Short version: “hard money” is not a product, it is a category, and the spread between two quotes that both call themselves hard money can be worth twenty thousand dollars on a single Pittsburgh flip. The rate is the number every investor asks about first and it is usually the smallest variable in the deal. What actually decides your cost is how the lender charges points, whether you pay interest on money you have not drawn, how fast draws get reimbursed, and what the extension costs when your rehab runs three weeks long. This guide walks through what to compare, line by line, before you sign anything.
FMC Capital is a Pittsburgh-based mortgage brokerage. This is our home market, and it is the one market where we can say that without qualification. We finance fix and flip, bridge, and rental deals for investors across Allegheny County and Western Pennsylvania, and because we place loans with a number of capital sources rather than lending our own balance sheet, we spend most of our week reading exactly the kind of term sheets this article is about.
What “hard money” actually means in 2026
The phrase is a holdover. It used to describe a private individual writing a short-term loan off a handshake and a first lien, priced high because the money was scarce and the underwriting was thin. That version still exists at the local level, but it is now a small share of the market. Most of what an investor is offered today when they search for a hard money lender is institutional capital: a short-term, interest-only, asset-based loan sized off after repair value, funded by a nationally capitalized lender or placed through a broker into one.
The practical distinction that matters is not “hard money versus soft money.” It is asset-based versus income-based. A bank underwrites you: your tax returns, your debt-to-income, your job. An asset-based investor lender underwrites the deal: the purchase price, the rehab budget, the after repair value, and your track record of finishing projects. Your credit still matters because it prices the loan and it backs the guaranty, but nobody is asking for two years of W-2s.
That distinction is why these loans close in two to three weeks instead of two months, and it is why they cost more than a thirty-year mortgage. You are paying for speed and for a lender who will fund a house that is currently uninhabitable. Both of those are worth real money on a flip. The question is how much, and that is where quotes diverge.
The seven line items that actually decide your cost
1. Rate, and what the rate is charged on
Investor bridge and fix and flip rates in 2026 generally run in the high single digits to low teens depending on experience, credit, leverage, and market, and they move with the broader rate environment. Two lenders can quote you the same rate and produce very different interest bills, because the rate is only half the sentence. The other half is what it applies to.
Some lenders charge interest on the full loan amount from day one, including the rehab holdback you have not touched yet. Others charge only on funds actually drawn. The industry shorthand for the first is a Dutch interest structure. On a loan with a large rehab component, this single term can be the biggest cost difference between two otherwise identical offers. We wrote a full breakdown of the mechanics in our guide to Dutch versus non-Dutch interest on fix and flip loans, and it is the first thing to check on any term sheet.
Here is the math on a typical Pittsburgh deal. Say you have a 90,000 dollar rehab holdback on a six-month project, and you draw it evenly across five months. At twelve percent, a non-Dutch structure charges you roughly 2,700 dollars of interest on that holdback across the project. A Dutch structure charges roughly 5,400 dollars on the same money. Same rate, same house, one line of the term sheet, and a difference of about 2,700 dollars.
2. Points, and who else is charging them
Origination points are quoted as a percentage of the loan amount and are paid at closing. One to three points is the normal band. The trap is not the number, it is the stack. Ask specifically whether there is a separate broker fee on top of lender points, and whether there are processing, underwriting, document preparation, or funding fees that are not called points but function as them.
Add every fee on the term sheet, divide by the loan amount, and compare that number rather than the quoted points. On a 200,000 dollar loan, two points plus a 1,495 dollar underwriting fee plus a 750 dollar document fee is not two points. It is closer to three and an eighth.
3. Leverage, expressed two ways
Every quote should state a percentage of purchase price, a percentage of rehab budget, and a cap as a percentage of after repair value. The after repair value cap is the binding constraint on most deals and it is the one investors overlook. A lender advertising ninety percent of purchase and one hundred percent of rehab still will not exceed, say, seventy percent of after repair value, and on a thin deal the after repair value cap is what actually sizes your loan.
Run it on your own deal before you take the quote at face value. Our deal calculator will do it, and our explainer on loan to cost and how 100 percent LTC financing works covers how the two ratios interact.
4. Draw process and turnaround
Your rehab money sits in a holdback and comes out in stages as work is completed and verified. The variables are how many free draws you get, what each additional draw costs, whether verification is a third-party inspection or a photo submission, and how many business days pass between your request and the wire.
Three business days versus ten does not sound like much until you are paying a roofing crew who will not start the next phase until they are paid for the last one. Draw delays are the single most common reason a Pittsburgh rehab that was scoped for four months takes six. Ask for the actual average turnaround, not the policy.
5. Extension terms
Most flips run long. Ask what an extension costs before you need one, because the answer ranges from a modest fee for an additional ninety days to a rate increase to no extension at all. A lender who will not extend is a lender who can force a default on a project that is ninety percent finished. This belongs on the comparison sheet next to the rate, not in the fine print.
6. Prepayment and minimum interest
Some short-term loans carry a minimum interest guarantee, meaning you owe a set number of months of interest even if you sell in month three. If you are a fast operator working properties in Brookline or Dormont that turn in one hundred days, a three-month minimum is fine and a six-month minimum is a real cost. Ask directly.
