Hard money loans can vary greatly depending on the a variety of different factors such as the type of loan, the size of the loan, the experience of the investor, the particular hard money lender you are working with, and many more factors. It is important to understand that hard money loans are much different compared to traditional banking loans such as mortgages because the loans are coming from private real estate lenders and typically will utilize the real estate as collateral.
What Is The Average Interest Rate On A Hard Money Loan?
The average interest rate on a hard money will typically range from 7% to 12%. This percentage can range depending on a variety of different factors that we will discuss in the section below. Sometimes the interest rate will be as low as 5% but we have heard of some lenders requiring interest rates as high as 18%. Use our apply now page or the form at the bottom of the page to receive a free hard money loan quote.
Depending on the lender, there is a possibility that they will require a loan origination fee. A loan origination fee can range from 0.5% to anywhere up to nearly 4%. It is important to understand that not all hard money lenders require a loan origination fee, or it might vary depending on the type of loan. We recommend that you ask your lender about the interest range as well as the loan origination fee to see how much these will be for the amount of capital you are requiring.
What Impacts The Interest Rate Of A Hard Money Loan?
There are many factors that can impact the average interest rate of a hard money loan. The first factor to look at is what type of loan you are looking for. A traditional hard money loan can often times have a different interest range compared to a fix and flip loan, a bridge loan, or a commercial loan. The second factor that is often considered is how much capital is being funded. A project that requires a large amount of capital like $5,000,000 will typically have a different interest rate compared to a small project that only requires $75,000 in capital. The third most common factor that is analyzed is the experience of the real estate investor. Often times private real estate lenders will require a higher interest rate for investors who don’t have much experience, a spotty track record, or very poor credit score. This all depends on the lender you are working with.
If you would like to learn more about hard money loans we recommend that you reach out to our team. You can receive a free hard money loan quote by filling out the form below.