The Quick Read: Closing a hard money loan means paying three layers of cost: the lender’s origination points, flat lender fees, and third-party charges such as valuation, title, and recording, and since no standard disclosure format applies, the total depends on how each lender itemizes and bundles them. Points are usually the biggest single line. The flat fees and per-draw charges are where quotes differ most. You should compare every quote line by line, not by headline number.
- Three layers: points, flat lender fees, and third-party costs.
- Cash to close is more than your down payment. Points and fees are generally paid in cash, not financed.
- Shop the lender-controlled lines. Points, processing, underwriting, document prep, and draw fees are the negotiable ones.
- Ask about back-end costs. Extensions, minimum interest, and payoff terms are not closing costs, but they belong in the comparison.
- Hold period matters. On a short hold, upfront fees weigh more than small differences elsewhere.
What Counts as Costs to Close on a Hard Money Loan?
Closing costs are what you pay at the table to get the loan funded. On a hard money loan, that means the lender’s points, the lender’s flat fees, and third-party charges tied to the property. Interest, extension fees, and payoff charges come later and are not closing costs.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
Hard money is short-term, asset-based financing. Across the wholesale network Lendmire places files with, terms typically run 6 to 18 months, interest-only, and the underwriting looks at the property, the plan, and the exit. Those terms vary by lender, property, and experience.
Because the loan is short, the upfront cost matters more than it does on a long-term loan. You have fewer months to spread it across.
Here is the part most new investors miss. The check you write at closing is bigger than the down payment. It is the down payment plus points, plus flat fees, plus third-party costs, plus any prepaid items the lender requires.
The Fee Map
This table sorts the usual fees by who sets them and how much room you have to push back. It describes common patterns, and the details vary by lender and file.
| Fee | Paid to | Who sets it | Room to negotiate |
|---|---|---|---|
| Origination points | Lender | Lender | Often |
| Underwriting, processing, doc prep | Lender | Lender | Sometimes |
| Appraisal or BPO | Valuation provider | Third party | Rarely |
| Title, escrow, recording | Title company or attorney | Third party | Shop the provider |
| Insurance | Carrier | Third party | Shop the carrier |
| Draw inspections (rehab only) | Lender or inspector | Lender | Ask up front |
The lender controls the top two rows and the last row. Those are the lines worth shopping, because the same loan can carry very different lender fees from one quote to the next.
Lender Fees: Points, Processing, and Everything Stacked on Top
Points are the lender’s main fee. One point is 1% of the loan amount. You pay it in cash at closing, and it is usually not rolled into the loan. In hard money, points are normally the lender’s origination and risk-pricing charge. They are not an optional buy-down in the way a consumer mortgage discount point can be.
That leads to the double-counting trap. Origination fee and points are normally the same charge under two names.
Flat lender fees sit on top. These cover processing, underwriting, application review, and document prep. Some lenders fold them into the point count. Others itemize them separately, which can make a quote with fewer points look cheaper than it is.
Here is a quick decoder for labels that often overlap:
- Admin, review, and processing fees usually cover the same file-handling work.
- Funding and commitment fees often overlap with origination.
- Underwriting and application fees can duplicate each other. Ask what each one buys.
If two lines sound like the same job, ask the lender to explain the difference in writing. If the answer is vague, one of them is probably padding.
A broker may also be involved in placing your loan. Any broker compensation should show up as its own line or be disclosed to you, so ask who is being paid and by whom.
Third-Party Costs: Real Charges You Can’t Negotiate Away
Third-party costs go to people outside the lender. The lender does not set them, so the shoppable part is how the lender’s own fees stack on top.
- Valuation. An appraisal or a broker price opinion (BPO) establishes value. A BPO is usually the lighter, cheaper option, and costs climb for multifamily properties.
- Title and escrow. This covers the title search, title insurance, and the closing agent. Some regions use attorneys instead of title companies, so the structure of this line varies by where the property sits.
- Recording and courier. These are small, but they appear on every file.
- Legal. Entity borrowers or custom guarantee structures can add legal work.
- Insurance and prorations. The lender will want proof of coverage, and prorated property taxes and insurance can show up at funding.
You can still save money here by getting two title quotes and comparing insurance carriers. The savings are smaller than on the lender side, but they are real.