7. Recourse and the guaranty
Nearly every investor loan of this type carries a personal guaranty even when the borrower is an entity. That is standard and not a red flag. What varies is the scope. Read it. Our guide to closing a fix and flip loan in a newly formed LLC covers how the entity and the guaranty interact when the LLC has no operating history, which describes most investor entities in this city.
How to read the term sheet you get back
Once you have two or three offers, put them side by side on the seven items above and compute a single number: total cost of capital for your actual expected hold period. Not the rate. Total dollars.
Work an example on a realistic Pittsburgh deal. You buy a two-story frame house in Swissvale for 95,000 dollars, budget 65,000 dollars of rehab, and expect an after repair value of 215,000 dollars. Offer A is eleven percent, two points, ninety percent of purchase and one hundred percent of rehab, non-Dutch, five free draws, three-day funding, ninety-day extension for a half point. Offer B is ten and a half percent, one and a half points, same leverage, Dutch interest, two free draws at 350 dollars each thereafter, ten-day funding, no stated extension.
Offer B has the lower rate and the lower points, and it is the more expensive loan. Across a six-month hold, the Dutch structure on a 65,000 dollar holdback costs roughly 1,900 dollars more in interest, the draw fees add several hundred more, and the ten-day funding cycle realistically adds three to four weeks to the timeline, which is another 1,700 dollars of carry on the purchase money. The extension question is unpriced risk on top of that.
That is the whole point of the exercise. The cheaper-looking loan is frequently the more expensive one, and you cannot see it from the rate. Our walkthrough on how to read a fix and flip loan term sheet goes clause by clause, and our breakdown of how fix and flip interest is actually calculated covers the per diem and payoff conventions that decide your final number.
What is specific to financing a Pittsburgh flip
The underwriting is national. The property is not. A few things come up on Allegheny County deals more than they do elsewhere.
The housing stock is old and the systems are older. A large share of the city’s investable inventory predates 1940. Knob and tube wiring, gravity furnaces, galvanized supply lines, and original slate roofs are common, and appraisers and inspectors here know to look for them. Budget the mechanicals honestly in the scope you hand the lender, because a scope that omits a full electrical service and a rewire will get caught and will slow your file down. Our guide to fix and flip contractor bids and what the lender checks covers what a lender-acceptable scope actually contains.
Hillside and slope conditions are a real underwriting item. Retaining walls, integral garages cut into a slope, and landslide-prone parcels show up throughout the South Hills, the North Side, and the river valleys. A questionable retaining wall can trigger a condition or an engineering report that adds two weeks. Flag it in advance rather than letting the appraiser find it.
Municipal fragmentation. Allegheny County has well over one hundred municipalities, each with its own permitting office, occupancy inspection, and in many cases a point-of-sale or dye-test requirement. A dye test that comes back failed in one borough can add a lateral replacement to your budget that you never scoped. This is local knowledge, and it is the part of a deal where being in the same county as the property genuinely helps.
The exit is bifurcated. Finished values in Lawrenceville, Bloomfield, Regent Square, and Mount Lebanon support a very different retail buyer than Homewood, Wilkinsburg, or the Mon Valley. Comps do not travel across neighborhood lines here the way they do in a more uniform metro. If your after repair value depends on a comp from six blocks away across a boundary, expect the appraisal to disagree. When it does, our guide to challenging a low after repair value covers the process.
Broker or direct lender
Both are legitimate. A direct lender gives you one set of terms and a shorter chain of communication. A broker shops the same deal across multiple capital sources and gets paid to know which one is currently strongest on your specific scenario, which changes more often than most investors realize.
The honest test is whether the person you are working with will show you the comparison. If you ask why this source rather than that one and get a real answer about leverage caps, draw speed, and interest structure, you are being served. If you get a rate and nothing else, keep shopping. More on how we work is on our why FMC page.
What to have ready before you call
You will get a faster and more accurate quote if you bring the address, the purchase price and contract date, a written rehab scope with a total, your estimate of after repair value with two or three comps behind it, your credit range, the number of investment properties you have completed in the last three years, and the entity you plan to close in. That is enough to price a deal accurately in one conversation.
If you are also holding rentals, the same conversation should cover the exit. A flip that does not sell can become a rental, and a rental refinances on debt service coverage rather than on your income. Our DSCR rental loan page covers that product, and for investors with several properties, our guide to cross-collateral and blanket loans for fix and flip portfolios covers pooling them under one loan.
The bottom line
Comparing hard money offers on rate alone is the most expensive habit in investor finance. Build the seven-line comparison, price it against your actual expected hold, and ask the extension question before you need the answer. On a Pittsburgh flip with an old house, a slope, a borough inspection, and a neighborhood-specific exit, the lender who understands the property is worth more than a quarter point.
Working a deal in Pittsburgh or anywhere in Western Pennsylvania? Send the address, the numbers, and your scope through our contact page or call 412-990-2941. Model it on our deal calculator, and see the full product set on our fix and flip and bridge loan page. Our companion guide on fix and flip loans in Pittsburgh and how 100 percent rehab financing works covers the leverage side in more depth. FMC Capital, NMLS #1840537.
FMC Capital is a Pittsburgh-based licensed mortgage brokerage, NMLS #1840537. This article is for educational purposes only and is not a commitment to lend, an offer of credit, or financial advice. Loan terms, rates, points, fees, draw procedures, and qualification standards vary by lender, property, borrower, and market and are subject to change at the time of application. All figures are illustrative examples, not quotes.