Typical Terms for Hard Money Loans: What to Expect
Navigating real estate financing can be overwhelming, especially when you're asking "what are typical terms for a hard money loan" or "how long do you have to pay back a hard money loan." Hard money loans offer an asset-focused alternative to traditional bank financing, ideal for fix-and-flip investors who prioritize speed and flexibility. At Property Flip Loan, we specialize in Maryland-based hard money lending, providing straightforward terms that align with your project goals. Let's break down the essentials, including interest-only payments explained, to help you understand what to expect.
Loan Term Length: How Long Do You Have to Pay Back a Hard Money Loan?
One of the most common questions is "how long do you have to pay back a hard money loan?" Unlike conventional mortgages that stretch over 15–30 years, hard money loans are short-term by design—typically 6–12 months, with extensions available up to 18–24 months for a fee.
This structure suits quick-turn projects:
6-Month Terms: Ideal for simple cosmetic flips where you plan to renovate and sell fast.
12-Month Terms: Common for more extensive rehabs, giving you breathing room to complete work and market the property.
Extensions: If needed, lenders like us offer 3–6 month rollovers (usually 0.5%–1% fee per extension), ensuring you avoid rushed sales.
The short timeline keeps costs down and encourages efficient execution, making hard money a smart choice for conservative investors avoiding long-term debt.
Interest Rates: What Percent Do Hard Money Lenders Charge?
Hard money loan interest rates range from 8%–15%, with averages around 10%–12% in 2026. These are higher than bank rates (6%–8%) due to the speed and risk involved, but they're charged interest-only—meaning no principal payments during the term, which preserves cash flow for renovations.
At Property Flip Loan, our rates start competitively for strong deals, calibrated to your ARV (up to 65%) or LTC (up to 85%). Factors influencing rates include:
Deal strength (e.g., solid comps and exit strategy)
Borrower experience
Property location (e.g., stable Maryland markets like Baltimore or the Eastern Shore)
Payment Structure: Interest-Only Payments Explained
A key benefit is the interest-only payment model. Interest-only payments explained: You only pay the interest portion each month (e.g., on a $200,000 loan at 10%, that's about $1,667/month), with the full principal due at maturity—via sale, refinance, or extension.
This conservatively manages cash flow:
Frees up funds for rehab (no amortizing principal)
Aligns with flip timelines: Pay low during hold, exit profitably
Supports BRRRR: Stabilize the property, then refi into lower-rate long-term debt
No prepayment penalties mean you can pay off early without extra costs, adding flexibility.
Fees and Other Costs
Beyond interest, expect these standard fees:
Origination Fee: 1%–3% of the loan amount (we charge 1.5%–2.5% for transparency).
Appraisal/Inspection: $500–$1,000 to verify ARV and progress.
Draw Fees: Often minimal for milestone-based rehab funding.
Closing/Legal: $800–$1,500, similar to any transaction.
Total upfront costs: 2%–5% of the loan—higher than banks but offset by rapid closings (7–14 days) that secure deals generating strong ROI.
Why Choose Hard Money Loans?
Hard money terms are built for efficiency: short durations, interest-only payments, and asset-based approval make them superior for flips where banks fall short (e.g., distressed properties). In a market influenced by potential Fed rate cuts under the new Chair Kevin Warsh, hard money remains a tool for seizing opportunities without long-term commitment.
At Property Flip Loan, our Maryland-focused terms—no junk fees, structured draws, and deal-centric underwriting—empower investors of all sizes. Whether you're flipping in Annapolis or Salisbury, we align financing to your scope.
Ready to explore terms for your next deal? Contact us for a free quote today—let's get your project funded fast!