Fix And Flip Hard Money Loans

Fix And Flip Hard Money Loans — The Quick Read: A fix-and-flip hard money loan is short-term financing. It’s business-purpose money. It funds the purchase and renovation of a non-owner-occupied property. The investor plans to resell it. Underwriting looks at the deal itself. Lenders check current value, projected after-repair value, and the exit plan. They don’t rely on a personal income file. Across the wholesale network Lendmire places files through, fix-and-flip leverage on the current program runs up to 93% of project cost for investors with five or more completed projects and up to 90% with two or more, with every tier capped at 75% of after-repair value; bridge purchases without rehab run up to 80% of purchase price, and cash-out or refinance files top out at 65% of value. Up to 100% of the rehab budget can layer on top through construction draws. This depends on lender guidelines and investor experience. The loan is meant to be temporary. A sale or a refinance into long-term rental financing replaces it once the renovation is done.

What a Fix-and-Flip Hard Money Loan Actually Is

A fix-and-flip hard money loan is short-term financing. It’s business-purpose money that funds the purchase and renovation of an investment property. The plan is to resell it once the work is done. It goes by other names — rehab loan, renovation loan, private money loan. Investors use these terms loosely, and the labels blur together. It’s worth sorting them out before you shop for one.

People treat “hard money” and “fix-and-flip loan” as the same thing constantly. They aren’t quite the same product. A true hard money loan is priced almost entirely off the property itself. Lenders pay little attention to the borrower’s file — Scotsman Guide describes it as “almost exclusively focused on the asset.” That lighter underwriting is exactly why a true hard money loan often caps at a lower ceiling. That ceiling is frequently 65% loan-to-value or less. A fix-and-flip loan looks at the asset, the borrower, and the renovation plan together. That means more moving parts, but usually more leverage as a result.

Flipping still moves real volume nationally, even as margins shrink. ATTOM Data Solutions counted 64,348 single-family and condo flips in its most recent quarterly report. That’s about 8% of all home sales. Typical gross returns land near 25.4%. That’s the real environment fix-and-flip financing operates in. The deal’s margin decides whether a project is worth doing — not the loan approval. Rehab budgets, holding-cost assumptions, and resale timing move that margin far more than the underwriting decision does. That’s why experienced investors spend more time stress-testing the scope of work than negotiating financing terms.

These loans close in a business entity’s name — an LLC or corporation, not a personal name. They’re structured as business-purpose credit rather than consumer credit. That distinction isn’t a technicality. It’s the reason the underwriting looks completely different from a standard owner-occupied mortgage. The borrower is a business, not an individual buying a primary residence. So the file gets judged largely on the strength of the deal: the purchase price relative to as-is value, the realism of the renovation budget, and the credibility of the projected resale or refinance value.

That structure also changes who tends to use this financing. Fix-and-flip and hard money products are built for investors who plan to hold the property for months, not years. Their repayment plan depends on a sale or a switch to permanent financing — not on ongoing monthly cash flow from the property. Anyone comparing quotes across lenders should be clear on which bucket a given quote falls into. A true asset-based hard money quote and a fuller fix-and-flip underwrite can look similar on the surface. But they carry very different leverage ceilings and documentation requirements.

How Underwriting Actually Treats These Loans

Underwriting on a fix-and-flip file runs through steps in a specific order. Skipping that order costs money.

Step one: two valuations, not one. The lender wants current as-is value and projected after-repair value (ARV). The renovation scope needs to reach the appraiser before the inspection, not after. Scotsman Guide explains why sequencing matters with a blunt example. Without the scope of work attached to the appraisal order, an appraiser might land on an as-is value of $200,000 and an ARV of just $210,000. That margin kills the deal on paper. Hand that same appraiser the renovation plan before the visit, and the same property might appraise at $300,000 ARV once the improvements are accounted for. It’s the same house. The numbers are wildly different, and it comes down entirely to paperwork sequencing. Investors who treat the scope-of-work document as an afterthought routinely leave leverage on the table. The reason is simple: the appraiser never saw the full picture.

Step two: two leverage tests, and the lender uses the lower one. One test caps the loan as a percentage of total project cost — purchase price plus rehab budget, or loan-to-cost. The other caps it as a percentage of ARV. That same Scotsman Guide breakdown notes a lender might cap the as-is loan-to-value at 80%. But the ARV-based ceiling might hold closer to 65%-70% once the work is finished. Whichever number produces the smaller loan governs the file. This dual test is the mechanism behind the 85% purchase-side leverage figure mentioned earlier. It describes a ceiling under favorable circumstances — not a number every borrower should expect on every file.

