The Federal Reserve raised the federal funds target range by 25 basis points in September, to 3.75%-4%. It was the first increase since July 2023.
For real estate investors, the more important change is not the size of one hike. It is the rate path now being projected into 2027.
In June, the median Federal Reserve participant projected the federal funds rate at 3.8% at the end of 2026 and 3.6% at the end of 2027. By September, those projections had moved to 4.1% for both years. The Fed also makes clear that these are projections of appropriate policy, not guarantees of where rates will land.
That higher projected path changes the backdrop for investors using short-term private financing. It gives borrowers less reason to build a 2027 deal around the assumption that hard money loan rates will fall meaningfully before the exit.
How Hard Money Loan Rates Are Set
The Federal Reserve does not set hard money loan rates. Private lenders price each loan based on the deal and their own funding model.
A lender may consider the amount of borrower equity in the transaction, project complexity, sponsor experience, liquidity, property type, market, and the proposed exit. A heavy renovation at high leverage can price differently from a lower-leverage bridge loan even if both close during the same week.
The lender’s source of capital also affects pricing. Some private lenders use warehouse facilities, institutional credit lines, securitizations, or other external funding. Others lend from their own balance sheets. Changes in short-term interest rates can therefore reach hard money lenders through different channels and on different timelines.
Competition also plays a role. A change in benchmark rates does not require lenders to change their spreads by the same amount.
That is why hard money rates, hard money lender rates, and broader Fed policy tend to move in the same financial environment without moving point-for-point together.
What the September Fed Hike Changes
The September decision raises the cost of short-term money in the broader financial system. Its effect is most direct on loans tied to a floating benchmark.
A commercial bridge loan priced at a spread over SOFR, for example, can reset as its index changes. A fixed-rate hard money loan works differently. Once the borrower closes at a fixed coupon, a later Fed decision does not change that existing rate.
For new originations, the effect depends on how the lender funds the loan, the risk of the transaction, and competitive pricing at the time.
The September projections are therefore more useful as an underwriting signal than as a formula for predicting the next hard money interest rate. They show that the expected policy path moved higher between June and September.
For a borrower planning a project into 2027, that weakens the case for assuming cheaper financing will arrive during the hold.
How Hard Money Loan Deals May Be Underwritten in 2027
The Fed’s September projections support a more conservative approach to 2027 underwriting, particularly for projects with a refinance or resale exit.
Keep refinance assumptions grounded in current conditions
If the exit depends on refinancing into longer-term debt, the deal economics should work without requiring a rate decline.
A lower takeout rate in 2027 can improve the economics. It should be treated as upside rather than as a condition to make a profit.
Stress the hold period while planning
Check how the profitability changes in case of a delay of 30, 60, and 90 days beyond the planned completion or sale date.
The additional interest you have to pay for the delay can reveal more about the downside than testing a small change in the hard money rate. The same exercise also exposes how sensitive the project is to permitting, construction, draw, or resale delays.
Recheck the resale timeline and value
The investor’s borrowing cost is only one part of the exit.
A fix-and-flip borrower ultimately sells into a housing market where the end buyer may also be financing the purchase. Elevated borrowing costs can affect affordability, which makes both resale assumptions and days on market worth testing conservatively.
Build draw timing into the carry calculation
For renovation projects, access to construction funds affects the schedule.
If an approved draw takes longer than expected, contractors may slow down and the project can remain outstanding for additional weeks.
Compare the Full Financing Cost, Not Just the Hard Money Interest Rate
A hard money loan should not be compared on rate alone.
Borrowers should also look at origination points, required equity, closing time, extension provisions, prepayment terms, draw procedures, and who controls decisions once the loan is active.
What 25 Basis Points Changes in a Fix-and-Flip Deal
The dollar impact of a rate move is often more useful than the headline.
Take a $400,000 interest-only loan at 10%.
Annual interest is $40,000, or about $3,333 per month.
At 10.25%, annual interest becomes $41,000. The additional cost is about $83 per month.
Now compare that with one additional month of holding the project. At a 10% coupon, that month adds roughly $3,333 in loan interest alone, before property taxes, insurance, utilities, and other carrying expenses.
For a fix-and-flip investor, a delayed renovation or slower sale can therefore move the total financing cost far more than a modest change in the initial coupon.
This is also why a lower hard money lending rate does not automatically produce the lower-cost loan. If the project stays outstanding longer, the savings can disappear quickly.
How Stormfield Approaches Hard Money Loan Pricing
Stormfield’s Fix & Flip program currently publishes rates starting at 8.99%, with final pricing based on the borrower, property, leverage, and deal structure. The program typically closes in 7–10 business days.
Stormfield also funds and holds its loans on its own balance sheet, while underwriting, credit decisions, servicing, and renovation draws remain in-house. For a borrower comparing hard money lenders, that means the quoted rate can be evaluated alongside the closing process, draw execution, and servicing structure
Investors evaluating a deal can explore Stormfield’s Rates & Options to review indicative financing terms before moving forward with a full application.
Frequently Asked Questions
What is a hard money loan interest rate?
A hard money loan interest rate is the rate charged on short-term, real-estate-secured financing used primarily for investment properties. Pricing varies by lender and can depend on leverage, borrower experience, property type, project scope, and the planned exit.
How do Fed rate changes affect hard money loan rates?
Fed policy influences the broader short-term interest-rate environment and can affect lenders’ funding costs. Hard money pricing also depends on the lender’s capital structure, deal risk, leverage, and competition, so private lending rates do not move point-for-point with every Fed decision.
What are hard money rates right now?
Hard money rates vary by lender and deal structure, so there is no single market rate. Stormfield currently publishes Fix & Flip rates starting at 8.99%. Other lenders publish different starting rates based on experience, leverage, property type, and pricing model. For a lender-by-lender comparison of published starting rates, see Stormfield’s Fix and Flip Loan Rates in 2026: How 6 Leading Lenders Price Your Deal. Compare fix and flip loan rates
Will hard money loan rates fall in 2027?
There is no reliable hard money rate forecast for 2027. The Fed’s September projections did, however, move the expected policy-rate path higher than its June projections. Investors should therefore underwrite deals using financing costs that work today and treat future rate declines as upside rather than a requirement.
Are hard money loan rates fixed or variable?
Both structures exist. Many residential fix-and-flip and bridge loans use a fixed interest rate for the loan term, while some commercial bridge loans are priced at a spread over a floating benchmark such as SOFR. Borrowers should confirm whether the quoted rate can change after closing and whether any rate cap applies.
Can you negotiate a hard money loan rate?
Pricing can sometimes vary based on the strength of the transaction. Lower leverage, stronger liquidity, relevant project experience, repeat-borrower history, or a lower-risk property may support better terms. But borrowers should compare the full loan structure, including points, fees, draw procedures, and extension terms, rather than negotiate the interest rate in isolation.
