Hard money loan calculator for a house flip

Hard money interest is what you pay on the loan that funds 90 percent of the purchase and the rehab. It is not the 0.5 percent holding line, and it is not a rate this page looks up. The signed-in financing card stores one hard-money preset: 10 percent down, a 12 percent rate, a 12 month term, and an interest-only payment. This page runs that preset on the same labeled example as the cash flip projection, so the interest line sits beside the cash profit. The dollars are a worked example. They are not a closed sale, not a lender quote, and not a recommendation of a rate. Nothing on this page is uploaded.

The preset on the financing card

The hard-money row is one of four saved rows. Conventional is 20 percent down at 7 percent for 30 years, and that payment amortizes. Private money is 15 percent down at 9 percent for 24 months, interest-only. Cash is 100 percent down and no payment. Hard money is the row this page uses. A rate from a term sheet you received this week is a different worksheet. This page does not ask a lender, a bank feed, or any other server for a rate. The 12 percent is the number stored with the preset.

Interest-only means the monthly payment is the loan times the annual rate, divided by 12. None of that payment reduces the principal. When the term ends, the whole loan balance is still due. A 12 month term is the date that balance is due. It is not a rule that a flip you sell in month six owes twelve months of interest. You owe the monthly amount for each month the loan is open, and you owe the principal when you pay the loan off.

The loan on the labeled example

Use the same inputs as the fix and flip profit guide. After-repair value is $200,000. Rehab is $40,000. The purchase price is $94,000, which is the 25/5/3 maximum allowable offer on that ARV and that rehab. You can reproduce the $94,000 on the MAO calculator. The financing preset does not apply the 10 percent down payment to the purchase price alone. It applies the down payment to purchase plus rehab. That project cost is $94,000 + $40,000 = $134,000.

• Down payment is 10 percent of $134,000, which is $13,400.
• The loan is the rest: $134,000 − $13,400 = $120,600.
• Monthly interest is $120,600 × 0.12 / 12 = $1,206. The division is exact.
• Interest for the full 12 month preset is $1,206 × 12 = $14,472.
• After those 12 payments the balance due is still $120,600. The $14,472 did not pay the loan down.

A fully amortizing 12 month loan at the same 12 percent on the same $120,600 is a different payment. That payment rounds to $10,715 a month, because each payment includes principal. The preset is not that payment. If a mortgage calculator shows $10,715, it is paying the loan down to zero inside 12 months. The hard-money row charges $1,206 and leaves the $120,600 due.

The interest line next to the cash profit

The cash flip projection assumes you pay cash and hold the house for 6 months. On this example it reports profit of $48,360 and ROI of 34.6 percent. Total investment on that cash worksheet is $139,640. Buyer closing is $2,820. Holding is $2,820. Seller closing is $12,000. Net proceeds are $188,000. Those lines are already inside the $48,360. The $48,360 includes no interest and no points.

Six months is the hold inside that cash profit. Six months of the preset interest is $1,206 × 6 = $7,236. Subtract that interest from the cash profit: $48,360 − $7,236 = $41,124. Total investment becomes $139,640 + $7,236 = $146,876, because the interest is cash you pay on top of the cash worksheet. ROI is $41,124 / $146,876, which the one-decimal rounding reports as 28.0 percent. Read $41,124 as the cash profit with one extra line, the interest, for the same six months. It is the number that belongs beside $48,360.

Leave the $2,820 holding line where it is. The 0.5 percent line is a stand-in for taxes, insurance, utilities, and similar carry. The $7,236 is debt service. Adding the two and calling the sum the holding line hides the rate. Replacing the $2,820 with the $7,236 drops the taxes and the insurance. The holding-cost guide is the split between those bills and the loan. The profit guide says the same thing in the other direction: interest and points sit outside the 0.5 percent line, so a cash profit overstates a financed flip until you add them.

The full 12 month preset is a second column

The preset term is 12 months. If you keep the loan and the house for those 12 months, two lines move, not one. Interest is the full $14,472. The 0.5 percent holding line is no longer the six-month $2,820. Twelve months of that line is $94,000 × 0.005 × 12 = $5,640. Buyer closing stays $2,820. Seller closing stays $12,000, because it is 6 percent of the $200,000 after-repair value.

