Hard Money Loan Calculator

Question 1

What is a Hard Money Loan?

Accepted Answer

Also referred to as fix-and-flip loans, private money loans, bridge loans, or business purpose real estate loans - hard money is just a well-known term for financing that is more easily attainable than traditional financing. A hard money loan is a short-term, asset-based loan primarily used in real estate investments. Unlike traditional bank loans that focus on the borrower's creditworthiness, hard money lenders prioritize the property's value, especially its after-repair value (ARV). This approach allows for quicker approvals and funding, making them ideal for time-sensitive projects like fix-and-flip investments.

Question 2

Are Hard Money Rates and Loan Costs Affordable?

Accepted Answer

Hard money loan terms usually range from 6 to 24 months, though some lenders may offer extensions. Interest rates are slightly higher than traditional mortgages, often between 7% and 15%, reflecting the increased risk lenders assume. Additionally, borrowers may encounter origination fees, commonly referred to as "points," ranging from 1% to 4% of the loan amount. It's essential to discuss specific terms with potential lenders, as these can vary based on factors like property type, location, and the borrower's experience. At Deal Street Capital our focus is on loan volume not high loan prices which means all our investors save money on loan costs.

Question 3

How do I Qualify for a Hard Money Loan?

Accepted Answer

Qualification criteria for hard money loans differ from traditional loans. Lenders focus on the property's value and potential rather than the borrower's ability to show proof of income or tax returns. Key considerations include:

Property Value: The current and projected ARV of the property.
Down Payment: Borrowers may need to invest a portion of their own funds.
Experience: Prior success in similar projects can be advantageous.
Financial Standing: While credit scores are less critical, a history free of bankruptcies or significant judgments is important.

Each lender has unique requirements, so it's advisable to consult directly to understand specific qualification criteria.

Question 4

What Types of Properties can be Financed with a Hard Money Loan?

Accepted Answer

Hard money loans can finance various property types, including:

Residential: Single-family homes, multi-family units, and condominiums.

Commercial: Office buildings, retail spaces, hotels, and industrial properties.

Question 5

Are There Prepayment Penalties?

Accepted Answer

Some lenders impose prepayment penalties on hard money loans, discouraging borrowers from paying off their loans early. At Deal Street Capital, we do things differently. We offer flexible loan terms ranging from 6 months to 24 months and believe in empowering our clients with total freedom. If you decide to pay off your loan on day 1—whether you’ve sold the property quickly or just won the lottery—there’s absolutely no prepayment penalty. Our goal is to provide you with fair, investor-friendly terms, so you can focus on maximizing your real estate opportunities without worrying about hidden fees.

Hard Money Loan Calculator