tiered pricing often drop rates by 0.5-1% for borrowers with 5+ completed projects.
- Property type and condition: A light-cosmetic rehab on a single-family home is lower risk than a gut renovation on a multi-family. Rates reflect this.
- Loan size: Loans under $100K often carry higher rates due to fixed origination costs. Loans over $500K may get more competitive pricing.
Points (Origination Fees)
Points are an upfront fee charged as a percentage of the loan amount. One point on a $150,000 loan is $1,500. Most hard money lenders charge 1-4 points, due at closing.
Points are a significant cost because they are paid upfront regardless of how long you hold the loan. If you close a 12-month loan but complete the project in 4 months, the interest savings are significant but the points are already spent.
LTV and LTC
Hard money lenders use two leverage metrics:
- Loan-to-Value (LTV): Loan amount as a percentage of the purchase price or current value. Most lenders cap this at 80-90%.
- Loan-to-Cost (LTC): Loan amount as a percentage of total project cost (purchase + rehab). Lenders often fund 85-90% of total cost.
- Loan-to-ARV: Loan amount as a percentage of the after repair value. Typically capped at 65-75%.
The binding constraint is usually the ARV limit. Even if a lender will do 90% of purchase price, they will not exceed 70% of ARV.
Cost Comparison: $150K Loan Over 8 Months
Let us compare four scenarios using a $150,000 loan held for 8 months (a typical flip timeline).
| Scenario | Rate | Points | Monthly Interest | Points Cost | Total Interest (8 mo) | Total Financing Cost |
|---|---|---|---|---|---|---|
| A | 10% | 2 | $1,250 | $3,000 | $10,000 | $13,000 |
| B | 11% | 1.5 | $1,375 | $2,250 | $11,000 | $13,250 |
| C | 12% | 1 | $1,500 | $1,500 | $12,000 | $13,500 |
| D | 13% | 3 | $1,625 | $4,500 | $13,000 | $17,500 |
Scenarios A, B, and C are remarkably close in total cost despite rate differences of 2 percentage points. The points offset the rate in each case. Scenario D is clearly the worst — high rate and high points.
Key takeaway: Always calculate total financing cost (interest + points + fees). A lower rate with higher points can cost more than a higher rate with fewer points, especially on shorter holds.
How Hold Period Changes the Math
The relationship between rate and points shifts with project duration:
| Hold Period | Better to Pay… |
|---|---|
| 3-4 months | Higher rate, fewer points |
| 6-8 months | Balance of rate and points |
| 10-12 months | Lower rate, more points OK |
On a 3-month flip, 2 extra points on a $150K loan costs $3,000, while 2% extra interest only costs $750. Points dominate short holds. On a 12-month hold, the interest differential catches up.
Extended Comparison: $150K Loan at Different Hold Periods
| Hold Period | Scenario A (10%, 2 pts) | Scenario C (12%, 1 pt) | Difference |
|---|---|---|---|
| 3 months | $6,750 | $6,000 | C saves $750 |
| 6 months | $10,500 | $10,500 | Break-even |
| 9 months | $14,250 | $15,000 | A saves $750 |
| 12 months | $18,000 | $19,500 | A saves $1,500 |
Additional Fees to Watch For
Beyond rate and points, hard money lenders may charge:
| Fee | Typical Amount | Notes |
|---|---|---|
| Application/underwriting fee | $500 – $1,500 | Some roll this into points |
| Appraisal/BPO | $400 – $750 | Usually required |
| Legal/doc prep | $500 – $1,000 | Varies by state |
| Wire fee | $25 – $50 | Per disbursement |
| Draw inspection fee | $100 – $200 | Per rehab draw |
| Extension fee | 0.5% – 1% of loan/mo | If you exceed original term |
| Minimum interest guarantee | 3 – 6 months | You pay this even if you repay in month 2 |
The minimum interest guarantee is the one most investors miss. If a lender requires 6 months of minimum interest and you finish your flip in 3 months, you still owe 6 months of interest. Ask about this explicitly before signing.
