Hard money loans typically cost 8-15% annual interest plus 1-4 origination points paid at closing. Additional fees include appraisal ($300-$800), processing ($500-$1,500), draw fees ($100-$300 per draw on construction loans), and extension fees if you exceed the loan term. Total cost on a $300,000 loan for 12 months runs $30,000-$55,000 all-in. That sounds steep until you factor in the deal—if you're buying a $200,000 property worth $350,000 after repair, that financing cost is built into your margin.
I've been doing this for over 20 years. I've closed $58 million in hard money loans. And I'll tell you straight: investors who focus only on interest rate are looking at the wrong number. You need to understand the full fee picture—what each one covers, which are negotiable, and which lenders add on the side.
Let's be honest about the economics. Hard money lenders aren't banks. They can't pull deposits out of a checking account and lend them at 4%. They're lending on asset value, not credit score. They close in days, not weeks. They lend to people traditional lenders won't touch. All of that risk has a cost.
Here's the trade-off: you pay more in fees and interest. In return, you get speed, flexibility, and yes—someone who will actually say yes.
I've worked with investors who saved $8,000 in points by going to a bank, which took 45 days to close. By the time they got funded, the deal was gone. Other investors paid an extra $3,000 in points to close in 5 days and locked in a $40,000 profit. The math isn't about the rate. It's about the margin.
Ask yourself: if I'm buying a $150,000 property with $80,000 in repair and my ARV is $320,000, is an extra $6,000 in points worth protecting a $90,000 spread? Yes. Is it worth it if my margin is $15,000? No.
That's the conversation you should be having—not "what's the lowest rate" but "what's my real profit after all costs."
An origination point is simply 1% of the loan amount. You pay it upfront at closing, and it's the lender's main profit center in the deal (apart from interest).
Typical range: 1-4 points. Most common is 2 points.
Real example: 2 points on a $300,000 loan = $6,000 due at closing. This gets deducted from your funding or you bring it in from another source.
Who pays: You do. Sometimes you can negotiate to roll points into the loan balance (I'll explain that below), but the standard deal is points due at close.
Lender points vs. broker points: This is where it gets murky. A lender might charge 2 points for their underwriting. A broker (like me at Broker Cheetah) might charge 1 point for finding the deal and placing it. That's 3 points total. Both are legitimate costs. But you need to know the breakdown upfront. Some sketchy operators bury this.
Here's what to ask: "How many points is your lender, and how many are your broker points? Give me the breakdown in writing."
| Loan Amount | 1 Point | 2 Points | 3 Points | 4 Points |
|---|---|---|---|---|
| $100,000 | $1,000 | $2,000 | $3,000 | $4,000 |
| $250,000 | $2,500 | $5,000 | $7,500 | $10,000 |
| $300,000 | $3,000 | $6,000 | $9,000 | $12,000 |
| $500,000 | $5,000 | $10,000 | $15,000 | $20,000 |
| $1,000,000 | $10,000 | $20,000 | $30,000 | $40,000 |
This is the big one—and it's ongoing, unlike points.
Typical range: 8-15% annually. Fresh borrowers with weak deals sit at 12-15%. Experienced investors with strong deals get 8-11%.
How it's charged: Most hard money loans are interest-only, meaning you pay interest monthly on the outstanding balance. No principal payment until you sell or refinance. At $300,000 borrowed at 12%, that's $3,000 per month—$36,000 over 12 months.
Interest-only vs. amortizing: Hard money is almost always interest-only. You're not here to make 30-year payments; you're flipping or stabilizing and getting out. Banks offer amortizing loans; hard money doesn't.
The real cost: Interest adds up fast. That 12% rate looks expensive, but on a 6-month flip, you're only paying 6 months of interest. On a 9-month hold, 9 months. Build it into your timeline.
| Loan Amount | 10% Annual | 11% Annual | 12% Annual | 13% Annual | 14% Annual | 15% Annual |
|---|---|---|---|---|---|---|
| $100,000 | $833/mo | $916/mo | $1,000/mo | $1,083/mo | $1,166/mo | $1,250/mo |
| $250,000 | $2,083/mo | $2,291/mo | $2,500/mo | $2,708/mo | $2,916/mo | $3,125/mo |
| $300,000 | $2,500/mo | $2,750/mo | $3,000/mo | $3,250/mo | $3,500/mo | $3,750/mo |
| $500,000 | $4,166/mo | $4,583/mo | $5,000/mo | $5,416/mo | $5,833/mo | $6,250/mo |
The lender needs to know what the property is actually worth—both as-is and at ARV (after repair value). That's not a guess; that's a document you order.
Who orders it: The lender.
Who pays: You do. Upfront, before approval, non-refundable.
