The Quick Read: The method is a per-loan ledger: add origination points, interest on the drawn balance for the days actually held, draw and third-party fees, and any extension charge, subtract the total from that deal’s gross spread, then roll every loan into an annual view that shows cost as a share of profit and per month of capital deployed. A single loan’s cost matters less than the pattern across all of them.
- Count every charge the lender or broker touches, not just the quoted interest.
- Interest follows the balance and the calendar, so days held usually move the result more than any single fee.
- Extension fees and overruns belong in the base case, not the footnotes.
- Leverage tiers rise with documented completed projects, which changes how much cash each deal ties up.
- The annual roll-up shows what a deal-by-deal view hides.
What Margin Is the Cost Coming Out Of?
The margin is thinner than most flippers assume. ATTOM’s year-end flipping report put the typical flip at $65,981 in gross profit and a 25.5% return on investment, the lowest since 2008 and down from 32.1% the year before. ATTOM measures gross profit as sale price minus purchase price, before rehab, financing, holding and selling costs, so every cost here comes out of that figure.
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.
What Goes Into the Cost of a Hard Money Loan?
Five layers make up the cost, and most of them hit on different dates. Hard money is a short-term, interest-only loan secured by the property. The programs we place files with typically run 6 to 18 months with no prepayment penalty, though terms vary by lender, property, and experience. The table shows each layer and when it lands.
| Cost layer | When it hits | How to net it |
|---|---|---|
| Origination points | At closing, usually from proceeds | One-time charge on the loan amount |
| Interest | Monthly, or added at payoff | Balance outstanding × days held |
| Draw inspection fees | Each rehab draw | Fee × number of draws |
| Third-party fees | At closing | Appraisal, title, processing, insurance |
| Extension or overrun | When the exit slips | Fee plus extra interest |
Brokers can add their own fees on top of the lender’s charges. Always compare the full fee sheet, not the headline numbers.
How Does the Per-Deal Ledger Work, Step by Step?
The ledger runs in seven steps, and each one is a line you can audit later.
1. Size the loan. Purchase funds go out at closing. Rehab money sits in a holdback and is released in draws against completed work. Across our network, fix-and-flip leverage typically runs 93% of project cost at 5 or more completed projects, 90% at 2 or more, and 85% below that. Every tier is capped at 75% of after-repair value. Up to 100% of the rehab budget funds in draws. That is a rehab-budget figure, not a purchase LTV. All of this varies by lender, property, and experience.
2. Record the points. They are normally deducted from proceeds at closing, so they reduce the cash you receive or raise the cash you bring.
3. Pin down the interest basis. Some lenders charge interest only on the drawn balance. Others charge on the full commitment from day one. Daily versus monthly accrual and a 360-day year also change the figure slightly. Ask which method applies before you sign.
4. Add per-draw fees. Multiply the inspection fee by the draws your rehab schedule requires. A rehab split into many small draws costs more than one planned in a few.
5. Add third-party fees. These are appraisal, title, processing, and insurance.
6. Add hold-period carry. Taxes, insurance, and utilities are not lender costs, but they belong in the same ledger. Experienced operators plan on roughly five to six months of interest to stay safe.
7. Net it out. Take resale price minus purchase price. Subtract rehab, points and fees, interest for the actual hold, carry, and selling costs. What remains is the profit.
Why Does Time Move the Number More Than the Fee?
Time is the biggest swing factor. Points are paid once. Interest accrues for every day the loan is open. A slow exit adds interest and can trigger an extension fee on top. Each extra day held adds about one day of interest.
ATTOM’s most recent quarterly data show a median of 165 days from purchase to resale. That is a bit over five months of carry before any delay. The 6-to-18-month terms on our network’s programs leave room, but a slipped exit still costs money.
This leads to a point many flippers get backwards. A lower-points structure paired with higher monthly interest can cost more on a long hold. A high-points structure with lower monthly interest can cost more on a short one. Build the ledger twice, once at your planned hold and once at a hold that runs a month or two long. Pick the structure that holds up in both.
What Changes When You Flip at Volume?
At volume, the unit of analysis changes from the deal to the year. Four numbers matter.
- Annual financing spend. Add the total financing cost of every loan.
- Cost as a share of gross spread. Divide annual financing spend by the combined gross spread. This shows whether financing consumes a stable or shrinking slice.
- Cost per month of capital deployed. Divide each loan’s cost by its months outstanding. This lets you compare a short, cheap deal with a long, expensive one.
- Return on capital across turns. Each payoff funds the next purchase, so a faster-recycling dollar earns more than a stuck one.
True high-volume operators are a minority. HousingWire’s coverage of the ATTOM data counted 297,045 flips, or 7.4% of all home sales. In the fourth quarter, 54,992 investors completed 68,999 flips, about 1.25 flips each.
