Updated Rates as of August 2026
A hard money loan is worth it when the cost of capital is lower than the cost of losing the deal — or when bank timing kills your contract. Compare all-in carry (rate + points + timeline) against profit margin and hold period.
Hard money wins on: off-market speed, distressed assets banks won’t touch, and BRRRR bridges. It loses when: thin ARV margin, inexperienced scope, or holding longer than 12 months without a refi plan.
Fix and flip calculator · Hard money vs conventional
Decision framework — hard money vs waiting for a bank
| Factor | Hard money wins | Bank wins |
|---|---|---|
| Days to close needed | Under 14 | 30+ acceptable |
| Property condition | Distressed / unfinanceable | Turnkey |
| Rehab holdback needed | Yes | Rare on banks |
| Hold period | Under 12 months | 30-year hold |
| Credit | Weak but strong deal | 720+ conventional |
Cost of lost deal = assignment fee, wholesale spread, or off-market discount you forfeit while waiting 45 days for bank denial.
Worked comparison — $45K margin flip
| Scenario | Hard money 10.75% IO, 8 mo | Wait for bank (denied week 6) |
|---|---|---|
| Finance cost | ~$19,600 | $0 |
| Deal outcome | Closed, $45K gross | Lost — $0 |
| Net | ~$25K after finance | $0 |
Hard money loses when margin after 8.99%–13.5% carry and sale costs falls below $20K. Fix and flip calculator · hard money vs conventional
Opportunity cost of slow capital
| Deal type | Cost of 30-day delay |
|---|---|
| Off-market at 20% below ARV | Lose deal to cash buyer |
| Wholesale assignment | Buyer finds another property |
| Auction | Forfeit deposit |
| BRRRR in rising rate env | DSCR rate lock risk |
Hard money at 8.99%–13.5% IO from Jaken Finance Group closes 7–10 business days — the premium buys certainty.
When hard money is NOT worth it
- Spread after all costs under $20K
- Rehab timeline 18+ months without refi plan
- ARV depends on unpermitted work
- No reserves for 2 extensions
- First deal with no local team
Hard money statistics · evaluating proposals · calculator
Break-even margin calculator — quick sanity check
Before you sign at 8.99%–13.5% IO, confirm:
Net = ARV − purchase − rehab − holding costs − sale costs − finance costs
If net falls below $25K on your first three deals, hard money may be teaching you expensive lessons. Use the fix and flip calculator with conservative ARV (lender number, not yours). Add two months extension IO as stress test — if margin survives that, the deal has buffer.
When to walk away even with financing approved
Walk when: seller won’t budge after low appraisal, permits are blocked, insurance quote exceeds 2% of ARV, or your contractor timeline exceeds 12 months without a refi path. Speed from a 7–10 business day close only helps when the underlying spread works. Hard money vs conventional · down payment guide · first-time investor
Use-case matrix — when hard money wins
| Scenario | Hard money worth it? | Why |
|---|---|---|
| Off-market 18% below ARV | Yes | Speed captures discount |
| Auction with 10-day close | Yes | Banks cannot compete |
| BRRRR acquisition | Yes | Bridge to DSCR at 5.75%–10.5% |
| Turnkey rental hold 30 years | No | Use DSCR directly |
| Thin $12K spread after costs | No | Finance eats margin |
| Unpermitted addition required for ARV | No | Permit risk kills timeline |
Worked comparison — Atlanta duplex BRRRR
| Line | Hard money path | Wait for bank |
|---|---|---|
| Purchase | $285,000 (closed day 9) | Lost to cash buyer |
| Rehab | $75,000 in draws | — |
| Bridge IO (10 mo at 11%) | ~$28,000 | $0 |
| DSCR refi at 75% LTV | $390K on $520K ARV | — |
| Monthly cash flow post-refi | ~$850/door net | — |
| Outcome | Own cash-flowing asset | No deal |
Hard money cost ~$28K + ~$12K DSCR closing — paid back by cash flow within 3 years on a hold.
Holding cost stress test — add 2 months
Before you sign at 8.99%–13.5% IO, rerun your pro forma with +2 months on timeline:
| Original hold | 8 months | 10 months (+2 stress) |
|---|---|---|
| IO on $240K at 11% | ~$17,600 | ~$22,000 |
| Utilities + taxes | ~$3,200 | ~$4,000 |
| Net margin (was $42K) | $42,000 | $36,400 |
If stress-test margin falls below $20K, the deal lacks buffer for first-time sponsors.
Rescue financing — when hard money saves a contract
End buyer lost bank approval 10 days before closing? Hard money at 7–10 business days can fund the acquisition side of a double close or assignment rescue — if spread supports 8.99%–13.5% carry for 30–60 days until resale. See Second Look rescue for deal-specific routing.
Luxury flip vs standard — when premium cost still works
| Tier | All-in | ARV | Spread | Finance at 11% IO, 10 mo | Worth it? |
|---|---|---|---|---|---|
| Standard SFR | $250K | $340K | $90K | ~$28K | Yes if net >$35K |
| Luxury SFR | $680K | $950K | $270K | ~$62K | Yes if net >$120K |
| Over-improved | $520K | $580K | $60K | ~$48K | No — thin spread |
Luxury at 8.99%–13.5% IO with up to 100% LTC on qualified files still requires 75% ARV cap — spread must survive finance on dollar terms, not just percentage.
Rising rate environment — hard money vs DSCR exit risk
When DSCR rates move within 5.75%–10.5% during your flip hold:
| Flip month | DSCR rate at refi | BRRRR still works? |
|---|---|---|
| 6 | Same as modeled | Yes |
| 10 | +0.50% | Maybe — recheck DSCR |
| 14 | +1.0% | Often need lower LTV refi |
Hard money cost is fixed at close — DSCR exit rate is variable. Model +0.75% DSCR rate stress on BRRRR before you buy.
Wholesale double close — worth it math
| Line | Amount |
|---|---|
| B-leg purchase | $175,000 |
| Hard money (85% LTC) | $148,750 |
| Cash to close | ~$35,000 |
| Hold 45 days until end buyer closes | IO ~$2,100 |
| Assignment/spread profit | $18,000 |
| Net after finance | ~$15,900 |
45-day hold at 8.99%–13.5% IO makes hard money worth it on wholesale when spread exceeds $12K and end buyer is verified.
Competitive offer scenario — speed as product
| Offer type | Close days | Seller acceptance |
|---|---|---|
| Cash | 7–14 | Highest |
| Hard money POF | 7–10 | High |
| Conventional pre-approval | 30–45 | Low on distressed |
| FHA retail | 45–60 | Lowest on fixer |
Hard money worth 1–2 points extra when it wins a $40K below-market purchase that banks will not touch.
Decision scorecard — rate the deal 1–5 before signing
| Factor | Score 5 (go) | Score 1 (pass) |
|---|---|---|
| ARV spread after 75% cap | 25%+ | under 15% |
| Hold timeline confidence | under 8 months | over 14 months |
| Contractor committed | Fixed bid | Time-and-materials |
| Reserves vs IO need | 6+ months | under 3 months |
| Exit clarity | Buyer or DSCR path | ”Figure out later” |
20+ total score — hard money likely worth it at 8.99%–13.5% IO. Under 12 — pass regardless of financing availability.
Pre-qualify and model your deal · (833) 264-7776