Full appraisal: $400-$800. A licensed appraiser goes inside, measures the property, checks comparables, writes a formal report. Takes 5-7 business days.
BPO (Broker Price Opinion): $150-$350. Faster (2-3 days), less formal, less detail. Some lenders accept BPOs; others require full appraisals.
The catch: Non-refundable. If the deal falls through, you don't get it back. Budget accordingly.
Why lenders require it: They're securing their loan against the property. They need an independent third party saying, "Yes, this property is worth $200,000 as-is" or "Yes, it'll be worth $350,000 after these repairs." It protects both you and them.
This is the lender's administrative fee for reviewing documents, verifying information, and preparing the loan.
Typical range: $500-$1,500, depending on loan size.
Names for this fee: "Admin fee," "doc prep fee," "underwriting fee." Same thing—money for paperwork and review.
Negotiable? On larger loans ($500K+) or for repeat borrowers, sometimes yes. On smaller loans, it's usually fixed.
What you're paying for: Real work—pulling credit reports, verifying funds, reviewing title, preparing documents. Not a junk fee.
This is specific to construction or rehab deals. The lender doesn't dump all the money upfront. You draw it as work progresses. Each draw costs you money.
How it works: You request funds to pay contractors or suppliers. The lender approves the draw, usually after an inspection. Boom—draw fee.
Typical cost: $100-$300 per draw.
How many draws? On a standard rehab, expect 3-6 draws. Might be framing/foundation, rough-ins, finish work, and final.
Total draw cost: $300-$1,800 over the project life.
Inspection fees: Often bundled with draws. The lender sends an inspector to verify work is done before releasing funds. Sometimes this costs extra ($150-$300 per inspection); sometimes it's included.
The message: Account for this. If you're doing a $200,000 rehab in four phases, you're paying $400-$1,200 in draw fees alone.
You've got 12 months to sell or refinance. What if you don't?
You can ask for an extension. The lender can charge you for it.
Typical cost: 0.5-1.5 points per extension period (usually 3-6 months).
Real example: $300,000 loan, 1-point extension fee, 6 months = $3,000 to extend.
Why lenders charge it: They've tied up capital. An extension ties it up longer. They want compensation—or they want to renegotiate rate.
Prevention: Build a realistic timeline upfront. Add a 30-45 day buffer. Have your exit strategy confirmed before you even close. If you're buying a house to flip, you should know the market, the contractor timeline, and when you'll list. Don't close on a hard money loan hoping to figure it out later.
Some lenders penalize you for paying off early. Not all—but some.
Typical structure: 1-3 months of interest minimum, or a "yield maintenance" clause.
What's yield maintenance? It means if you pay off in month 3 of a 12-month loan, you're still paying interest on the remaining 9 months. The lender collects the yield they expected no matter how fast you repay. This is rare in hard money but happens.
Always ask: "Is there a prepayment penalty? What is it? Can I pay off without penalty?"
Red flag: If a lender won't answer this directly, walk. You should know the rules upfront.
Not all fees are created equal. Some you can push back on; others are fixed.
| Fee | Negotiable? | Notes |
|---|---|---|
| Origination points | Sometimes | Negotiable on loans $500K+ or for repeat borrowers. Rarely negotiable under $300K. |
| Interest rate | Sometimes | Strong deal + strong borrower profile = wiggle room. Weak deal + first-time investor = no room. |
| Processing fee | Sometimes | Often waived for repeat borrowers. Sometimes reduced on large loans. |
| Appraisal | Rarely | Third-party cost; lender doesn't set the price. You might shop appraisers. |
| Draw fees | Occasionally | Waived on larger projects (e.g., $500K+ rehab). |
| Extension fees | Rarely | Mostly fixed. Built into lender policy. |
| Prepayment penalty | Sometimes | Some lenders have them; others don't. Choose a lender without them. |
Here's the honest take: You have the most leverage on rate and points when you're a repeat borrower with a strong deal. First-time borrowers with marginal deals take what they get. It's not unfair; it's risk-based pricing. A lender looking at borrower #47 with a 15% margin in a hot market can be more aggressive than a lender looking at borrower #1 with a 10% margin in a soft market.
Let's walk through a real deal and see what you actually pay.
Loan details:
Fee breakdown:
| Fee | Calculation | Cost |
|---|---|---|
| Origination points (2 lender + 1 broker) | 3 points × $300,000 | $9,000 |
| Processing fee | Flat fee | $995 |
| Appraisal | Full appraisal | $650 |
| Draw fees (4 draws @ $200) | 4 × $200 | $800 |
| Interest (11%, 9 months) | ($300,000 × 0.11) × (9/12) | $24,750 |
| Total financing cost | $36,195 |
Is this deal worth it?