Step three: the rehab budget funds in pieces, not a lump sum. Renovation dollars sit in a holdback. They release as draws, tied to milestones the lender verifies through inspection. Costs generally accrue only on money actually disbursed — not on the untouched portion of the rehab reserve. But that also means an investor needs enough working capital to pay contractors before reimbursement lands. Underestimating that gap is one of the more common ways a flip runs into a cash crunch mid-project. Build a buffer into the initial budget instead of assuming draws will arrive exactly on schedule. That habit tends to separate smooth projects from stalled ones.

Step four: the file gets decided on the deal, not a personal income résumé. These are business-purpose loans made to an investor or entity, not a consumer buying a home to live in. So they fall outside the disclosure and ability-to-repay framework built for a standard mortgage. A business-purpose extension of credit is exempt from those consumer protections under Regulation Z. That exemption isn’t automatic just because a loan gets labeled “business purpose” on paperwork. Whether it actually qualifies turns on the real facts of the transaction. In practice, that’s why credit minimums on hard money and fix-and-flip files vary so widely from program to program. The current program carries a 620 minimum credit score, with additional conditions under 660; credit is one input among several in an asset-based review that centers on the property, the plan, and the exit. Others weigh credit history, liquidity, and prior flipping experience more heavily when setting leverage and terms.

Exit Strategy: Selling Versus Refinancing

Every fix-and-flip loan is built around an assumption about how it ends. Set that assumption before the loan closes, not after the renovation wraps. The two realistic exits are a sale to a retail buyer or a refinance into longer-term financing built for a rental property.

A sale exit depends on market absorption at the moment renovations wrap. That means how quickly comparable finished homes are moving, and whether the improved property matches what buyers in that price band are actively shopping for. A refinance exit shifts the question. Instead of “will this sell quickly,” it becomes “does this property cash flow well enough to support a rental loan.” That’s a different underwriting conversation entirely. It’s typically anchored to the property’s own rental income, not the borrower’s personal earnings. Investors who plan to hold and rent rather than flip often move directly from the rehab loan into that kind of long-term investor financing. This usually happens once the renovation draws are closed out and the property is stabilized. Hard money often opens the deal, and a refinance typically closes the chapter — see refinancing out of a hard money loan with a DSCR loan.

Don’t wait until late in the project to choose between these two paths. Deciding after the rehab loan’s term is already running short tends to produce rushed decisions. Build the exit plan into the original underwriting conversation. Include a realistic fallback in case the primary exit slips. That approach keeps a short-term rehab loan from turning into a forced sale at a bad moment.

Choosing a Fix-and-Flip Lender or Broker

Not every fix-and-flip quote is built the same way. Comparing them line by line matters more than comparing them on a single leverage number. Some programs weigh investor track record heavily. They offer more favorable terms to borrowers who can document a history of completed projects. Others focus more narrowly on the deal’s numbers, regardless of borrower history. Draw schedules, inspection requirements, and how fast a lender confirms completed work — all of this affects how a project actually moves. Often, it matters more than the headline leverage figure does.

These are business-purpose loans arranged through wholesale and investor-lending channels, not retail bank products. Working through a broker with access to multiple programs can widen the range of leverage, draw structures, and eligibility standards available for a given deal. Guidelines differ meaningfully from one program to the next, so that range matters.

For current guidelines and terms, see Lendmire’s DSCR loan programs page.

About Lendmire

Lendmire is a non-QM mortgage brokerage, NMLS# 2371349. It focuses on DSCR investor financing and business-purpose lending for real estate investors. Lendmire doesn’t underwrite or fund loans directly. Instead, it works across a wholesale network of investor-lending sources. It arranges financing on behalf of borrowers moving between short-term rehab strategies and longer-term rental holds. Lendmire arranges financing across roughly 40 markets. This connects investors with programs suited to their specific property, credit profile, and exit plan. Lendmire’s Top Mortgage Workplace recognition is documented by Scotsman Guide 2026 Top Mortgage Workplace.

For the end-to-end picture of how these loans work — qualification, structures, and the full process — see Lendmire’s complete DSCR loans guide.

References

1. Scotsman Guide

2. ATTOM Data Solutions

3. Scotsman Guide

4. Regulation Z