How Are Hard Money Loans Calculated?

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Hard money loans are secured loans against properties against collateral, typically the house you are planning to buy. While it can be difficult to get bank approval due to poor credit scores, hard money loan providers mostly consider the price of your collateral and ensure that it will cover the loan amount in case you default.

Hence, very little documentation or underwriting is required for a hard money loan. However, since the interest rates are higher than an average bank loan, you need to calculate the loan amount properly to ensure that you can cover the monthly payments and prevent a default.

Calculating Hard Money Loan Payments

To start with, the interest rates on hard money loans are almost double that of bank loans.

  • If your bank loans charge you a 5% rate of interest, the hard money loan interest could be around 10%.
  • On the other hand, you have about 360 months to pay off your bank loans, while you will have to repay your hard money loan within 24 months.
  • So, if you seek a loan of $200,000, then based on this calculation, you will have to pay $1,073 per month for your bank loans.
  • On the other hand, you will have to pay $ 1,666.67 for hard money loans each month.

Using Online Hard Money Loan Calculator

One of the best ways to calculate your monthly payments is to use an online hard money loan calculator. Your loan provider will have one, or you may use any of the free online tools.

You can provide the details like the amount of loan you want, the average interest rates on hard money loans for property in your area, and the duration of the loan, which is typically between 12 and 24 months.

Then, based on your monthly income, you can figure out whether you will be able to make the monthly payments after deducting taxes and other essential expenses.

In addition, you also need to consider certain fees like hard money origination fees; buying costs like title insurance and attorney and closing costs; holding costs like property taxes, homeowners association fees, and utility costs; realtor fees, transfer and conveyance expenses and a few others.

Your lender will calculate all the costs and tell you the exact amount you would have to pay each month, and you can pay off the debt in a couple of years. However, in case you cannot, you may be looking at a foreclosure. As such, you need to be mindful that you will be able to pay off your loan within the stipulated time.


At Hard Money Georgia, we ensure that our clients get their loans approved in the least possible amount of time. While many banks may refuse loans to borrowers because they do not have a strong credit score or may have a lower income threshold, for us, the principal criteria is that the collateral matches the loan amount.

We provide short-term loans that you can repay within 12 to 24 months and acquire your dream property in no time. Call us today for a quick consultation about your property and check if you qualify for our fast funding.