Hard Money Interest Calculator

The interest-only payment

This calculator, like the app, models a loan that doesn't amortize: the borrower pays interest each month and repays the whole principal at payoff, when the property sells or is refinanced. So the monthly payment is just the interest:

For a $250,000 loan at 11.5%, that's $2,395.83 a month. There's no principal in the payment, so the balance at payoff is still $250,000 (plus any interest not yet paid).

Interest for the whole term

The scheduled interest is what the loan would cost if it ran its full term. The calculator works it out from the exact monthly amount, not the rounded one:

The difference is small but real. At 11.5% on $250,000, twelve rounded payments of $2,395.83 add up to $28,749.96, but the true 12-month interest is $28,750.00. The app and this calculator show the exact figure. For a 6-month term it's $14,375.00.

Scheduled interest is an estimate for the stated term. A borrower who pays off early may pay less, depending on the loan documents (for example, minimum interest or another prepayment term).

Full balance vs funded balance

If part of the loan is a rehab holdback, the interest depends on how the note treats undrawn money:

• Full loan balance (often called Dutch): interest on the whole loan from closing. The monthly figure above applies from day one.
• Funded balance (often called non-Dutch): interest only on what's been disbursed. It starts on the acquisition advance alone and rises with each draw.

Choose Funded balance and enter the draws to see the total. To compare the two methods side by side, use the Dutch interest calculator.

Per diem and day count

When interest for part of a month (at closing, at payoff, or between draws) is charged by the day, the daily amount, the per diem, depends on the day count in the note:

On $250,000 at 11.5% that's $78.77 a day on Actual/365 and $79.86 on Actual/360. Actual/360 charges the stated rate for 360 days, so a full 365-day year costs 365/360 as much, about 1.4% more interest. The guide to Actual/360 vs Actual/365 works through it in dollars.

In the app (and here), day count applies to funded-balance interest, which is built from actual days. Full-balance interest is shown monthly, as rate ÷ 12. The per diem shown for full-balance loans is an extra on this website, for estimating partial months.

Minimum interest

Some notes guarantee the lender a minimum number of months of interest, even if the loan is repaid sooner. The calculator shows it separately and never adds it to scheduled interest:

With 3 months minimum on the example, that's $7,187.50. How a minimum is collected at payoff depends on the documents; see minimum interest, exit fees and prepayment.

What isn't calculated

• Amortizing payments and APR. Loans are modeled interest-only.
• Default interest, late fees, extension fees and exit fees.
• Interest reserves. This calculator has no reserve input; in the full calculators and the app a reserve is a dollar amount you enter, withheld at closing. See the interest reserve guide.