Do you know how to calculate the specifics of a hard money loan?

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Here's how you can calculate the specifics of a hard money loan... 

A simplified/general calculation can be done by following the steps outlined below.

• Step 1: Calculate your total loan amount by taking the ARV (average retail value or after repair value) of your subject property and multiplying it by the total LTV that the lender will allow.
• Step 2: Calculate the total costs by adding up the purchase price, rehab budget, estimated closing costs (title, taxes, etc), lender points and interest reserve (pre-paid interest). 
• Step 3: Calculate the total amount of cash you’ll need to bring to closing by subtracting the total loan amount (i.e. your total from Step 1) from the total costs (i.e. your total from Step 2). Please note that even if this number is 0 or less, you may still be required to bring some cash to closing.

You can also determine these estimates using any number of online resources, including our a free online hard money loan calculator. You can enter the specifics of your deal to estimate your total loan amount, LTV and the amount of cash required at closing.

Please note that some lenders may have certain down payment requirements, and some costs are estimates until final numbers are available at closing. The ARV is an estimate until the appraisal ordered by the lender is complete.