You bought the property for $200,000. You're putting $70,000 into repair. Your ARV is $350,000. Your carrying costs (taxes, insurance, utilities) are $2,500 for 9 months. Your realtor commission is 6% = $21,000.
Not bad. That 11% rate and $9,000 in points looked expensive until you did the math. You're still making $20K on a $200K investment over 9 months. That's a win.
But what if your ARV was only $320,000?
Suddenly that 11% rate kills the deal. You would have been better off at 8% ($22,000 in interest instead of $24,750). You would have saved $2,750—not enough to save the deal, but closer.
The point: Always run the full math including all fees before you sign. Don't fall in love with the property; fall in love with the numbers.
I've seen deals torpedoed by surprise fees at closing. Here's what to watch for.
Upfront commitment fees: "We'll charge you $1,000 to commit to the deal before we even do an appraisal." Avoid. Legitimate lenders order the appraisal and charge you for the appraisal. They don't charge a separate commitment fee.
Vague fee schedules: If the fee sheet says "and additional costs as determined by lender," walk. Everything should be documented in writing upfront.
Junk fees added at closing: You show up to close and suddenly there's a $500 "doc delivery fee" that wasn't on the initial quote. Unacceptable. Get a detailed fee schedule in the Loan Estimate (yes, hard money lenders should provide this).
Double points: Lender charges 2 points AND broker charges 2 points, and you didn't know the breakdown. That's 4 points instead of 3. Get the breakdown in writing.
Mystery inspection fees: You thought draw fees included inspections. Turns out they're separate—another $150 per draw. Confirm what's included and what isn't.
You've got quotes from three lenders. One offers 10%, another 11%, another 12%. Which one is cheapest?
You don't know until you calculate total cost.
The formula:
(Points × Loan Amount) + (Monthly Interest × Loan Term in Months) + All Flat Fees
Example:
Lender A: 10% rate, 2 points, $995 processing, 9-month loan on $300,000
Lender B: 12% rate, 1 point, $500 processing, 9-month loan on $300,000
Lender A looks more expensive (10% vs. 12%), but the actual cost difference is only $1,005 because Lender B charges fewer points. Now you can make an informed decision—maybe Lender B gets you funded faster, which is worth $1,000. Or Lender A is the right choice.
At Broker Cheetah, we show you this side-by-side. We don't pitch the lowest rate; we pitch the lowest total cost and the best terms for your specific deal.
Q: What are typical hard money loan fees?
A: You're looking at 1-4 origination points (most commonly 2-3), 8-15% annual interest, $500-$1,500 in processing fees, $300-$800 for appraisal, and if there's construction involved, $100-$300 per draw. All in, expect to pay $20,000-$55,000 in financing costs on a $300,000 loan depending on loan term and structure.
Q: Are hard money origination fees tax deductible for investors?
A: Points paid on a business loan are generally deductible, but the way you deduct them depends on the loan type. For purchase loans, points are typically deducted over the life of the loan. For refinances, you can deduct them upfront in most cases. Talk to your CPA—this isn't my lane, and tax law varies.
Q: What is a point in hard money lending?
A: One point equals 1% of the loan amount. If you borrow $200,000 and pay 2 points, that's $4,000. Points are paid upfront at closing and are your lender's primary profit (apart from interest revenue).
Q: Can hard money fees be rolled into the loan?
A: Sometimes, yes. You can ask the lender to roll points into the loan balance instead of paying them at closing. If you do, your loan amount increases (if you borrowed $300,000 and rolled in $9,000 in points, your actual loan is now $309,000) and you're paying interest on that extra amount. This is useful if you don't have cash at close, but do the math—you're paying interest on those points for the entire loan term.
Q: What is an extension fee on a hard money loan?
A: If your loan term is 12 months and you haven't sold by month 12, you can request an extension. The lender charges a fee to extend—typically 0.5-1.5 points per 3-6 months. So if you extend for 6 months on a $300,000 loan at 1 point, that's an additional $3,000. Plan accordingly; extensions are expensive.
I'm Justin, founder of Broker Cheetah and Power Loan Group. Over 20 years in hard money lending, I've closed $58 million in loans and worked with hundreds of investors navigating the hard money landscape. This article was updated in April 2026.
When investors come to me asking "what's the cheapest rate," I ask them to bring me their full deal analysis instead. Rate matters, but margin matters more. I built Broker Cheetah to make that conversation transparent—showing you actual total costs and connecting you with lenders who price competitively, close fast, and deal straight.
If you're evaluating a hard money loan, get the full fee schedule in writing, run the numbers on total cost, and make sure the margin makes sense. That's what wins flips.
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