Hard Money Lending Glossary

An investor's rule of thumb for the most to pay for a flip: 70% × ARV − repair costs. It caps the purchase price, not the loan. A lender's 70% LTARV limit is a different test.

Example: a $200,000 ARV with $50,000 of repairs gives a maximum offer of $90,000. Total cost is then $140,000, exactly what a 70% LTARV cap allows ($140,000), so an illustrative 90% LTC limit ($126,000) binds first.

Also called: seventy percent rule, maximum allowable offer (MAO)

See: The 70% rule vs LTARV

The part of the loan funded at closing toward the purchase: proposed loan − rehab holdback. It never exceeds the purchase price.

Example: $280,000 − $100,000 = $180,000. Some lenders apply their as-is limit to this amount instead of the total loan.

Also called: initial advance, initial funding, acquisition loan

See: Rehab holdback explained

The estimated market value of the property once the planned rehab is complete. It is the basis for the LTARV limit. The calculators and the app take ARV as an input; they don't estimate it.

For banks, the OCC handbook says a prospective as-completed value "reflects the property's market value as of the time that development is expected to be completed," and the interagency appraisal guidelines call for a prospective value upon completion on renovation loans. Private lenders may rely on an appraisal, a broker opinion or comparable sales.

Also called: after-repaired value, as-completed value, prospective value upon completion

See: LTV vs LTC vs LTARV · Underwriting checklist

The loan divided by the property's current, as-is value. The cap is As-Is Value × Max As-Is LTV. The calculators and the app apply it to the total loan, including the rehab holdback.

"LTV" on its own means different things at different lenders: loan ÷ as-is value, loan ÷ the lower of purchase price and as-is value (the federal bank definition of value for purchases), or loan ÷ ARV. Some lenders also apply their as-is limit only to the money funded at closing. Ask which one a quote uses before comparing two lenders.

Example: 70% of a $400,000 as-is value caps the loan at $280,000.

Also called: LTV (at some lenders), loan-to-as-is-value

See: Loan sizing calculator · LTV vs LTC vs LTARV

The property's market value in its current condition, before any rehab. It is the basis for the As-Is LTV limit.

The OCC defines as-is market value as the "market value of real property in its current physical condition, use, and zoning as of the appraisal's effective date." Under the bank real estate lending guidelines, for a loan to purchase an existing property, "value" means "the lesser of the actual acquisition cost or the estimate of value." Some private lenders follow that rule; the calculators use the as-is value you enter.

Also called: as-is market value, current value

See: LTV vs LTC vs LTARV

The lending limit that produces the lowest loan amount, and so sets the maximum loan. When several limits produce the same whole-dollar amount, all of them are binding. If no As-Is LTV, LTC or LTARV cap is lowest, the loan is limited by financed project cost.

Example: in the site's example deal, As-Is LTV binds at $280,000. Raising the LTC or LTARV limit wouldn't change the loan.

Also called: binding limit, limiting ratio

See: Loan sizing calculator · Hard money loan calculator

Purchase price − acquisition advance, before points, fees and reserves. It is the borrower's share of the purchase only, not total equity in the project.

Example: $300,000 − $180,000 = $120,000. Cash to close adds points, the lender fee and any interest reserve; third-party closing costs and any rehab the lender doesn't fund come on top.

Also called: purchase gap, down payment (informal)

See: Cash to close on a fix and flip loan

Purchase price − (acquisition advance − points − lender fee − interest reserve). It excludes title, escrow, taxes, insurance, third-party costs and other closing charges.

Example: $300,000 − ($180,000 − $5,600.00) = $125,600.00, with no lender fee or reserve.

Also called: cash required at closing, borrower cash at closing

See: Cash to close on a fix and flip loan

The rule for turning an annual rate into daily interest. Actual/365: balance × rate × days ÷ 365. Actual/360: balance × rate × days ÷ 360. The calculators use it only for funded-balance interest.

Actual/360 produces more interest over a year: a 12% rate works out to 12.17% over 365 days. The calculators and the app don't support 30/360.

Also called: day count convention, Actual/365, Actual/360

See: Actual/360 vs Actual/365

A release of rehab holdback funds to the borrower, typically after the work is completed and inspected. Under funded-balance (non-Dutch) interest, each draw starts accruing interest on its draw date.

