Hard money rates, points and LTV: typical ranges and what moves them
Hard money pricing has three dials — rate, points and leverage — and lenders trade them against each other. The cheapest rate is rarely the cheapest loan.
Typical ranges (indicative, not quotes)
| Term | Typical range | What moves it |
|---|---|---|
| Interest rate | 9%–14% (lower for experienced borrowers and institutional lenders; higher for small lenders and weak files) | Borrower experience, credit, leverage, property type, state, market rates |
| Origination points | 1–4 points (1% = 1 point of the loan amount) | Loan size (smaller loans carry more points), experience, competition |
| Loan-to-cost (LTC) | 80%–90% of purchase price; 100% of rehab in some programs | Experience, credit, deal quality |
| Loan-to-ARV | 65%–75% of after-repair value | Market, property type, lender appetite |
| Term | 6–18 months, extensions at 0.5–1 point per 3–6 months | Project scope |
| Other fees | Underwriting, document, draw inspection ($150–$300 per draw), appraisal or BPO, legal | Lender policy |
How the dials interact
A lender offering 9% may require 30% down and 3 points; one offering 12% may fund 90% of purchase and 100% of rehab at 2 points. For a flipper with limited cash, the second loan may be the only one that works; for an investor with cash, the first is cheaper. Compute the total cost of capital over your realistic hold — points plus interest plus fees plus extension risk — and the cash left in the deal, then decide.
Worked comparison
Purchase $180,000, rehab $40,000, ARV $300,000, nine-month hold. Lender A: 10%, 3 points, 80% LTC on purchase, 100% rehab → loan $184,000, cash in $36,000 plus costs; interest about $13,800 plus $5,520 points ≈ $19,300. Lender B: 12%, 2 points, 90% LTC on purchase, 100% rehab → loan $202,000, cash in $18,000 plus costs; interest about $18,200 plus $4,040 points ≈ $22,200. Lender B costs about $2,900 more but frees $18,000 of cash — worth it if that cash funds a second deal, not otherwise.
Draws and interest on undrawn funds
Rehab funds are released in draws after inspections. Ask whether interest accrues on the full loan from day one (“Dutch” interest) or only on drawn amounts — the difference on a $60,000 rehab budget over six months can be thousands. Ask how many draws are allowed, the fee per draw, and the turnaround time; a slow draw process stalls contractors.
Comparing quotes
- Get the term sheet in writing with every fee listed.
- Confirm the leverage basis (purchase price, cost, or ARV) and whether rehab is funded.
- Ask about prepayment: minimum interest periods of three to six months are common.
- Ask about extension terms before you need them.
- Check the lender’s licensing status for the state where the property sits — see state rules.
Frequently asked questions
Why are hard money rates so high?
Short terms, higher default risk, distressed collateral, expensive capital (lenders often pay 7% to 9% for their own funds), and the cost of underwriting and servicing small loans quickly. The rate buys speed and a yes.
Are rates negotiable?
Points and leverage more than rate, and both improve with a track record: most lenders have published tiers for borrowers with three, five or ten completed projects.
Is a lower rate with more points ever better?
On longer holds, yes — points are a one-time cost and rate accrues monthly. On short flips, the reverse.
Sources
Related: What is a hard money loan? Asset-based lending explained · Fix-and-flip financing: structuring the loan around the project · How hard money lenders evaluate ARV — and how to estimate it yourself · How to find and vet hard money lenders: sources, questions, red flags. Hub: Hard money.