The Quick Read: Sometimes, but not by default: lender fees can often come out of loan proceeds and a seller can agree to a credit, yet both depend on the lender, the leverage headroom, and the appraised value, and neither is a right the investor can demand.
- Lender origination fees are the item most often deducted from proceeds at funding. Title, escrow, and recording costs are more often paid in cash.
- A seller credit is a negotiated line in the purchase contract. It lowers the cash the buyer brings to closing without adding debt.
- Rolled-in costs only work while the total loan stays inside the lender’s cost and after-repair-value caps. Terms vary by lender, property, and experience.
- Rolling costs in lowers cash at closing, not the true cost. The balance is still owed and still accrues interest.
- On a fix-and-flip, the top leverage tier is reserved for experienced investors, and a seller credit is a separate tool from financing the fees.
What Counts as Hard Money Closing Costs?
Hard money closing costs are the lender’s origination fee plus the third-party charges needed to complete the purchase or refinance. Hard money is short-term, asset-based bridge or flip financing, so the fee stack looks different from a long-term rental loan.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
The usual line items:
- Origination fee. Quoted in points, where one point is 1% of the loan amount. In hard money, points generally mean the origination fee, not a rate buy-down, as Real Estate Bees explains.
- Title and escrow. Search, settlement, and recording charges.
- Appraisal or broker price opinion. The value check the lender sizes the loan against.
- Draw and inspection fees. Charged when rehab funds release against completed work.
- Insurance. Hazard coverage in force at closing.
Note Servicing Center lists the same categories and adds extension and prepayment charges. On Lendmire’s hard money program, terms run 6-18 months, interest-only, with no prepayment penalty. Parameters vary by lender, property, and experience, and nothing here is a commitment to lend.
Can Closing Costs Be Rolled Into a Hard Money Loan?
Partly. Points are the item most often deducted from proceeds. The borrower writes no separate check for them, but receives less than the face amount and owes the full face amount at maturity. Third-party costs are usually paid in cash at closing. Lender practice differs, and some lenders expect points in cash too, so treat this as a question to ask early, not an assumption.
Three things decide whether any cost can be added:
1. Cost-based leverage headroom. On Lendmire’s fix-and-flip program, leverage runs 93% of project cost at 5+ completed projects, 90% of project cost at 2+ completed projects, and 85% of project cost with fewer than 2. Every tier is capped at 75% of after-repair value. Once fees would push the loan past either cap, the extra comes out of the investor’s pocket.
2. Purpose of the loan. Bridge purchases without rehab go up to 80% of purchase price. Cash-out and rate/term refinances go up to 65% of value. Closing costs added to a refinance have less room, because the cap is tighter.
3. Appraised value. Lenders size on the lower of price or value. A low appraisal shrinks every cap at once.
Here is the catch. Up to 100% of the rehab budget funds in draws against completed work. That is a rehab-budget figure, never a purchase leverage figure. There is no true 100% purchase program. When a lender advertises “100% financing,” it usually means the rehab budget, not the purchase price and not the closing costs. The investor still brings cash for the gap.
What Does Rolling In Actually Cost?
Rolling in lowers cash to close but raises the balance. The investor owes the larger amount and pays interest on it for the whole hold. Hard Money Bankers makes the same point: points deducted from proceeds raise the effective cost of the money received.
On a short hold, the math cuts two ways. Interest-only terms keep the carry simple, and a 6-18 month run means the added balance accrues for months, not decades. But the fee is a fixed cost that gets spread over a short time. A fee that looks small against a long loan looks heavier when the property sells or refinances in half a year. Matrix Commercial Capital illustrates this: a 2-point fee adds roughly 2% to year-one cost, and about 4% annualized if the loan is repaid in six months. That is an illustration of the math, not a program figure.
Exit sequence matters too. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Costs rolled into the bridge loan raise the balance the refinance must pay off, which can pressure leverage on the takeout. Read the complete DSCR loans guide before assuming the refinance will absorb a heavier payoff.
Can the Seller Pay Closing Costs?
Yes, if the seller agrees and the lender permits it. A seller credit is a negotiated term in the purchase contract or an addendum. It settles as a line item on the settlement statement, not as cash passed between the parties.
Four mechanics matter:
- Credit, not cash back. A seller credit offsets actual costs. It cannot exceed them, and it is not money in the buyer’s pocket.
- Not a price cut. A full-price offer with a seller credit leaves the contract price, and the comps, intact.
- Lender caps. No federal rule sets a cap on seller credits for an investor purchase. The limit comes from the lender or the investor that buys the loan, which is why hard money and DSCR lenders each set their own. Ask for the written policy.
- Appraisal risk. A credit paired with a higher price can backfire. If the appraisal comes in below the price, the lender sizes on the lower number and the credit can shrink with it.
Business-purpose loans are generally outside Regulation Z. The eCFR text of 12 CFR 1026.3 exempts credit extended primarily for a business purpose. That means the consumer-style Closing Disclosure is generally not required on a true investor loan. Lenders still produce a settlement statement, and some use consumer-style forms anyway. For a sense of how seller-paid items are displayed on a standard form, the CFPB Closing Disclosure explainer shows a lump-sum “Seller Credit” or itemized “Seller Paid” lines. Do not read this as “TRID never applies.” Lenders vary in how they paper the file.
