Current Hard Money Rate Environment
Hard money loan interest rates in 2025 range from 10% to 15%, with the median for experienced investors on clean residential deals falling between 11% and 13%. Rates have compressed slightly from the peaks seen in late 2022 and 2023 during the most aggressive phase of the Federal Reserve's rate hike cycle, but they remain elevated relative to conventional financing.
Origination points typically range from 1 to 3 points, with 2 points being the most common for mid-market deals. The total cost of hard money has made fast execution and exit planning more critical than ever. The difference between a 6-month and 12-month hold on a $225,000 loan at 12% is $13,500 in additional interest alone.
What Determines Your Hard Money Rate
LTV ratio is the most direct pricing lever. A loan at 65% LTV presents significantly less risk to the lender than one at 80% LTV, and the rate reflects that. Bringing more equity to the deal is the most reliable way to get better pricing.
Borrower experience matters considerably. First-time flippers and new BRRRR investors pay a premium because they represent higher risk. Lenders want to see a track record of successfully completed projects. After 3 to 5 completed deals, rates typically improve by 0.5% to 1.0%.
Property type influences pricing. Single-family residential properties receive the most favorable rates. Small multi-family (2 to 4 units) is close behind. Commercial properties, vacant land, and ground-up construction carry progressively higher rates.
Exit strategy clarity reduces perceived risk. A borrower with a clear, documented exit plan (pre-approval for DSCR refinance, contractor already engaged, ARV supported by comparable sales) signals lower risk and commands better terms than someone with a vague plan.
Loan amount affects pricing through lender economics. Some lenders have minimum loan amounts of $75,000 to $150,000. The pricing sweet spot for many lenders falls between $150,000 and $500,000. Very small loans may carry higher rates due to fixed origination costs, and very large loans may command premium pricing due to concentration risk.
Market location matters because properties in primary metropolitan areas with strong resale markets and deep comparable sales data represent lower risk than properties in rural or tertiary markets.
Lender relationship is an underappreciated factor. Repeat borrowers consistently receive better terms. After 2 to 3 successful deals with the same lender, most will reduce rates and points, sometimes significantly.
See how much you save by refinancing out of hard money.
Open the Calculator →Points and Fees: The Full Cost Picture
The headline interest rate tells only part of the cost story. Origination points (1-3% of loan amount) are paid at closing and represent a significant upfront cost. Processing fees range from $500 to $1,500. Draw inspection fees for rehab disbursement run $150 to $300 per draw. Legal and wire fees add several hundred more. Extension fees, if your project runs past the original term, typically cost 0.5% to 1.0% per month plus continued interest.
| Cost Component | Low Scenario | Medium Scenario | High Scenario |
|---|---|---|---|
| Loan Amount | $200,000 | $200,000 | $200,000 |
| Interest Rate | 10% | 12% | 14% |
| Points | 1 ($2,000) | 2 ($4,000) | 3 ($6,000) |
| Hold Period | 6 months | 8 months | 12 months |
| Interest Cost | $10,000 | $16,000 | $28,000 |
| Fees | $1,000 | $1,500 | $2,000 |
| Total Cost | $13,000 | $21,500 | $36,000 |
| Monthly Effective | $2,167 | $2,688 | $3,000 |
How to Compare Hard Money Lender Quotes
The only meaningful comparison metric is total cost of capital for your specific expected hold period. A lower rate with more points can cost more than a higher rate with fewer points on a short hold. Request written term sheets from at least 3 lenders and calculate the total dollar cost for each based on your projected timeline.
Key comparison factors beyond rate and points: draw process speed (how quickly rehab funds are released), extension terms and costs (what happens if your project runs long), closing timeline (can they meet your purchase contract deadline), and communication quality (responsiveness during underwriting signals responsiveness during the loan).
Always ask about extension terms before you close on a hard money loan. Some lenders offer reasonable 3-month extensions at 1% per month. Others charge 2% plus continued interest at a penalty rate. This is where a 2-month rehab delay can become financially devastating. Get extension terms in writing as part of your loan commitment.
Rate vs. Speed vs. Flexibility Trade-Offs
The lender offering the absolute lowest rate may also be the slowest to close and the most restrictive on rehab draw disbursements. In real estate investing, speed and operational flexibility often matter more than rate optimization.
Consider the opportunity cost of missing a deal because your lender needs 3 weeks to close instead of 7 days. Consider the cost of slow draw releases that delay your rehab timeline by weeks, extending your carry costs far beyond any rate savings. Consider the value of a reasonable extension policy when unexpected rehab issues arise. The cheapest lender on paper is not always the cheapest lender in practice.
How to Negotiate Better Hard Money Terms
Present your experience and track record. Show completed projects with documented outcomes. Offer a lower LTV by bringing more cash to the deal. Present a clear, documented exit strategy with supporting comparable sales and a pre-approval from your permanent lender.
Bring repeat business. Committing to multiple deals with the same lender creates loyalty pricing. Negotiate points rather than rate when possible, as points are a one-time cost while rate is ongoing. On a short hold, a point reduction saves more than a small rate decrease. Ask directly about volume discounts or loyalty programs that many lenders offer but do not advertise.
When to Exit: The True Cost of Holding
Monthly carry on a $225,000 hard money loan at 12% is $2,250 in interest alone. Over 12 months, that totals $27,000. Add origination points and fees, and your total hard money cost can exceed $32,000 on a single deal. Every month you delay the refinance costs real money that comes directly from your profit margin.
The takeaway is clear: refinance into permanent financing as soon as the property is stabilized. Do not hold hard money a single day longer than necessary. Use the hard money refinance calculator to model exactly what you save by exiting on schedule versus holding additional months.