Hard Money Loan Calculator

An investor buys a house for $200,000, budgets $50,000 for the rehab and expects it to sell for $340,000. The lender offers 90% of cost up to 70% of ARV at 11% interest-only with 2 points and $1,500 of fees, and charges interest only on drawn funds. The rehab is drawn evenly over four months, and the investor expects to sell six months after buying.

The cost limit is 90% × $250,000 = $225,000 and the value limit is 70% × $340,000 = $238,000, so the loan is $225,000.00. The lender funds the full $50,000 rehab through draws and $175,000.00 of the purchase, leaving a $25,000.00 down payment. With closing costs, points and fees, the cash needed to close is $35,000.00.

Interest starts at $1,718.75 in the first month and rises to $2,062.50 once the rehab is fully drawn, totaling $11,687.50. After holding costs of $3,600.00 and selling costs of $27,200.00, the flip nets $37,512.50 on $50,287.50 of the investor's own money, a 74.6% return in six months.

Stress-testing the deal

Flips rarely go exactly to plan. Here is the same deal under four common surprises:

A lower ARV does double damage: it cuts the sale price and, because the loan is capped at 70% of ARV, shrinks the loan so you bring more cash to closing. Dutch interest adds $687.50 here, which is why the interest basis is worth asking about before you sign.

Before running the full numbers, many flippers screen a property with the 70% rule: offer no more than 70% of the after repair value, minus the cost of the rehab. The result is the maximum allowable offer. It is a rule of thumb among investors, not a lender requirement or a law; the 30% it holds back is meant to pay for the loan, holding the property, selling it, and a profit.

ext{ARV} ext{ARV}

After repair value, what the renovated property should sell for

pp

The offer rule percentage, 70% by default (0.70)

ext{rehab} ext{rehab}

The renovation budget

In the example, 70% of the $340,000.00 ARV less the $50,000.00 rehab is $188,000.00. The $200,000.00 price is $12,000.00 above it, so the deal fails this screen even though the full calculation shows $37,512.50 of profit. The calculator lets you change the percentage; a stricter or looser rule moves the offer by 1% of ARV for each point:

A price above the maximum allowable offer doesn't mean the deal loses money, and one below it doesn't mean it makes money: the rule ignores your actual rate, points, holding time and selling costs. The profit and ROI figures above use all of them, so treat the rule as a first filter and the full calculation as the answer.

Hard money is expensive by design. You are paying for speed, flexibility and a lender willing to finance a property a conventional lender won't touch. Terms vary widely by lender and market, so treat the ranges below as typical rather than guaranteed.

Decisions that move the result most

• Buy right. The 70% rule, offering no more than 70% of ARV minus the rehab, leaves room for financing, holding and selling costs. Here it suggests a maximum offer of $188,000.00.
• Shorten the Holding Period. Every month adds interest and holding costs; line up contractors and permits before closing.
• Negotiate the interest basis and draw terms. Interest on drawn funds and fast draw inspections both cut your carrying cost.
• Plan the exit. If you will keep the property as a rental, check whether its rent supports a refinance with the DSCR loan calculator before you buy.

Where wholesaling fits

Wholesaling means putting a distressed property under contract and assigning that contract to a rehabber for a fee instead of buying it yourself. Wholesalers usually don't need a hard money loan, but they speak the same language: buyers judge a wholesale deal by its ARV, rehab estimate and the 70% rule, exactly as this calculator does. Running a buyer's numbers before you set your assignment fee shows whether the deal still works for them.

A hard money loan is a tool for speed, not a cheap way to borrow. In the example, the flip nets $37,512.50 on $50,287.50 of the investor's cash, a 74.6% return, after $11,687.50 of interest and $3,600.00 of holding costs.

Before you offer, test a lower ARV and a longer hold in the hard money loan calculator. If the deal only works when everything goes to plan, the price is too high.