Cash to Close: The Worksheet Most Quotes Leave Out
Fees on the settlement statement are only part of what you bring to closing. Build your own worksheet with these lines:
1. Down payment. This is the gap between the loan and the project cost.
2. Points. Paid in cash at closing.
3. Flat lender fees. Processing, underwriting, and doc prep.
4. Third-party costs. Valuation, title, escrow, recording, and legal.
5. Prepaid items. Insurance premiums and tax prorations.
6. Interest or reserves. Some lenders require prepaid interest or a reserve, so ask about it up front.
7. Rehab holdback. On a rehab loan, funds for the work are released in draws, so they are not cash you receive at closing.
The size of line one depends on leverage. In Lendmire’s wholesale network, fix-and-flip leverage is based on loan-to-cost, which means the loan amount compared with total project cost. It typically runs 85% of project cost for newer investors, 90% at two or more completed projects, and 93% at five or more. Every tier is capped at 75% of after-repair value. Bridge purchases without rehab typically go up to 80% of the purchase price, and cash-out or rate-and-term refinances typically go up to 65% of value.
Up to 100% of the rehab budget can be funded in draws against completed work. That is a rehab-budget figure, not a purchase loan-to-value number. All of these ranges vary by lender, property, and experience, and nothing here is a commitment to lend.
The practical point: even at the top tier, you still bring cash for the gap, the points, and the fees. Plan for that before you write an offer.
Which Fees to Shop and Which to Leave Alone
Shop these first, in this order:
- Points. They are the largest line and the most negotiable, especially on larger loans or for borrowers with a track record.
- Flat lender fees. Ask which are charged at closing and which are folded into points.
- Draw fees. On a rehab loan, ask whether the fee is paid up front or per draw, and how many inspections the plan assumes.
- Back-end terms. Extension, minimum-interest, and payoff terms can cost more than a small difference in upfront fees.
Leave these alone, apart from comparing providers: appraisal, title, recording, and insurance. You will pay them whichever lender you choose.
Loan size changes the picture. Flat fees weigh more on a small loan, because the same dollars spread over fewer loan dollars. A lender with high flat fees and modest points can look fine on a large loan and poor on a small one.
How to Compare Two Quotes
Two quotes rarely use the same fee names, so convert both into one comparable number. Here is a method that works on any file.
1. Add every upfront charge. Include points, flat lender fees, and third-party costs that the lender controls or orders.
2. Express the total as a percentage of the loan. This lets you compare a small loan and a large one fairly.
3. Add draw and inspection costs. Estimate the number of draws your rehab plan needs.
4. Add expected carrying cost. Use your realistic hold period, not the best case.
5. Add back-end terms. Check minimum interest, extension charges, and payoff fees.
Now picture two quotes on the same flip. Quote A has fewer points but charges separate processing, underwriting, and per-draw fees. Quote B has more points but bundles everything else into them. A looks cheaper on the first page. After you count draws on a multi-stage rehab, B may be cheaper. On a project with one or two draws, A may win.
The trade-off between points and interest cost also depends on your hold period. A short hold favors paying less upfront, because you won’t be in the loan long enough to benefit from a lower ongoing cost. A longer hold favors the opposite. Compare total cost over your expected hold, not either number alone.
Back-End Costs to Ask About Before You Sign
Not everything lands at closing. These charges accrue later, but they should shape your decision now:
- Extension fees. If the project runs long, ask what an extension costs and how long each one lasts.
- Minimum interest. Some lenders charge a minimum number of months of interest, even if you pay off early.
- Prepayment terms. Terms on the network’s current program carry no prepayment penalty, but this varies by lender and program, so confirm it in writing.
- Servicing and payoff fees. These are small, but they should be disclosed.
Time is a cost on its own. A delayed rehab means more months of interest and holding expenses, and possibly an extension fee. A month of delay can cost more than a small difference in points. Build a cushion into your timeline and your budget.
Tax treatment varies; consult a qualified professional.
Why There Is No Standard Closing Statement
DSCR loans and hard money loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
The practical result is that you may not receive the standardized estimate and closing statement that a homebuyer gets. The CFPB’s Regulation X examination material lists loans made primarily for business purposes among those exempt from the federal settlement-cost rules, though the exemption carries conditions. A law firm analysis from Hunton Andrews Kurth explains that non-owner-occupied rental property is generally treated as business purpose. It also notes that the loan’s purpose, not just the property type, drives the classification.
So fee names, bundling, and timing vary by lender. You protect yourself by asking for an itemized fee sheet, in writing, before you commit. Then check the final loan documents against it. A fee that appears on the final statement but never appeared in the documents or the quote deserves a written explanation before you sign.