• Purchase, rehab, and buyer closing stay $94,000 + $40,000 + $2,820.
• Holding for 12 months is $5,640, which is $2,820 more than the six-month cash hold.
• Preset interest for 12 months is $14,472.
• Total investment is $94,000 + $40,000 + $2,820 + $5,640 + $14,472 = $156,932.
• Profit is $188,000 − $156,932 = $31,068.
• ROI is $31,068 / $156,932, which the one-decimal rounding reports as 19.8 percent.

Do not subtract the $14,472 from the $48,360 and stop. That arithmetic is $48,360 − $14,472 = $33,888, and $33,888 still carries only six months of taxes, insurance, and utilities. The twelve-month result on this page is $31,068. The $2,820 gap between $33,888 and $31,068 is the extra half year of the 0.5 percent line. A sale in month six that pays the loan off at the sale is the $7,236 case, not the $14,472 case. Interest stops when the loan is paid off. The 12 month term is the deadline for the balance, not an extra interest bill after payoff.

Points are not in the preset

The published hard-money row has no points. A point is a fee at the loan closing, usually 1 percent of the loan amount, and it is not a monthly charge. One point on $120,600 is $1,206. That $1,206 equals one month of interest on this example. It is not the monthly payment, and it does not repeat in month two. Two points would be $2,412. None of those dollars are inside the $2,820 buyer-closing line. Buyer closing in the flip projection is 3 percent of the purchase price. A point is 1 percent of the loan. The bases differ, so the lines stay separate.

If a term sheet adds one point to the six-month case, profit falls by that $1,206, from $41,124 to $39,918, and total investment rises from $146,876 to $148,082. The preset itself does not add the point. Write a point on its own line when a term sheet charges one. This worksheet does not invent a point so the example looks finished. The same rule covers a servicing fee or an inspection fee the card does not store: add the dollar you were charged, and leave the $1,206 monthly interest alone.

Cash to close on the card is a different 3 percent

The signed-in card also shows cash to close. It adds the down payment to 3 percent of purchase plus rehab. On this example that is $13,400 plus 3 percent of $134,000. Three percent of $134,000 is $4,020. Cash to close on the card is $13,400 + $4,020 = $17,420. That $4,020 is the card’s own closing allowance. It is not the flip projection’s buyer closing, which is 3 percent of the purchase price only, $2,820. Adding $4,020 on top of $2,820 counts two closing allowances. This page keeps the flip projection’s $2,820 when it sits interest next to the $48,360.

The $17,420 answers a different question: how much of purchase plus rehab, plus the card’s closing allowance, you bring before the loan funds. It is not profit, and it does not include the later interest. The down payment inside it, $13,400, is 10 percent of $134,000, including 10 percent of the rehab. The other 90 percent is the $120,600 loan, which comes back due at payoff. Treating $17,420 as the whole cost of the flip leaves out the $2,820 holding line and every month of the $1,206.

What the interest line leaves out

The principal is still owed. Paying $1,206 a month does not build equity in the loan. At a six-month sale you repay $120,600 from the resale, on top of the interest you already paid. That repayment is why total investment in the six-month financed column is purchase plus rehab plus buyer closing plus holding plus interest. It is not the down payment alone. Using $13,400 as the ROI denominator reports a return on money you have not finished paying back. The 28.0 percent figure uses $146,876, which still includes the principal through the purchase and rehab lines.

Private money stays on its own preset: 15 percent down, 9 percent, 24 months, still interest-only. Those inputs do not belong in this hard-money column. A conventional 30 year payment amortizes, and it does not belong on a six-month flip interest line either. The after-repair value here is a round number so the subtraction can be checked. A real offer still needs sold comps. If the rate on a term sheet is not 12 percent, replace 0.12, recompute $120,600 times that rate divided by 12, and multiply by the months the loan is open. Leave the 0.5 percent holding line on its own row while you do it.

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