Fix and flip calculator

How hard money sizes your loan

Most flip calculators ask you for a loan amount. Lenders do not work that way. They calculate two numbers and give you the smaller one.

The first is loan to cost, a share of purchase plus rehab, commonly 80 to 90 percent. The second is a ceiling on after-repair value, commonly 70 percent. On a deal where the purchase price is high relative to ARV, the ARV ceiling binds and your cash requirement jumps, which is the single most common surprise for a first-time flipper.

The calculator shows both figures and tells you which one is limiting your deal.

Costs people forget

Points are charged on the loan at closing, so a 2 point fee on a $300,000 loan is $6,000 before you own the property. Interest is charged monthly on the balance rather than amortised, so every month the project slips costs you the full interest payment with nothing going to principal. Cost of sale at 8 percent of ARV is usually the largest single line after the purchase itself, and it is the one most often left out of back-of-envelope maths.

Texas property tax deserves its own mention. At 1.8 to 2.5 percent of assessed value, a held property in the Austin metro carries a meaningful monthly cost before utilities and insurance.

Questions we get about this

How much do hard money lenders actually lend?

Commonly 80 to 90 percent of purchase plus rehab, capped at around 70 percent of after-repair value. You receive whichever of those two figures is lower, which is why two investors with identical purchase prices can bring very different amounts of cash to closing.

What is the 70% rule?

A quick sanity check on an offer: multiply after-repair value by 0.70 and subtract your rehab budget. The result is roughly the most you should pay. It is a rule of thumb rather than an underwriting standard, and a strong deal can break it, but paying well above it usually means a thin margin.

Do hard money loans have monthly payments?

Yes, interest-only. You pay interest on the drawn balance each month and repay the principal when the property sells or refinances. Nothing reduces the balance along the way, so a project running two months long costs two extra full interest payments.

Can I roll the rehab into the loan?

Usually yes, as draws. The lender funds the purchase at closing and releases rehab money in stages as the work is inspected, which means you front each stage and get reimbursed.

What credit score do I need for hard money?

Hard money leans on the property rather than the borrower, so credit requirements are looser than conventional financing. Score still affects pricing, and most programs look for experience or reserves on larger projects.