Faro Labs / Tools / Hard money loan calculator
Hard money loan calculator
What a bridge lender will actually fund, the cash you bring to close, and the real annualized cost once points and a short hold are counted.
The loan is capped by loan-to-cost: $263,500 at 85% of cost versus $280,000 at 70% of ARV. You bring $53,270 to close: $46,500 of project cost plus $6,770 in points and fees.
How hard money is priced
Hard money is priced in two pieces, and only one of them is a rate. Points are charged up front on the full loan amount whether you hold the money nine months or ninety days; interest accrues monthly on an interest-only basis. The headline rate understates the cost badly on a fast project. Two points on a three-month hold is an extra 8 percent annualized on top of the stated rate.
Sizing: cost versus ARV
Lenders run two tests and take the lower answer. Loan-to-cost limits the loan to a share of purchase plus rehab; the ARV cap limits it to a share of the finished value. On a deal bought well, loan-to-cost binds and you bring the difference in cash. On a deal bought at too high a price for the ARV, the ARV cap binds, and the widening cash gap is the lender telling you what they think of your numbers.
Holding time is the variable you control
Interest is the one cost that scales with how long the project runs. A rehab that slips from six months to eleven doesn't just delay the profit; it adds five months of interest, five more months of taxes, insurance, and utilities, and pushes the sale into a season you didn't plan for. Budget the timeline as carefully as the rehab.
Hard money questions
Why use hard money at all?
Speed and flexibility on properties a conventional lender won't touch. A distressed house with no working kitchen isn't financeable on a standard mortgage, and a two-week close can win a deal that a 45-day one loses. You're buying certainty and timing, and paying for it in points and rate.
Is rehab money funded up front?
Almost never. Rehab is typically held back and released in draws as work is completed and inspected, so you front each stage and get reimbursed. Plan working capital for at least one draw cycle. Running out of cash between draws stalls the crew and adds the interest that stalling costs.
How does this fit a BRRRR?
Hard money is the buy-and-rehab stage; the refinance replaces it with a long-term loan once the property is finished and rented. What matters is whether the refinance proceeds, usually 70 to 75 percent of the new appraised value, cover the hard money payoff plus enough of your cash to make the next deal. The BRRRR calculator carries it through that step.
Every calculator
Know the ARV before you borrow against it.
Faro pulls real comps for an address so the value your loan is sized against isn't a guess.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.