The Quick Read: A hard money lender usually does not run a personal debt-to-income ratio, but it still sees your other debt through your credit report, a personal financial statement, a schedule of properties you own, and your personal guaranty. Debt changes the file through credit, cash on hand, and leverage rather than through a formula. Lenders vary on how much weight each piece gets.
- The property, the plan, and the exit carry the file, so a paycheck ratio is not the gate.
- Other debt still shows up as credit score, liquidity, and guaranty exposure.
- Existing liens on the subject property matter more than most borrowers expect.
- A 620 minimum score applies on the program we broker, with extra conditions below 660, and everything varies by lender, property, and experience.
- A conventional lender down the road can count the loan against you, so the exit plan matters.
What Does “Counting” Debt Actually Mean?
Counting debt can mean three different things: a gate, an adjustment, or context. Most confusion comes from mixing them up.
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.
A gate is a hard pass-or-fail test, such as a maximum debt ratio. An adjustment changes the offer, for example by lowering leverage or asking for more cash on hand. Context is information the lender notes and weighs without any formula.
On hard money, other debt is rarely a gate. It is often context, and sometimes an adjustment. “No ratio” does not mean “no review,” and “not on the credit report” does not mean “invisible.”
What Is DTI, and Why Doesn’t Hard Money Use It?
Debt-to-income (DTI) is your total monthly debt payments divided by your gross monthly income. A conventional lender uses it as a gate because it is lending against your paycheck.
A hard money loan is a short-term, interest-only, asset-based loan. On the program we broker, terms run 6 to 18 months with no prepayment penalty, subject to lender guidelines. The lender lends against the property, the project plan, and the exit.
Underwriting therefore asks different questions. Is the collateral worth what the plan says? Can this borrower finish the project? How does this loan get repaid?
The Five Ways Other Debt Enters the File
Across the lenders we work with, other debt reaches a hard money file through five channels. Here is how each one behaves.
| Channel | What the lender sees | What it can change |
|---|---|---|
| Credit report | Balances, late payments, collections | Score tier and conditions |
| Financial statement and property schedule | Loans on other properties | Context, leverage comfort |
| Liens on the subject property | Existing mortgages and judgments | Payoff needs, combined leverage |
| Personal guaranty | Your personal liability on this loan | Brings your whole balance sheet into view |
| Liquidity | Cash left after obligations | Reserves, draw comfort |
1. The credit report
The credit pull shows revolving balances, installment loans, and personal loans. No ratio is computed. The effect runs through the score.
The program we broker sets a 620 minimum, with additional conditions below 660. First-time investors qualify at the lower leverage tiers. Heavy card utilization or recent late payments can push a score down, and that is the main way everyday consumer debt touches a hard money file. These figures vary by lender, property, and experience, and nothing here is a commitment to lend.
2. The financial statement and property schedule
A personal financial statement lists your assets and liabilities. A real-estate-owned schedule lists each property you hold, its value, and the loan against it. These documents are where your other debts are written out in full.
How much a lender asks for varies. Larger loans and guaranteed loans tend to draw more paperwork. Mortgages on other rentals are read as context for experience and liquidity, not plugged into a ratio.
3. Liens on the subject property
This is the channel most borrowers overlook. Debt on the property you are buying or refinancing can matter more than debt on you.
On a purchase, the existing seller loan is normally paid off from the sale. On a refinance, the existing mortgage is paid off, and any judgment or tax lien attached to the property has to be dealt with. Lien position and combined leverage matter because the lender wants to be repaid from the property.
Leverage on the program we broker is measured against cost or value, not your income. Refinances run up to 65% of value. Bridge purchases without rehab run up to 80% of purchase price. For fix-and-flip projects, leverage runs 93% of project cost at 5 or more completed projects, 90% at 2 or more, and 85% with fewer than 2. Every tier is capped at 75% of after-repair value.
4. The personal guaranty
A guaranty means you promise to repay the loan personally, even when an LLC is the borrower. Entity borrowers are common, subject to lender program eligibility. The guaranty still pulls your personal credit and your other obligations into view.
It also creates a second effect. A loan you guarantee is a liability of yours, whether or not it appears on a credit report.
5. Liquidity
Liquidity is the cash you can actually reach. Payments on your other properties come out of that cash. A borrower with substantial equity but thin cash, because it is tied up in other deals, is a real concern for a lender funding a rehab in draws.
For that reason, debt shows up as a liquidity question more often than a leverage question. A borrower with plenty of cash and many properties tends to read as stronger than one with few properties and no cushion.
Debt on the Property vs. Debt on You
Underwriters mentally split your obligations into two piles.
| Item | Debt on the property | Debt on you |
|---|---|---|
| Examples | Existing mortgage, liens, judgments | Cards, auto loans, loans on other properties |
| Who cares most | Title and the lender’s collateral position | Credit review and the guaranty |
| Typical effect | Payoff at closing, combined leverage | Score, liquidity, comfort |
Property debt is a collateral problem. Personal debt is a borrower problem. Most hard money files turn on the first pile, and the second pile mostly shows up through credit and cash.
What the Lender Can See That Your Credit Report Doesn’t
Many hard money loans never appear on a credit report. That does not make them hidden. Lenders also use title work, public-record searches, and asset searches. Liens, judgments, and recorded mortgages tend to turn up that way.
A borrower who leaves a debt off an application can still have it found. Disclose everything accurately. A surprise during underwriting does more damage than the debt itself would have.
Worked Examples (Illustrative, No Dollar Figures)
These scenarios are illustrative, and outcomes vary by lender, property, and experience.
Strong equity, heavy personal debt. A borrower with several completed flips and a large balance on credit cards wants a bridge purchase. The cards weigh on the score, but the deal has plenty of margin and the borrower has a track record. The likely effect is a conversation about score and cash, not a ratio-based decline. Debt here is context.
