Hard Money Loan Cost & APR Calculator
Enter the loan amount, charged balance, rate, term, points, and lender fees to estimate the cash you receive, the interest cost, the payoff amount, and a fee-adjusted APR.
Estimated fee-adjusted APR14.81%
- Monthly interest payment
- $2,500.00
- Origination fee
- $5,000.00
- Net loan proceeds
- $243,500.00
- Total interest
- $30,000.00
- Total financing cost
- $36,500.00
- Amount due at payoff
- $250,000.00
- Effective annual financing cost
- 15.86%
Assumes simple interest, equal monthly periods, and payoff at the entered term.
The APR is solved from net proceeds and scheduled borrower cash flows, not quoted as a legal disclosure.
How to use this calculator
- Enter the total loan amount the lender will fund.
- Enter the balance that actually accrues interest during the term.
- Add the note rate, term, origination points, and other lender fees.
- Choose whether interest is paid monthly or accrued until payoff.
- Compare net proceeds, total financing cost, payoff amount, and estimated APR.
How the hard money loan cost is calculated
Hard money loans are often quoted with a note rate, points, and separate lender fees. The note rate explains the interest charge, but it does not show how much cash you receive after fees or how those fees affect the annualized cost. This calculator treats the loan as a cash-flow problem: net proceeds today, then scheduled interest payments and payoff later.
Let P be the loan amount, B the balance charged interest, r the annual note rate as a decimal, n the term in months, q the points rate as a decimal, and F the other lender fees. The origination fee is O = P x q. Monthly interest is M = B x r / 12. Total interest is I = M x n. Net loan proceeds are N = P - O - F. Total financing cost is C = I + O + F.
If interest is paid monthly, the amount due at payoff is the loan principal, and the monthly cash-flow rate i solves:
N = M/(1+i)^1 + M/(1+i)^2 + ... + M/(1+i)^n + P/(1+i)^n
If interest is accrued, the borrower makes no monthly interest payment and pays principal plus accrued interest at payoff. In that case the monthly cash-flow rate is i = ((P + I) / N)^(1/n) - 1. The estimated fee-adjusted APR is 12 x i x 100. The effective annual financing cost is ((1 + i)^12 - 1) x 100.
What moves the result most
Points and other lender fees reduce net proceeds immediately, so they can raise APR even when the stated note rate is unchanged. Term length matters because the same points are annualized over fewer or more months. A one-month bridge loan can have a high APR even when the dollar fee looks small.
The charged balance also matters. Some hard money lenders charge interest on the full commitment from day one, while others charge only on funds drawn or use staged rehab draws. If only part of the loan is expected to be outstanding, use a reasonable average charged balance rather than the full commitment.
What this calculator leaves out
The estimate assumes simple interest, equal monthly periods, and payoff at the entered term. It does not model daily interest, odd funding dates, minimum-interest clauses, extension fees, default interest, prepayment penalties, unused-line fees, or individual construction draws. It also excludes third-party title, escrow, appraisal, legal, recording, insurance, and property costs unless you include them as lender fees.
Worked example
Suppose a lender funds a $250,000 hard money loan, charges interest on the full $250,000 balance, quotes a 12% annual note rate, and expects payoff in 12 months. The loan has 2 points and $1,500 of other lender fees.
The origination fee is $250,000 x 2%, or $5,000. Monthly interest is $250,000 x 12% / 12, or $2,500. Over 12 months, total interest is $30,000. Net loan proceeds are $250,000 - $5,000 - $1,500, or $243,500. Total financing cost is $36,500.
If interest is paid monthly, the borrower pays $2,500 each month and owes $250,000 at payoff. Solving the monthly cash-flow rate gives an estimated fee-adjusted APR of about 14.81% and an effective annual financing cost of about 15.86%.
Common questions
How are hard money loan payments calculated?
Most hard money loans are interest-only during the term, so the monthly payment is the charged balance multiplied by the annual note rate and divided by 12. Principal is usually due at payoff. If interest accrues instead of being paid monthly, the monthly payment shown here is zero and the accrued interest is added to the payoff amount.
What does two points mean on a hard money loan?
One point equals one percent of the loan amount. On a $250,000 loan, two points equal $5,000. Points usually reduce the borrower’s net proceeds or are paid at closing, so they increase the fee-adjusted APR compared with the note rate alone.
Do hard money lenders charge interest on undrawn rehab funds?
Some lenders charge interest on the full commitment, while others charge interest only as funds are drawn. Use the full loan amount when the lender charges on the full commitment. Use an expected average balance when the lender charges only on drawn funds.
What is the true APR after origination fees?
This calculator estimates APR by comparing the net proceeds the borrower receives with the scheduled interest payments and payoff amount. It is useful for comparing offers, but it is not a legal Truth in Lending disclosure. Official APR can differ because of exact dates, rounding, fee classifications, and regulatory rules.
Is accrued interest more expensive than monthly interest?
Accrued interest increases the payoff amount because the borrower does not pay interest during the term. In this calculator, the APR can be lower or higher than the monthly-pay version depending on points, fees, term, and timing. The dollar interest is the same under the simple-interest assumption, but the cash-flow timing is different.
What happens if I repay a hard money loan early?
Recalculate with the actual expected payoff month. A shorter term usually lowers dollar interest but can raise the annualized APR because points and fixed fees are spread over fewer months. Also check the agreement for minimum-interest clauses, extension fees, and prepayment terms.