Hard Money at 12%: Real Cost of a 6-Month Flip in 2026

If you are borrowing hard money at 12% for a six-month fix-and-flip, the total cost is higher than most new investors expect. The interest rate is only part of the picture. Points, origination fees, and the short repayment window all add up quickly.

Here is what you actually pay when you take a hard money loan at 12% in 2026.

The Baseline Numbers

Assume you buy a property for $200,000. You put 20% down ($40,000) and borrow $160,000. The lender charges 12% annual interest and 3 points upfront.

Monthly interest: $160,000 × 12% ÷ 12 = $1,600 per month.

Total interest over 6 months: $1,600 × 6 = $9,600.

Points (3%): $160,000 × 3% = $4,800.

Total interest + points: $9,600 + $4,800 = $14,400.

On a $160,000 loan, you pay $14,400 just for the money. That is 9% of the loan amount in six months. And that is before any other fees.

What Changes in 2026

Interest rates on hard money loans have not dropped much. In 2026, 12% is still common for fix-and-flip loans. Some lenders charge 13% or 14% if your credit or experience is thin.

Points also vary. Two to four points is standard. Some lenders advertise lower rates but charge higher points. Always calculate the total cost, not just the monthly payment.

Use the Hard Money Calculator to compare different rate and point combinations. A 10% loan with 4 points may cost more than a 12% loan with 2 points.

The Hidden Costs That Add Up

Hard money lenders rarely give you the full six months without extra charges.

Extension fees. If your flip runs long, most lenders charge a one-month extension fee. That is often 1% to 2% of the loan balance. On $160,000, that is $1,600 to $3,200 for one extra month.

Prepayment penalties. Some lenders charge a penalty if you pay off the loan before a certain date, like 90 days. Read the note carefully before signing.

Appraisal and inspection fees. Expect to pay $500 to $1,000 for the appraisal. Another $300 to $500 for a property inspection. These are out-of-pocket costs, not added to the loan.

Title and closing costs. Hard money loans still require title work, escrow, and recording fees. Add another $1,000 to $2,000.

Total estimated cost on a $160,000 loan for 6 months:

• Interest: $9,600
• Points: $4,800
• Appraisal/inspection: $1,200
• Title/closing: $1,500
• Total: $17,100

That is 10.7% of the loan amount in just six months.

How to Know If the Numbers Work

The only way to know if a 12% hard money loan makes sense is to run the full deal math. You need to know your after-repair value (ARV), your rehab costs, and your holding costs.

Start with the ARV Calculator to estimate what the property will sell for after repairs. Then use the Fix and Flip Calculator to see if your profit covers the financing cost.

A common rule is the 70% rule: your purchase price plus rehab costs should not exceed 70% of the ARV. That leaves room for financing, holding costs, and profit. Use the 70% Rule Calculator to check your deal against this standard.

Lenders also look at loan-to-value (LTV). Most hard money lenders cap LTV at 65% to 70% of the as-is value. Use the LTV Calculator to see how much you can actually borrow.

What 12% Really Costs in a Realistic Flip

Here is an example that includes rehab costs and sale proceeds.

Purchase price: $200,000
Down payment (20%): $40,000
Loan amount: $160,000
Rehab costs: $50,000 (paid from your cash or a rehab reserve)
Holding costs (taxes, insurance, utilities): $3,000
Loan cost (interest + points + fees): $17,100
Total cash needed: $40,000 + $50,000 + $3,000 + $17,100 = $110,100

ARV: $320,000
Sales costs (8%): $25,600
Net proceeds: $320,000 - $25,600 = $294,400
Pay off loan: $160,000
Cash left: $294,400 - $160,000 = $134,400
Profit: $134,400 - $110,100 = $24,300

That is a 22% return on your $110,100 cash investment over six months. Not bad. But if the ARV is only $300,000, the profit drops to $4,300. If the flip takes nine months instead of six, the extra interest and extension fees can turn a profit into a loss.

How to Lower the Cost

Hard money at 12% is expensive. But you can reduce the cost.

Shorten the timeline. Every month you save is $1,600 in interest. Pre-sell or pre-lease before you close. Finish rehab early.

Shop lenders. Some lenders offer 11% with 2 points. Others offer 13% with 1 point. Compare total cost, not just the rate.

Use a lower loan amount. Put more cash down if you have it. A $140,000 loan instead of $160,000 saves $2,400 in interest and $600 in points over six months.

Refinance into conventional debt. If your flip finishes in four months, you may be able to refinance into a conventional loan and pay off the hard money early. That saves two months of interest.

The Bottom Line

Hard money at 12% costs about 9% to 11% of the loan amount in six months when you include points and fees. That is $14,400 to $17,600 on a $160,000 loan. The cost is real, and it eats into your profit.

The only way to know if a deal works is to run the numbers before you borrow. Use the calculators at arvcalc.com to check your AR