Hard Money Loan Costs in Hawaiʻi: Rates, Points, Fees

Every hard money loan in Hawaiʻi carries a mix of upfront and ongoing costs, and understanding how they stack up against a bank loan, or against doing nothing while a deal falls through, is the real comparison most investors need to make. This guide breaks down the retainer, points, interest-only payments, and extension fees, then walks through a full worked example on a six-month flip so you can see how the numbers actually land.

The Main Cost Components of a Hawaiʻi Hard Money Loan

A hard money loan in Hawaiʻi is priced around a handful of components rather than a single APR figure. The retainer is paid up front to open your loan file and start paperwork. Points are an origination charge, paid at closing, expressed as a percentage of the loan amount. Interest is charged monthly, interest-only, at roughly 1% per month on the outstanding balance, meaning you are not paying down principal each month the way you would on a 30-year amortizing mortgage. Finally, standard third-party closing costs apply: appraisal, escrow, title insurance, and recording fees, similar to what you would see on any real estate closing in Hawaiʻi.

The Retainer: $1,000 on Oʻahu, $1,500 on the Outer Islands

Pac I G Capital LLC collects a retainer before starting paperwork, $1,000 for a property on Oʻahu and $1,500 for a property on Maui, the Big Island, Kauaʻi, Molokaʻi, or Lānaʻi. It is paid up front, once you accept a quote, so the file can start moving. Your written quote explains how the retainer is applied at closing.

Interest-Only Payments at Roughly 1% Per Month

Because Hawaiʻi hard money loans are interest-only, the monthly payment is simple to calculate: outstanding balance multiplied by the monthly rate. On a $400,000 loan at roughly 1% per month, that is approximately $4,000 per month, with no principal reduction required until payoff, sale, or refinance. This structure keeps monthly cash outflow predictable during a renovation, which matters more than the headline rate for most investors managing a fix-and-flip budget where a general contractor draw schedule already has enough moving parts.

Points and Closing Costs

Points are charged at closing and vary by deal size, loan-to-value, and term. Combined with standard title, escrow, and recording costs, expect total closing costs on a typical Hawaiʻi hard money loan to run several percentage points of the loan amount, paid once at the start rather than spread across the loan term. Because the loan is short-term by design, six to 24 months, these upfront costs are amortized over a shorter window than a 30-year mortgage would allow, which is part of why total borrowing cost is driven more by how long the loan is outstanding than by the interest rate alone.

Extension Fees: What Happens If the Project Runs Long

Renovations in Hawaiʻi frequently run past the original schedule because of shipping delays on materials, permit review times, or a termite or cesspool issue discovered mid-project. When a loan term is about to expire and the exit, sale or refinance, is not yet ready, most hard money lenders offer an extension for an additional fee rather than forcing a full refinance. This is far less disruptive than defaulting on the original term, but it is also avoidable with realistic scheduling from the start, which is covered in more depth in the fix and flip loans overview.

Hard Money vs. Bank Financing: A Cost and Speed Comparison

Factor	Hawaiʻi Hard Money Loan	Conventional Bank Loan
Typical rate structure	Roughly 1% per month, interest-only	Lower fixed rate, fully amortizing
Underwriting basis	Property value and exit plan	Income, credit, W-2s, bank statements
Non-owner-occupied fixer	Yes, standard use case	Rarely available, or heavily restricted
Typical closing time	Within 15 business days	30 to 60 days, often longer
Credit minimum	None	Yes, typically 660 or higher
Best fit	Short-term flip, bridge, or rehab	Long-term hold with full documentation

A Worked Example: Total Cost of a Six-Month Oʻahu Flip

Consider an investor buying a fixer on Oʻahu for $700,000, well under the island’s roughly $1.1 million median single-family price, with a $150,000 rehab budget and a projected ARV of $1,050,000. At 70% of current value, the acquisition loan is approximately $490,000. Rehab financing at up to 80% of the $150,000 budget adds another $120,000, released in draws. Total loan exposure across the project reaches roughly $610,000.

Cost item	Approximate amount
Retainer (Oʻahu)	$1,000
Points at closing (example: 2 points, quoted per deal)	about $12,200 on $610,000
Interest-only, 6 months at roughly 1%/month on average balance	Tens of thousands, scales with drawn balance
Title, escrow, appraisal	Standard third-party closing costs
Total carrying cost for 6-month term	Confirmed on your specific term sheet

The exact dollar total depends on the draw schedule, since rehab funds are not drawn all at once, so interest accrues only on what has actually been disbursed. This is one reason a realistic, staged draw schedule matters as much as the headline interest rate when comparing lenders. Running your own numbers through the hard money calculator or the fix and flip calculator before signing a term sheet gives you a project-specific total rather than a generic estimate.

Why the Rate Alone Is the Wrong Comparison

Comparing a hard money loan to a bank loan purely on interest rate misses the point of the product. A bank rate might look lower on paper, but if the bank cannot close in time to beat a competing cash offer, will not lend on a non-owner-occupied fixer at all, or requires two years of tax returns from a self-employed borrower, the comparison is moot. The real cost of a hard money loan should be measured against the cost of losing the deal entirely, or of holding a property longer than planned while waiting on slow bank underwriting. For most Hawaiʻi investors, the total cost of a hard money loan is best evaluated against the total profit built into the ARV, not against a 30-year mortgage rate.

How to Keep Total Costs Down

The biggest lever an investor has over total loan cost is time. Because the loan is interest-only, every month a project runs past its target exit adds another full month of interest at the outstanding balance. Building a realistic rehab timeline that accounts for Hawaiʻi-specific delays, materials shipped in by container, a smaller pool of licensed contractors, and permit review times that vary by county, keeps the loan outstanding for the shortest time possible and avoids extension fees altogether.

Comparing Costs Across Loan Sizes

Total hard money loan cost scales with both the loan amount and how long it stays outstanding, which is why a smaller Big Island loan and a larger Oʻahu loan can carry very different total costs even at the same rate structure. A $300,000 loan outstanding for six months at roughly 1% per month accrues meaningfully less total interest than a $700,000 loan outstanding for the same period, simply because the balance it is calculated against is smaller. This is part of why lenders and investors alike look at loan-to-value alongside the dollar amount when discussing cost, since two loans at the same LTV percentage can have very different total dollar costs depending on the underlying property value.

What Happens If You Sell or Refinance Early

Because Hawaiʻi hard money loans are interest-only, paying off the loan before the end of its term simply stops interest from accruing from that point forward. There is no principal balance being amortized down that needs to be recalculated, which makes an early sale or refinance financially straightforward compared to a traditional mortgage with prepayment penalty structures. Always confirm the specific payoff process and any applicable fees in writing with your loan documents before closing, since terms can vary by lender even within the same general hard money structure.

Reading a Term Sheet Before You Sign

A complete Hawaiʻi hard money term sheet should spell out the loan-to-value, the interest rate, the retainer amount, points due at closing, the loan term, and how rehab draws will be structured and released. Before signing, confirm you understand exactly when each cost is due, at application, at closing, or monthly, and ask directly about extension terms in case your project timeline shifts. A lender willing to walk through each line item before you commit to a retainer is generally a sign of a transparent process, which matters as much as the headline rate when you are comparing offers from more than one Hawaiʻi lender.

Next Step

To see exact numbers for your specific property and rehab budget rather than a general estimate, apply directly at /apply/ and get a written term sheet from Pac I G Capital LLC that spells out the retainer, points, and monthly interest for your deal.