Also called: draw request, construction draw, disbursement

See: Fix and flip loan calculator · Rehab holdback explained

The expected date and amount of each rehab draw. In the calculators, total funded-balance interest is estimated only when the draws add up to the full rehab holdback; otherwise only the initial funded balance and its monthly interest are shown.

Draws can't be dated before closing or after maturity, and they can't add up to more than the holdback.

Also called: disbursement schedule

See: Dutch interest calculator · Fix and flip loan calculator

Interest charged on the full committed loan amount from closing, including rehab holdback that hasn't been drawn yet. The calculators and the app label this basis Full Loan Balance.

Example: on a $280,000 loan at 12%, interest is $2,800.00 a month from the first day, although only $180,000 was funded at closing.

Nearly every definition we reviewed uses this meaning, but one source we found uses "Dutch" for interest charged up front at origination, so confirm what a term sheet means. In Lightning Docs data published by AAPL in February 2025, 28% of 8,832 bridge construction loans charged Dutch interest.

Also called: full boat interest, full-balance interest, full commitment interest, interest on the total loan amount

See: Dutch interest calculator

A fee charged when the loan is repaid, stated as a percentage of the loan or a flat amount. It is typically owed at payoff whether or not the loan is repaid early, unlike minimum interest or a prepayment penalty; the loan documents define when it applies. The calculators and the app don't compute exit fees.

Also called: exit points, back-end fee

See: Minimum interest, exit fees and prepayment

Purchase price + (rehab budget × rehab funding %). The loan can't exceed it, because the calculators and the app don't finance lender fees or closing costs.

With 100% rehab funding it equals purchase plus rehab ($400,000 in the example deal), so it binds only when every ratio limit allows more than the full cost.

See: Hard money loan calculator

Points + lender fee + estimated interest. The interest reserve isn't counted again. It is not net profit: cost of funds, servicing, defaults, taxes and overhead are not included.

Example: $5,600.00 in points + $33,600.00 of scheduled interest = $39,200.00.

See: How much hard money lenders make · Private money loan calculator

A dollar amount withheld from loan proceeds at closing to cover future interest payments. In the calculators it's entered manually; it reduces net proceeds, adds to the borrower's cash to close, and isn't counted as extra lender revenue.

Also called: prepaid interest, interest holdback

See: Interest reserves on hard money loans · Investor bridge loan calculator

A flat dollar charge from the lender, separate from points. The calculators add it to the borrower's cash to close and to gross lender revenue.

Lenders name these charges differently. Enter the total of the lender's own flat fees; third-party charges such as title, escrow or the appraisal are not lender fees.

Also called: processing fee, underwriting fee, document fee, admin fee

See: Private money loan calculator

The loan divided by the estimated value after renovation (ARV). The cap is ARV × Max LTARV.

Some lenders call this simply "LTV." Example: 70% of a $550,000 ARV is $385,000. A 70% LTARV cap is a lender limit; it is not the investor's 70% rule, which caps the purchase price.

Also called: loan-to-ARV, ARV LTV, percent of ARV

See: Loan sizing calculator · The 70% rule vs LTARV

The loan divided by total project cost. In the calculators and the app, total project cost is purchase price + rehab budget only; lender fees, closing costs and financing costs are not included. The cap is (Purchase Price + Rehab Budget) × Max LTC.

Some lenders add closing costs, soft costs or contingency to cost, which raises the dollar cap at the same percentage. Others quote a split, such as "90% of purchase, 100% of rehab," instead of one ratio; the calculators handle the rehab part with rehab funding and the financed project cost limit. For banks, the OCC describes LTC as "dividing an extension of credit by the total cost of the property plus all construction costs."

Also called: loan-to-cost ratio

See: Loan sizing calculator · LTV vs LTC vs LTARV

The loan, or the part of it funded at closing, divided by the purchase price. A lender that quotes "90% of purchase, 100% of rehab" is stating an LTPP limit for the purchase share. The calculators have no separate LTPP limit.

You can read it from the results as acquisition advance ÷ purchase price: $180,000 ÷ $300,000 = 60% in the example deal.

Also called: loan-to-purchase, percent of purchase

See: LTV vs LTC vs LTARV

A minimum number of months of interest the lender earns even if the loan is repaid early. The calculators and the app show it separately as monthly interest × minimum months; it is not added to scheduled interest. For funded-balance interest it's calculated on the initial funded balance.