Volume helps in a practical way. Leverage tiers step up with completed projects, as shown above. A documented track record gives you a stronger basis to ask for better terms, though what any lender offers varies. Higher leverage means less cash tied up per deal, which matters most when several loans overlap.
Overlap raises the stakes. Say you run several flips at once. A delay on one deal holds your cash and forces you to fund the next purchase from somewhere else. Track capital tied up, not just cost per loan.
What Does the Payoff Statement Show?
The payoff statement is where the ledger meets reality. It shows principal, accrued interest, any extension charge, and fees owed. The settlement statement on the sale then shows what lands in your account after payoff and selling costs. Reconcile both against your ledger line by line. A gap usually means an unexpected interest basis, an uncounted extension, or a fee you did not plan for.
Where Does the General Method Break?
Several edge cases change the math.
- Financed points. Rolling points into the loan lowers cash at closing, but you pay interest on the points as well. Total cost rises.
- Full-commitment interest. If interest accrues on the whole loan while rehab funds sit unspent, the cost can be thousands more than the drawn-balance method.
- Experience tiers. First-time investors qualify at lower leverage tiers, so the cash they bring is higher. A 620 minimum credit score applies, with additional conditions below 660.
- Different structures. A bridge purchase without rehab goes up to 80% of purchase price. Refinances go up to 65% of value. Loans run up to $5,000,000, and larger by exception.
- Property type. Programs cover non-owner-occupied residential property of 1 to 4 units. Ground-up construction goes to 10 units. Commercial, land, and owner-occupied property are not on the program.
- Tax treatment. Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Where Do Profits Leak, and What Should You Track?
Most leaks come from schedule slippage, uncounted draw fees, and untracked spending. A small tracking table copied for each deal catches all three.
| Field | What to record |
|---|---|
| Planned vs actual days held | Both numbers, with the reason for any gap |
| Interest basis | Drawn balance or full commitment |
| Points and fees paid | Each charge, dated |
| Number of draws | Planned and actual |
| Extension used | Yes or no, with the charge |
| Payoff total | From the payoff statement |
| Net to account | From the settlement statement |
Sell, Keep, or Refinance After the Flip?
The all-in figure tells you how much equity the deal produced. That number should drive the sell-or-hold choice. If you sell, the ledger is your final profit. If you keep the property as a rental, the financing already paid becomes part of your cost basis. Many investors refinance out of hard money into long-term DSCR investor loans once the property is stabilized, and Lendmire brokers that path.
For the rental side, the complete DSCR loans guide explains how long-term investor loans work. Clearing a DSCR test is not the same as positive cash flow, because repairs, vacancy, and management sit outside the calculation.
Key Terms Defined
Gross spread: The resale price minus the purchase price, before any rehab, financing, holding, or selling cost.
Holdback (draw account): Rehab money the lender holds back and releases as work is completed and inspected.
Loan-to-cost: The loan amount as a share of total project cost, which is how fix-and-flip leverage is measured.
After-repair value (ARV): The estimated value of the property once the rehab is complete.
Interest basis: The balance on which interest accrues, either the drawn balance or the full commitment.
Frequently Asked Questions
Should I pay points in cash or roll them into the loan?
Paying in cash usually costs less overall. Rolling points into the loan lowers the cash you need at closing, but you then pay interest on the points for the whole hold. Operators with plenty of cash and many overlapping deals sometimes finance them to preserve liquidity. Run both versions in your ledger and compare total cost at your planned hold and a longer one.
Does interest accrue on the full loan or only what I have drawn?
It depends on the lender. Many charge on the drawn balance, which keeps early carry lower. Some charge on the full commitment from the start, which can add thousands over a hold. Ask for the interest basis in writing and model both.
Is a one-month delay worse than a higher interest cost?
Often yes. A delay adds a full month of interest on the outstanding balance, may trigger an extension charge, and delays the cash you need for the next deal. A modest difference in pricing is usually smaller than that, so model the delay first.
How many completed deals does it take to get better terms?
Leverage steps up with documented completed projects: typically 85% of project cost below two, 90% at two or more, and 93% at five or more, always capped at 75% of ARV. Other terms vary by lender, property, and experience. A clean record of completed projects gives you the strongest basis to negotiate.
How should I compare hard money with other capital?
Compare total cost per month of capital deployed, plus the cash each source ties up and what it requires of you. A cheaper source that needs more cash or slows your next purchase may cost more in lost turns. Put each option into the same ledger and compare the full-year results.
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 broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Programs and terms vary by lender, property, and experience, and nothing here is a commitment to lend.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. 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. attomdata.com: Year End Home Flipping Report
2. attomdata.com: Q2 Home Flipping Report
3. ATTOM Home Flipping Trends by State
4. HousingWire’s coverage of the ATTOM data
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get a Hard Money Loan Without Owning a Business? · Should You Use a Hard Money Lender for a Single Family Investment Home? · Can You Roll Closing Costs Into Hard Money on a Flip?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.