ONEDEAL EDUCATIONAL GUIDE
Editorial standards · Calculation methods
Hypothetical fully funded, interest-only loan
- Funded principal
- $200,000
- Annual rate / holding period
- 12% / 9 months
- Origination points
- 2% = $4,000
- Other upfront fees / exit fee
- $1,500 / $1,000
- Monthly interest / total interest
- $2,000 / $18,000
Modeled financing cost is $24,500. A three-month delay adds $6,000 of interest before extension fees.
Separate fees, interest and returned principal
The example multiplies $200,000 by 12%, divides by twelve and arrives at $2,000 monthly interest. Nine months cost $18,000. Add $4,000 of points, $1,500 of other upfront fees and a $1,000 exit fee: total financing cost is $24,500.
Returning the $200,000 principal is a cash requirement at exit, but it is not another $200,000 financing expense. If scheduled interest is already paid, the example needs $201,000 to repay principal and the exit fee. Do not subtract principal twice when building a sale-proceeds worksheet.
Ask what the word points means
The CFPB distinguishes discount points that reduce a rate from other charges that may also be labeled points. Our input models an origination fee equal to the entered percentage of principal. It does not assume that fee buys a lower rate.
Request a written list of charges: underwriting, document preparation, valuation, draw inspection, servicing, extension and exit charges can affect the comparison. Count a fee once. Separate lender costs from closing costs and project expenses.
Read the assumptions that can break a simple estimate
This calculator assumes the full balance is funded immediately and interest is paid monthly. A staged rehab draw can produce a different interest total. A financed fee increases the balance on which interest may accrue. A daily-accrual contract or minimum-interest clause also needs a different schedule.
The three-month delay case is a stress scenario, not an extension offer. Confirm whether an extension is available at all, when notice is due and what fee or rate change applies. Property taxes, insurance, utilities and rehab overruns belong in the broader project budget.
- Compare offers at the same funded amount and holding period.
- Ask how interest is charged on undrawn rehab funds.
- Verify minimum interest, prepayment restrictions and default terms.
- Test an exit that takes longer and produces less cash.
Sources and method
Worked examples use the stated hypothetical assumptions. Source links support the general definitions and rules; they do not verify a specific product, offer or individual outcome.
Examples are educational estimates, not current product offers, approvals or individualized investment, tax, insurance or legal advice. Confirm current terms and rules for your circumstances.