Hard Money Lender Rates and Fees
Hard money loans are the primary financing tool for fix-and-flip investors. They are asset-based loans secured by the property, not the borrower's credit score or income. This makes them fast to close (7 to 14 days) but expensive compared to conventional financing.
Understanding hard money costs is critical for wholesalers because your flip buyers use these loans, and the financing costs directly affect how much they can pay for your deal.
Current hard money rates (2025-2026)
| Fee Type | Typical Range | Notes |
|---|---|---|
| Interest rate | 10% - 15% | Interest-only, monthly payments |
| Origination points | 1 - 3 points | Upfront fee (1 point = 1% of loan) |
| Loan-to-value (LTV) | 65% - 75% of ARV | Some go to 80% for experienced borrowers |
| Loan term | 6 - 18 months | 12 months is most common |
| Minimum down payment | 10% - 25% | Of purchase price, depending on LTV |
| Extension fee | 0.5 - 1 point | If you need more time beyond the original term |
| Prepayment penalty | Usually none | Most fix-flip lenders allow early payoff |
| Draw fees | $150 - $500 | Per rehab draw (inspection before releasing funds) |
What does a hard money loan actually cost?
Let us walk through a real example. A flipper buys a property for $150,000 with a $50,000 rehab budget. The ARV is $280,000.
| Component | Amount | Calculation |
|---|---|---|
| Loan amount (75% of ARV) | $210,000 | $280K × 75%. Covers purchase + some rehab |
| Down payment required | $0 | Loan covers full purchase; rehab draws cover rest |
| Origination (2 points) | $4,200 | $210K × 2% |
| Monthly interest (12%) | $2,100 | $210K × 12% / 12 months |
| Total interest (6 months) | $12,600 | $2,100 × 6 months |
| Draw fees (4 draws) | $1,000 | $250 per inspection |
| Total financing cost | $17,800 | Points + interest + draws |
That $17,800 in financing costs is roughly 6% of the ARV. For a flipper targeting 15% net profit, financing costs consume almost half of their margin. This is why cash buyers can offer more for deals and why the profit calculation changes dramatically based on financing.
Factors that affect your rate
Experience
First-time flippers pay premium rates: 13-15% interest and 2-3 points. After 3 to 5 successful flips, rates drop to 10-12% and 1-2 points. Lenders with whom you have an established relationship offer the best terms.
Loan-to-value ratio
Lower LTV loans get better rates because the lender has more cushion if the deal goes wrong. A 65% LTV loan will have a lower rate than a 75% LTV loan on the same property.
Property location and type
Urban properties in strong markets get better terms than rural properties. Single-family homes get better rates than multifamily or commercial. Lenders charge more for properties they perceive as higher risk or harder to sell if they have to foreclose.
Credit score
While hard money is primarily asset-based, most lenders still check credit. A 700+ credit score gets better rates than a 600 score. Some lenders have a minimum credit requirement of 620 to 650.
Hard money vs other financing options
| Financing Type | Rate | Speed | Best For |
|---|---|---|---|
| Hard money | 10-15% + points | 7-14 days | Fix and flip, fast closings |
| Private money | 8-12%, negotiable | 3-14 days | Relationship-based, flexible terms |
| DSCR loan | 7-9% | 21-45 days | Rental holds, based on rental income |
| Conventional | 6-8% | 30-45 days | Owner-occupied or long-term holds |
| Cash | 0% | 3-7 days | Maximum leverage on price, fastest close |
| Transactional funding | 1-3% flat | Same day | Double closes only |
How hard money costs affect wholesale deals
As a wholesaler, you probably are not using hard money yourself (you are assigning, not buying). But your flip buyers almost certainly are. This matters because:
- Financing costs reduce what buyers can pay. A buyer using hard money has $10,000 to $20,000 less margin than a cash buyer. Your asking price must account for this.
- Fast closings matter. Hard money lenders can fund in 7-14 days, which means your buyers can close quickly. Price your deals assuming a 14-21 day closing timeline.
- Holding cost sensitivity. Every extra month a flip takes costs the buyer $1,500 to $3,000 in interest alone. Buyers discount properties that look like they will take longer to rehab.
When presenting deals in your marketing package, consider including a financing cost estimate. Showing a buyer that your deal works even with hard money at 12% and 2 points builds confidence that the numbers are realistic.
Transactional funding for wholesalers
The one financing product wholesalers do use is transactional funding. This is a same-day loan used exclusively for double closes. You borrow the money to purchase the property in the morning and resell it to your buyer in the afternoon. The loan is repaid from the resale proceeds.
Transactional funding typically costs 1-3% of the purchase price as a flat fee with no monthly interest. On a $150,000 purchase, that is $1,500 to $4,500. This cost comes out of your profit, so factor it into your assignment fee calculation.
Finding hard money lenders
Your flip buyers will have their own financing relationships, but knowing local hard money lenders helps you understand the financing landscape in your market:
- Local REI meetups: Hard money lenders attend and sponsor these events
- Title company referrals: Investor-friendly title companies work with lenders regularly
- Online platforms: Kiavi, Lima One, RCN Capital, and other national platforms
- Private lenders: Individuals who lend their own capital at negotiated rates
Bottom line
Hard money loans cost 10-15% annual interest plus 1-3 origination points, with total financing costs typically running $10,000 to $20,000 per flip. These costs directly affect what your flip buyers can pay for wholesale deals. Understanding hard money economics helps you price deals that work for financed buyers and close faster.