Edge Cases: Where the General Rule Bends
- No rehab, no draw fees. A purchase-only bridge loan should not carry draw, inspection, or rehab escrow charges. If it does, ask why.
- Fees bundled into points. Some lenders roll processing and underwriting into the point count. Others charge them separately. Neither is wrong, but you can only compare them after normalizing.
- Entity and cross-collateral files. Borrowing through an entity, or securing the loan with more than one property, can add legal and title work. Subject to lender program eligibility, entity borrowers are common, but ask what the structure adds.
- Misclassified loans. If a loan to an individual is really for personal or household purposes, consumer rules can apply. Business-purpose investor loans should be documented as such.
- Purchase versus refinance. A refinance typically carries different leverage and may skip some purchase-side costs, though valuation and title still apply.
Red Flags and Questions to Ask Your Lender
Watch for fees that overlap, fees named only in the final documents, and quotes that won’t itemize. A lender who answers every question in writing is a better sign than a low headline number.
Send these questions to every lender you consider:
- What is the full itemized fee sheet, and which lines are charged at closing?
- Are points and origination one charge, or two?
- Are processing, underwriting, and doc prep inside the points or on top of them?
- What is the draw fee, how many draws should I plan for, and is it paid up front or per draw?
- What are the extension terms, and is there any minimum interest or prepayment charge?
- Which third-party costs do you order, and can I use my own title company?
- What cash will I need at closing in total?
What the Decision Looks Like in Practice
Start with the project. Count the whole cost of the plan: down payment, points, fees, rehab, carrying costs, and the exit. Then count hard money’s upfront cost against the deal’s total return, not as a footnote.
Many investors use hard money to buy and rehab, then refinance into longer-term rental financing once the property is stabilized. Lendmire brokers that path into DSCR financing, and the complete DSCR loans guide walks through how it works. The catch is that this plan means two closings and two sets of costs, so both belong in your math. For the refinance side, see Lendmire’s piece How Much Does a Hard Money Refinance Cost in Fees?.
Key Terms Defined
Origination fee: The lender’s charge for making the loan. In hard money it is normally the same charge as points.
BPO (broker price opinion): A lighter valuation from a real estate professional, used in place of a full appraisal on some files.
Draw: A release of rehab funds after the lender confirms completed work, often after an inspection.
Holdback: Rehab money the lender keeps until the work is done, instead of paying it at closing.
Loan-to-cost: The loan amount compared with total project cost, rather than with the property’s value.
Minimum interest: A set number of months of interest you owe even if you pay the loan off early.
Frequently Asked Questions
What counts as closing costs on a hard money loan?
Points, flat lender fees such as processing and underwriting, and third-party costs such as valuation, title, escrow, recording, and insurance. Interest, extension fees, and payoff charges are not closing costs, but they affect your total cost.
Do closing costs come out of the loan proceeds?
It depends on the lender and the structure. Points and fees are generally paid in cash at closing, not financed. Ask the lender whether any charges are deducted from proceeds, and confirm the cash you need to bring.
How do points convert to dollars?
Multiply the loan amount by 1% for each point. A loan with two points costs twice that amount. Points are normally one fee, so do not add a separate origination line on top of them.
Are hard money fees negotiable?
The lender-controlled lines often are, especially points, processing, underwriting, and draw fees. Third-party costs such as appraisal and recording are not, though you can compare title companies and insurance carriers. Larger loans and experienced borrowers generally have more room.
Why do totals differ so much between lenders?
Lenders itemize differently. One may fold processing and underwriting into points, while another charges them separately. Draw fees, minimum interest, and extension terms add further differences, so normalize every quote before comparing.
Next Step
If you are buying, rehabbing or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. Lendmire is a mortgage broker arranging financing through select lenders in its wholesale network, across 41 markets, including Washington, D.C. Program terms vary by lender, property, and experience, and nothing here is a commitment to lend.
About Lendmire
Lendmire is a DSCR-focused mortgage brokerage, NMLS# 2371349, placing investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed by the lender around a property’s rental income rather than personal income documentation, which fits LLC-held rentals, self-employed investors, and portfolios scaling past conventional financed-property limits. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. CFPB Regulation X (RESPA) examination manual
2. Hunton Andrews Kurth, “Beware of Business Purpose”
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much a Low Appraisal Changes Cash to Close on a DSCR Purchase · How Much a Rent Gap Moves a DSCR Loan on a Newly Signed Lease · Renting to a Parent vs. a Stranger on a DSCR Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.