1. What is a Hard Money Loan?

Hard money loans are short-term loans secured by real estate, typically used by real estate investors. They have higher interest rates than traditional loans but are easier to qualify for and fund faster.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount ($)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments (term in months)

Explanation: This formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest.

3. Understanding Loan Payments

Details: Hard money loans typically have terms from 6-36 months with interest rates between 8-15%. Payments are interest-only or amortized, with balloon payments common at term end.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 12 for 12%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's typical for hard money loan terms?
A: Terms usually range 6-36 months, rates 8-15%, with 50-70% loan-to-value ratios.

Q2: How do hard money loans differ from traditional mortgages?
A: They're asset-based (not credit-based), shorter-term, higher-rate loans focused on property value rather than borrower qualifications.

Q3: Who typically uses hard money loans?
A: Real estate investors needing quick financing for fix-and-flip projects or bridge financing.

Q4: Are payments interest-only or amortized?
A: Can be either, but interest-only payments are common with balloon payment at term end.

Q5: What fees are typically involved?
A: Expect 2-5 points (1 point = 1% of loan amount) plus various closing costs.