Why do hard money loans use interest-only payments?

Because fix-and-flip projects are short-term (typically 6 to 12 months), borrowers do not amortize principal monthly; they make interest-only payments and repay the principal in a single balloon upon selling or refinancing.

Updated: August 2026 • Verified v1.2

Hard Money & Private Bridge Loan Financing Calculator

Finance & MathPopular

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Loan = Min(Cost * LTC, ARV * 0.75); Points_Fee = Loan * Points; Monthly_Int = (Loan * APR) / 12

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Understanding Your Results

Calculates total loan principal financed, cash required at closing, monthly interest-only payments, total points and interest costs over 6, 9, or 12-month terms, and overall financing cost.

Practical Guidance & Next Steps

Hard money lenders typically fund up to 85% - 90% of purchase and rehab costs, but strictly cap their loan at 70% - 75% of After Repair Value (ARV) to protect their downside.

What is this?

A real estate investment utility that models short-term hard money and private bridge loan financing terms.

How does it work?

1. Enter purchase price, rehab budget, and After Repair Value (ARV). 2. Enter interest rate, lender points, LTC percentage, and holding term. 3. View required cash at closing, monthly payment, and total financing costs.

Why use it?

Accurately predicts carrying costs and points so flippers preserve target profit margins.

Technical Scope & Calculation Limitations

Models standard interest-only short-term real estate bridge loans.

Frequently Asked Questions

Points are upfront origination fees charged by the lender, where 1 point equals 1% of the total loan amount. For example, 2.5 points on a $200,000 loan equals a $5,000 upfront fee.

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