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Hard Money Loan Calculator – Tips to Calculate Interest Only Loans

Hard Money Loans, Real Estate & Total Interest

As a hard money lender, I’m often asked about our interest-only loans, how they work, and all the costs involved in taking out a hard money loan from private lenders.

Here’s some information about calculating these loans and how you can calculate the payments. 

It is what we call our hard money calculator.

It doesn’t really matter what you are using the money for – as a commercial loan or financing property as a house flipper; hard money financing is calculated the same way.

Let’s start with the basics. Hard money lenders require interest payments on the hard money loan principal balance, just like any other financial institution. 

Interest is the monetary charge for using borrowed money, usually expressed as an annual percentage rate (APR).  Our loans are considered to be “interest-only” loans. 

This means the only payment due monthly is the interest on the loan for the previous month.  At the end of the loan term, the entire amount will be due and payable.  

How to Calculate the Cost of a
Hard Money Interest Only Loan

If a hard money lender uses the simple interest method, here’s how you can calculate the amount of interest you will have to pay on an interest-only loan and your monthly cost. This is the hard money calculator.

You’ll need the following:

  1. The total principal of the loan amount payment
  2. The hard money loan interest rate you’re being charged
  3. ….and the length of the loan in years.

Hard Money Loan Calculator – The Nuts & Bolts…

Hard money loan calculator: So what are the hard money loan requirements? The easiest way to look at this is to look at a hard money loan example:


Let’s say you take out a five-year loan for $100,000, and your lender gives you an annual percentage rate (APR) of 10%.  

Calculate Interest On A Loan – Method #1

The first formula is as follows:

  • Principal Loan Amount x Interest Rate x Time (# of years) = Total Interest Dollars You’ll Pay For Loan
    • $100,000 x .10 x 5 = $50,000 total interest will be paid for the loan.

To determine how much you will have to pay each month, divide the interest dollars from the formula above by the number of months you’ll have the loan. To get the length of your hard money loan in months, multiply the number of years you’ll have the loan x 12 months.

Calculate Interest On A Loan – Method #2

The second formula is:

  • Total Interest $’s / # of months you’ll have the loan = Your Monthly Payment
    • $50,000 / 60 months = $833.33

So, in this example, you would pay $833.33 every month for five years until the balance is paid in full. 

hard money loan calculator
Real Estate | Hard Money Loan Calculator

Estimated The Cost Of Your Own Loan:

The Benefit of Hard Money Interest-Only Loans

Keeping in mind the saying a dollar today is more than a dollar tomorrow, here are some facts about interest only mortgage loans that are interesting to consider.

Interest on virtually all mortgages is paid in arrears.  This means the payment you make each month pays the interest due for the previous month. The benefit is that you use the funds for a month before payment is due.  

Most hard money lenders will prorate interest at closing, so the payment is due on the first of the month, the following month.  If you close on January 30th, the lender will prorate two days of interest, and your first interest payment will not be until March 1st.  Rent is paid in advance, and interest is paid in arrears. So, with interest, you hold onto your money longer, giving you more time to invest it elsewhere and earn off it.  

Know All of Your Costs – Loan Figures, Penalty Charges & Loan Origination Fees

Many lenders charge a prepayment penalty if a loan is paid up before the term of the loan ends or at another specified time.  No matter how quickly a loan is fully paid, we do not charge prepayment penalties. This is a significant advantage to the person taking out the loan.

Payment structure: We require the monthly interest payment to be drafted from your account on the 1st of every month, and our interest rates can vary up to 13%. Check out our 5 Step Money Process that outlines the steps from application to loan payoff.

Get Expert Help Calculating Your Hard Loan

Once you know the actual cost of your loan, you can make intelligent decisions. We are here if you need help with this or any aspect of hard money loans, and it is what we do!

Who Is Trusted For Hard Money Loans?

DFW Hardmoney is a trustworthy private money lender providing honest and straightforward loans for real estate investing. We specialize in 24-48-hour funding with a competitive repayment term, no appraisal, and no predetermined down payment required. We are the hard money lenders you can trust.

hard money loan calculator

Whether you want to fix and flip houses, need funds for commercial, transactional funding, or commercial real estate developments, or are a first-time or experienced real estate investor, we’re here to help in all matters related to hard money & hard money commercial loans.

Contact us with any hard money questions, queries about calculating an interest-only loan, or a free consultation call (817)200-7575.

More Information & Reference:

Hard Money Definition – Hard money refers to a type of loan financing backed by the value of a tangible asset, such as real estate. Real estate investors often use hard money loans for short-term financings, such as purchasing and renovating a property. These loans are typically made by private individuals or companies and have higher interest rates and shorter repayment terms than a conventional loan, or traditional loans from banks, including a commercial mortgage from a traditional lender.

Other areas worth researching around this subject:

Repayment Term | Credit Score | Traditional Loan | Bridge Loan | Loan Origination Fee | Short Term Loan

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