Rolled In, Seller-Paid, or Cash: How the Three Routes Compare
| Factor | Rolled into loan | Seller credit | Paid in cash |
|---|---|---|---|
| Cash to close | Lower | Lower | Highest |
| Loan balance | Higher | Unchanged | Unchanged |
| Interest cost | Accrues on added amount | None added | None added |
| Main limit | Cost and ARV caps | Lender policy, appraisal | Investor’s liquidity |
| Negotiation | Lender-by-lender | Needs a motivated seller | None |
A fourth tool gets confused with these. A lender credit offsets costs in exchange for different loan pricing. The CFPB explainer above notes it trades against the rate. It is neither a roll-in nor a seller credit.
A Worked Example, in Percentages
Take a fix-and-flip purchase where the investor has two completed projects. On Lendmire’s program that puts the investor in the 90%-of-project-cost tier, still capped at 75% of after-repair value. Say the after-repair value is high enough that the cost-based tier is the binding limit.
- Route one, cash. The investor brings the 10% gap, the points, and every third-party fee. Balance stays at 90% of project cost.
- Route two, roll in points. If the lender allows it and the loan stays inside both caps, points come out of proceeds. Cash to close drops. But if 90% of cost already sits at the cap, there is no headroom, and the lender will not add anything.
- Route three, seller credit. The seller credits part of the third-party costs. Cash to close drops and the balance does not move. If the credit was bought with a higher price, the loan is now sized against a bigger number, and the appraisal has to support it.
The lesson: a file already at the top of its leverage tier has the least room to roll anything in. A file at a lower tier has more room, but the investor with fewer completed projects is also the one with the least cash cushion. Seller credits help most on exactly those files.
How to Ask, in Order
1. Lender first. Ask which fees can come out of proceeds and which must be paid in cash. Get the policy in writing, since the answer differs between lenders.
2. Then the contract. Write the seller credit into the purchase agreement or addendum with a stated dollar cap or percentage and the costs it may cover.
3. Then title. Confirm the settlement statement shows the credit on the correct lines and the numbers reconcile with the lender’s figures.
4. Last, the exit math. Model the larger balance against the sale price or the refinance payoff, not just the closing day.
Mistakes and Red Flags
- Assuming all fees roll in. Points are the common candidate. Title and third-party charges often are not.
- Treating “rolled in” as free. The cost stays in the balance and accrues interest.
- Inflating the price to fund a credit. If the appraisal does not hold, the deal loses both the credit and the leverage.
- Comparing points alone. One lender may charge fewer points plus extra fees, another more points and no other fees. Compare the total upfront cost.
- Skipping the holdback effect. Rehab funds release in draws, so the borrower often needs more cash up front than the headline leverage suggests.
- Mixing up the two “sellers.” The seller of the property being bought can give a credit at purchase. The investor, as seller of a finished flip, may also give a credit to close the resale. Those are separate negotiations.
If the property is a small multifamily the investor plans to occupy, business-purpose treatment can change. Compliance Alliance notes that an owner-occupied rental counts as business purpose for acquisition only above two units, and for improvement only above four. Lendmire’s hard money program is for non-owner-occupied 1-4 unit residential property, so owner-occupied plans are outside the program.
For related reading, see Lendmire’s piece DSCR Cash-Out Refinance Closing Costs That Can Be Rolled Into the Loan.
Key Terms Defined
- Points. Origination fees quoted as a percent of the loan amount, one point being 1%.
- Loan-to-cost. The loan as a share of the purchase price plus rehab budget.
- After-repair value (ARV). The appraised value of the property once the work is finished.
- Seller credit. A contract term where the seller funds part of the buyer’s closing costs, shown as a settlement line item.
- Draw. A release of rehab funds after the work is completed and inspected.
- Holdback. Rehab money the lender keeps until work is done, which raises the cash needed up front.
Frequently Asked Questions
Can points be rolled into a hard money loan?
Sometimes. Points are the fee most often deducted from proceeds, but the loan has to stay inside the lender’s cost and ARV caps. Some lenders want points in cash. The balance owed is the full face amount either way.
Can a seller credit cover my down payment?
Generally no. A seller credit offsets actual closing costs and cannot exceed them. It is not cash back, and a credit used to cover required equity usually conflicts with lender rules. Confirm the lender’s policy before writing it into the contract.
Does 100% financing mean no cash to close?
No. The 100% figure on Lendmire’s program refers to the rehab budget, which funds in draws against completed work. There is no true 100% purchase program. The investor still brings the purchase gap, fees, and any costs the lender will not finance.
Does a seller credit change the purchase price?
No. The credit is a separate contract line, so the price and the comps stay the same. The risk is the reverse move, raising the price to pay for the credit, which can fail if the appraisal comes in low.
Do all lenders allow rolled-in costs or seller credits?
No. Each lender sets its own policy. No federal rule dictates seller-credit caps on investor loans, so the limit lives in the lender’s guidelines.
If you are buying, rehabbing or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals.
For current hard money guidelines and terms, request a quote through Lendmire’s mortgage quote page.
For current guidelines and terms, see Lendmire’s hard money loan programs page.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets — 40 states plus Washington, D.C. — with DSCR eligibility generally reviewed by the lender on property cash flow instead of traditional personal-income documentation, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.
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References
2. noteservicingcenter.com: Hard Money Loan Fees Dispelling the Hidden Cost Myth for Investors
6. CFPB Closing Disclosure explainer
7. Compliance Alliance, Regulation Z and Investment Properties
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Keeping Seller Financing vs Refinancing Into a Hard Money Loan · Can You Get Hard Money to Buy at Auction With an Inherited Tenant? · How to Close a Hard Money Loan in a Community-Property State
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.