Hard Money Loan Calculator
Calculate your maximum hard money loan from both the After-Repair Value (ARV) cap and Loan-to-Cost (LTC) cap, your monthly interest-only carry, cash needed at closing, and net fix-and-flip profit.
Hard money & fix-and-flip loan calculator
Hard money loan underwriting formulas (ARV vs. LTC)
| Underwriting limit | How lenders calculate it |
|---|---|
| Maximum Loan by LTC (Loan-to-Cost) | (Purchase Price + Rehab Budget) × Max LTC % (typically 80%–90%) |
| Maximum Loan by ARV (After-Repair Value) | Appraised After-Repair Value × Max ARV % (typically 65%–75%) |
| Approved Loan Amount | The LESSER of the Max LTC Limit or Max ARV Limit |
| The 70% Rule Max Offer Price | (ARV × 70%) − Rehab Budget |
Hard Money Loan Worked Example: 70% ARV vs. 85% LTC Fix-and-Flip
You buy a distressed house for $220,000 needing $50,000 in rehab ($270,000 total cost) with an After-Repair Value (ARV) of $380,000. A lender capping loans at the lesser of 85% LTC ($229,500) or 70% ARV ($266,000) approves $229,500. At 11% interest-only and 2 points ($4,590) plus $2,500 closing fees, you bring $47,590 to closing and pay $2,103.75/month. Selling after 6 months for $380,000 (minus 6% agent/closing costs of $22,800 and $12,623 total interest) leaves $67,487 net profit before tax.
Common questions
How do hard money lenders decide between ARV and LTC?
Lenders compute both caps—for example, 70% of After-Repair Value (ARV) and 85% of Total Cost (Purchase + Rehab)—and lend whichever dollar amount is lower.
What is a typical hard money interest rate and points fee?
Most US fix-and-flip hard money loans charge 10% to 13% annual interest-only plus 1.5 to 3.0 origination points (1.5% to 3.0% of the loan amount).
How is fix-and-flip profit taxed?
Properties flipped for quick resale are generally treated by the IRS as dealer inventory rather than long-term capital assets, taxed at ordinary income rates plus self-employment tax unless structured in an S-Corp.
Sources
- IRS Publication 523 & Capital Asset vs. Dealer Inventory Rules
- CFPB: Real Estate Settlement & Loan Cost Disclosures
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General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.