Example: 3 months on $280,000 at 12% = $8,400.00. LegalClarity (May 2026) describes the charge at an early payoff as the minimum months of interest less the interest already paid; the calculators don't compute that payoff amount.

Also called: minimum interest guarantee, guaranteed interest, minimum earned interest

See: Minimum interest, exit fees and prepayment · Hard money interest calculator

Interest charged only on money actually disbursed: the acquisition advance from closing and each rehab draw from its draw date. The calculators and the app label this basis Funded Balance.

OfferMarket also calls it "New York interest." Estimating it takes a closing date, a day count and a draw schedule. In the same AAPL dataset, 72% of the 8,832 bridge construction loans charged non-Dutch interest.

Also called: as-disbursed interest, as-drawn interest, stage funding, interest on drawn funds, funded-balance interest

See: Dutch interest calculator

One day's interest: outstanding balance × annual rate ÷ 365 (or ÷ 360 under Actual/360). Funded-balance interest adds up per diem interest for every day each balance is outstanding.

Example: $280,000 × 12% ÷ 365 = $92.05 a day, or $93.33 on Actual/360.

Also called: per diem, daily interest

See: Hard money interest calculator · Actual/360 vs Actual/365

A percentage of the gross proposed loan, paid at closing: 2 points = 2% of the loan. The calculators and the app charge points on the whole loan, including the rehab holdback.

Example: 2% of $280,000 = $5,600.00.

Also called: origination points, origination fee

See: Hard money points calculator

A charge for repaying the loan before a date or period set in the loan documents. The calculators and the app don't compute prepayment penalties.

Minimum interest is a related provision with a different mechanism. Whether and how a prepayment charge can apply depends on the loan documents and state law; ask counsel.

Also called: prepayment premium, prepayment charge

See: Minimum interest, exit fees and prepayment

The share of the rehab budget the lender funds. Funded rehab is held back at closing and released as draws. 0% means the lender doesn't fund rehab.

A lender that advertises "100% of rehab" is describing this setting at 100%.

Also called: rehab funding percentage, percent of rehab financed

See: Fix and flip loan calculator · Rehab holdback explained

The part of the loan reserved for rehab draws: the smaller of rehab budget × rehab funding % and the proposed loan. It is part of the loan amount but is not funded at closing.

It is released in draws as work is done. Under Dutch terms it accrues interest from closing anyway; under non-Dutch terms each part accrues only once drawn. Example: $100,000 of a $280,000 loan. In Canada, "construction holdback" refers to a statutory lien-law holdback, which is a different thing.

Also called: construction holdback, rehab reserve, renovation holdback

See: Rehab holdback explained · Fix and flip loan calculator

The loan amount the borrower asks for. It's optional in the calculators: leave it blank to size the maximum loan. A request at or below the maximum is used as entered; a larger request is cut back to the maximum and the excess is shown.

Also called: loan request, requested loan amount

See: Private money loan calculator

A portion of each construction draw that is held back until the work is complete or reaches a later milestone. The calculators and the app don't model retainage; enter each draw as the amount actually disbursed.

For banks, the OCC handbook says a lender on a progress-payment plan "normally retains, or holds back, 10 to 20 percent of each payment," and HUD's 203(k) draw request form has a "Less 10% Holdback" line. Retainage is a slice of each draw; the rehab holdback is the whole undrawn rehab budget.

Also called: retention

See: Rehab holdback explained

Interest-only interest for the full stated term: loan × rate × term months ÷ 12 under full-balance interest. It's an estimate; the borrower may pay less if the loan is repaid early, subject to the loan documents.

Example: $280,000 at 12% for 12 months = $33,600.00. It is calculated at full precision and rounded once, not as rounded monthly interest × months.

Also called: interest for the term

See: Hard money interest calculator

A summary of proposed loan terms given before underwriting is complete; in private lending it can be a one-page preliminary quote. A preliminary quote is written to be non-binding; final terms are set by the commitment and the loan documents.

The app's quote PDF carries the line "Preliminary, non-binding quote for discussion purposes only. Final terms are subject to underwriting, due diligence, documentation, lender approval, and applicable law."

Also called: preliminary loan quote, loan quote, letter of intent (LOI), indication of terms

See: Hard money term sheet (sample)