Hard Money Loan Interest Calculator

The real cost of a short-term hard money loan

A $200,000 hard money loan at 11% interest with 2 points, held for 9 months, costs $20,500.00 all-in: $1,833.33/month in interest-only payments ($200,000 x 11% / 12) plus $4,000.00 in origination points paid up front (2% of $200,000).

That $20,500 total cost, spread over just 9 months, works out to a simple annualized cost of 13.67% -- notably higher than the quoted 11% rate, because the points are a fixed cost that gets more expensive per year the shorter the actual hold period is.

This is the core trap with points on short hold periods: the same 2 points that add a modest 0.2%/year to the cost of a 10-year loan add nearly 2.7 percentage points annualized on a 9-month hold, since the fixed fee is spread over far fewer months.

What's excluded from the $20,500 figure

Interest-only style cost. Default and extension fees are not included. Hard money loans commonly carry steep extension fees or default-rate interest bumps if the project runs past the planned hold period -- neither is modeled here, so a 9-month plan that slips to 12 months could cost meaningfully more than a straight 3-month extrapolation of this figure.

This calculator assumes interest-only payments with no principal amortization, which is standard for hard money bridge loans but means the full $200,000 principal is still due at the end of the 9 months.

If the exit plan is a refinance into a conventional loan once the project stabilizes, compare the new loan's cost against this bridge financing on the Refinance Break-Even & Savings Calculator.

Whether hard money is worth it for the deal

Hard money is usually justified by speed and flexibility rather than cost -- compare the property's expected return against this financing cost on the Rental Property Cash Flow & Cap Rate Calculator before committing.

For a longer-term, lower-cost alternative once the property qualifies for conventional financing, the Small Business SBA Loan Estimator shows what an amortizing term loan would cost instead.

Frequently Asked Questions (FAQ)