Hard Money Loan Rates and Costs, Explained

A hard money loan costs more than a bank loan, and that is the point: you pay a higher rate in exchange for speed, flexibility, and certainty on deals a bank cannot fund in time. Pricing has two parts, the rate and the points.

What is the interest rate on a hard money loan?

Rates are short-term and interest-only, typically starting in the high single digits to low teens depending on the program, leverage, and your experience. Because the loan lasts months, not 30 years, the headline rate matters less than the total cost to carry the deal to its exit.

What are points (origination)?

A point is 1% of the loan amount, paid at closing. Most hard money loans carry a few points of origination. Add typical closing costs (title, appraisal or valuation, legal) and you have your true cost of capital.

What moves your rate?

• Leverage — lower loan-to-value and loan-to-cost earn better pricing.
• Experience — a track record of completed deals lowers risk and rate.
• Property and exit — a clean asset with a clear sale or refinance prices better.
• Credit — it carries less weight than at a bank, but still affects rate on longer-term loans.

How to think about it

Compare the all-in cost of the loan against the profit the speed unlocks. If a fast close wins a deal a bank would have lost, the higher rate pays for itself.