Modest debt, thin cash. A first-time investor has little consumer debt but has sunk most savings into a down payment. The lender worries about how the borrower will cover costs between draws. The likely effect is lower leverage or an ask for more cash on hand. Debt is an adjustment, through liquidity.
Derogatory item on file. A borrower has a recent collection or a judgment. Lenders differ widely here. Some decline, some reprice or condition, and some need a documented explanation. We know of no universal rule, so treat it as case by case. If the judgment attaches to the property, it must be resolved.
Same Borrower, Two Lenders
The identical borrower can look very different depending on who reads the file next.
| Item | Hard money lender | Conventional exit lender |
|---|---|---|
| Main test | Property, plan, exit | Income and monthly debts |
| DTI computed? | Usually not | Yes |
| Guaranteed loans | Context and liquidity | Can count as liabilities |
| Other rentals | Experience signal | Counted in the debt picture |
This is why the exit plan belongs in the file from day one. Many investors have the hard money loan itself go smoothly, then run into a ratio when they apply for a conventional mortgage. Some conventional underwriters treat a guaranteed loan as a contingent liability, even when it never reports to credit.
If your exit is a refinance into long-term rental financing, the picture changes. A DSCR loan, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, does not run a personal DTI. Many investors refinance out of hard money this way once the property is stabilized, and the complete DSCR loans guide explains how that works.
Why the Rules Differ: The Business-Purpose Line
Hard money loans are designed for non-owner-occupied investment properties. Because they are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage. Federal rules on ability to repay do not cover business-purpose loans, which is the legal reason a lender is not required to compute a consumer-style ratio.
Two limits apply. First, the label alone does not settle it. A law-firm guide to the exemption notes that credit to acquire, improve, or maintain a non-owner-occupied rental is exempt, but owner occupancy changes the answer. Second, business-purpose does not mean free of all rules. A Hunton law-firm article warns against reading it that way.
The practical result is simple. If you plan to live in the property, this is the wrong product. The collateral we discuss is non-owner-occupied residential property with 1 to 4 units, plus ground-up construction up to 10 units.
Key Terms Defined
Debt-to-income (DTI): Your total monthly debt payments divided by your gross monthly income, used by conventional lenders as a pass-or-fail test.
Personal guaranty: Your personal promise to repay a loan, even when an LLC is the named borrower.
Contingent liability: A debt you could be responsible for if the main borrower fails to pay, which some lenders count in your obligations.
Personal financial statement: A signed list of what you own and owe, used to show net worth and liquidity.
Real-estate-owned schedule: A table of every property you hold, with value and loan balance for each.
Combined leverage: All loans secured by the same property, measured against its value.
Liquidity: Cash and assets you can reach without selling a property.
What to Prepare
Matching documents to the five channels keeps the file clean.
- Credit: Pay down card balances where you can before the pull, and be ready to explain any recent late payment.
- Statements: Build a current personal financial statement and property schedule that match your credit report.
- Subject property: Get a payoff statement for each existing lien and clear any judgment tied to the title.
- Guaranty: Know which of your current loans you personally guarantee, because a later lender will ask.
- Liquidity: Show cash on hand after the down payment, with the source documented.
Common Mistakes and Misconceptions
“No DTI means no underwriting.” That’s a misconception: credit, cash, experience, and the entity all get reviewed.
“An LLC makes the debt not mine.” A guaranty ties the debt back to you personally.
“If it isn’t on my credit report, nobody will find it.” Title work, public records, and asset searches turn up recorded loans.
“Checking the business-purpose box is enough.” The lender has to be satisfied about how the funds will be used.
“The hard money loan is a one-time event.” It can come back through a conventional lender’s liability review when you exit.
Frequently Asked Questions
Does a hard money lender check my debt-to-income ratio?
Usually not as a pass-or-fail test, because the loan is underwritten to the property and the plan. Lenders still review your credit, cash, and experience, and they can see your debts. Practices vary by lender, so ask before you apply.
Will my credit card debt hurt my application?
Indirectly. Card balances affect your score, and the program we broker sets a 620 minimum with extra conditions below 660. High balances can also strain the cash you can show. Both effects vary by lender, property, and experience.
Does a hard money loan count against me on my next mortgage?
It can, particularly if you personally guaranteed it, since a conventional lender may count it in your obligations even when it never hit your credit report. A refinance into long-term rental financing that is reviewed on rental income avoids a personal DTI test, subject to lender guidelines.
Do existing liens on the property matter?
Yes, often more than your personal debt. Existing mortgages are paid off at closing, and judgments or tax liens attached to the title have to be resolved. Combined leverage is measured against cost or value.
Can I get hard money with a lot of other debt?
Possibly, depending on the lender, the deal, and your cash and track record. First-time investors qualify at the lower leverage tiers, and the strongest tiers are reserved for experienced investors. Nothing is a commitment to lend.
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. As a broker, Lendmire arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
For current guidelines and terms, see Lendmire’s hard money loan programs page.
About Lendmire
Lendmire is a DSCR-focused mortgage brokerage, NMLS# 2371349, placing investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed by the lender around a property’s rental income rather than personal income documentation, which fits LLC-held rentals, self-employed investors, and portfolios scaling past conventional financed-property limits. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Federal Register: Ability-to-Repay and Qualified Mortgage Standards
2. Doss Law: Business Purpose Exemption Simplified
3. Hunton: Beware of “Business Purpose”
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Close a Hard Money Loan in a Community-Property State · How Much a Hard Money Lender Discounts ARV Built on Distant Comps · Can a Cosmetic Flip Get More Hard Money When Costs Run Over?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.