What are typical hard money loan rates and points?
Hard money loans typically charge 10 to 14 percent interest, paid interest-only, plus two to four origination points at closing, with extension and exit fees on top for some lenders. On a $300,000 loan held for nine months at 12 percent with three points, expect roughly $36,000 in interest and fees.
The fee list
| Cost | Typical range |
|---|---|
| Interest rate | 10 to 14 percent, interest only |
| Origination points | 2 to 4 |
| Underwriting or processing fee | $995 to $2,500 |
| Valuation | $300 to $1,500 for a desktop or inspection; more for a full appraisal |
| Draw fee, rehab loans | $150 to $300 per draw |
| Extension fee | 0.5 to 1 point per extension |
| Exit fee | 0 to 1 point at payoff with some lenders |
| Minimum interest | 3 to 6 months |
Ranges vary by lender and market.
What moves the rate
Leverage. 60 percent of value prices lower than 75 percent.
Experience. A borrower with five completed flips earns a lower rate and higher leverage than a first project.
Property condition and type. Light rehab on a single-family prices lowest. Heavy rehab, mixed-use, and land price highest.
Market. Rural and small markets carry higher rates because the lender's exit is harder.
Speed. A five-day close often adds a half point.
Loan size. Small loans, under $150,000, often carry higher rates and minimum fees.
A worked example
$300,000 loan, 12 percent, three points, nine-month hold:
- Interest: $300,000 × 12 percent × 9/12 = $27,000
- Points: $9,000
- Processing and valuation: about $2,000
- Total: about $38,000, or roughly 12.7 percent of the loan for nine months
If the loan carries a $60,000 rehab holdback with three draws, add draw fees and interest on the drawn amounts.
Compared with bridge loans
Bridge loans typically run 8 to 12 percent with one to two points. If your credit is around 650 or better and you can wait two to four weeks, a bridge loan is usually cheaper. Hard money earns its cost on speed, heavy rehab, and credit-challenged files.
Reducing the cost
- Bring more equity; leverage is the biggest pricing lever.
- Show a track record, even two completed projects.
- Confirm the minimum interest period and match your plan to it.
- Avoid extensions by taking a term with a cushion.
- Line up the exit before closing so the loan is paid off on schedule.
How CommFi handles it
Our lending desk prices the deal first and funds direct when it fits. When a hard money specialist is the right call, the desk searches a database of 7,000+ lenders and the ones that fit compete on rate and points. Zero upfront fees.
Related reading
Related questions
- What is a typical hard money interest rate?
- 10 to 14 percent, interest only. Leverage, experience, property condition, and market move it within that range.
- How many points do hard money lenders charge?
- Two to four points at closing is typical. Some add an exit fee at payoff.
- Are hard money rates negotiable?
- Within limits. More equity, a track record, and a documented exit are the levers that move pricing.
- Does hard money charge a prepayment penalty?
- Usually a minimum interest period of three to six months rather than a traditional penalty.
- Is hard money more expensive than a bridge loan?
- Usually by two to four points in rate and one to two points in fees. Bridge is cheaper when you qualify for it.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.