How to Compare Hard Money Lenders
Use this process when evaluating multiple lenders:
- Get quotes with identical parameters. Same loan amount, same LTV, same term. Otherwise you are comparing different deals.
- Calculate total financing cost for your expected hold period. Use the formula: (Monthly interest x months) + (Points x loan amount) + all fees.
- Ask about draw schedules. Some lenders fund rehab in tranches (draws) and only charge interest on disbursed funds. This can save 15-25% on total interest.
- Check the extension policy. Flips go over schedule. Know the extension fee and whether it is negotiable.
- Confirm no prepayment penalty. Most hard money loans have none, but verify.
- Ask about the minimum interest clause. If it exists, factor it into your total cost.
When Hard Money Makes Sense
Hard money is expensive financing. It makes sense when:
- Speed matters. You are competing against cash buyers and need to close in 7-10 days.
- The deal cannot qualify for conventional financing. Bank loans require the property to be habitable. Distressed properties fail inspection.
- The spread covers the cost. If your projected profit on a flip is $50K and total financing cost is $15K, the 30% drag is manageable. If your profit is $20K, that same $15K in financing cost makes the deal marginal.
- You lack the capital to pay cash. Hard money lets you control deals with 10-20% down instead of 100%.
Run the full profit analysis on any flip deal with our flip calculator.
Alternatives to Hard Money
| Option | Rate | Speed | LTV | Best For |
|---|---|---|---|---|
| Hard money | 10-14% | 5-14 days | Up to 90% | Flips, BRRRR |
| Private money | 8-12% | Varies | Negotiable | Relationship-based |
| DSCR loan | 7-9% | 21-30 days | 75-80% | Stabilized rentals |
| HELOC | 7-9% | 14-30 days | Up to 85% of home equity | Investors with equity |
| Conventional rehab (203K/Homestyle) | 6.5-7.5% | 45-60 days | Up to 97% | Owner-occupant only |
For a deeper comparison of flip financing options, see our guide to financing a flip.
Negotiation Tips
- Bring your track record. A spreadsheet showing 5+ completed projects with purchase price, rehab cost, sale price, and timeline will get you better terms than any credit score.
- Offer a lower LTV. Putting 20-25% down instead of 10% can drop your rate by 1-2%.
- Ask about relationship pricing. Many lenders reduce rates and points after your 3rd or 5th deal with them.
- Get multiple quotes. The hard money market is competitive. Three quotes minimum.
- Negotiate the minimum interest clause. Some lenders will reduce it from 6 months to 3 months for experienced borrowers.
For more on structuring profitable flips, see our fix and flip guide.
Frequently Asked Questions
Are hard money loan rates negotiable?
Yes. Rates, points, and fees are all negotiable, especially for repeat borrowers. Lenders compete for experienced flippers with strong track records. Always get multiple quotes and use competing offers as leverage.
Can I use hard money for a rental property?
Hard money is designed for short-term use (6-18 months). You can use it to acquire and renovate a rental property, but you must refinance into permanent financing (conventional, DSCR, or portfolio loan) before the term expires. This is the core of the BRRRR strategy.
What credit score do I need for hard money?
Most lenders have minimums between 600-680, and some have no minimum at all. Hard money is asset-based, meaning the property’s value and the deal’s numbers matter more than your credit. That said, better credit may get you slightly better terms.
How are hard money loans repaid?
Most hard money loans are interest-only with a balloon payment at maturity. You make monthly interest payments during the term, then repay the full principal when you sell (flip) or refinance (BRRRR). Some lenders allow interest to accrue and be paid at payoff.
What happens if my project takes longer than the loan term?
Most lenders offer extensions for 0.5-1% of the loan balance per month. If you anticipate delays, negotiate extension terms upfront. Failing to repay or extend can result in foreclosure, as hard money loans are secured by the property.