The Quick Read: A hard money file moves forward when three packets are complete and consistent with each other: your borrower and entity papers, a valuation the lender trusts, and a title report with no unresolved surprises. Start all three at once, because a problem in any one of them can stall the whole loan.
- Hard money underwriting centers on the property, the plan, and your exit, so the paperwork is lighter than a bank file but never absent.
- The lender’s appraiser sets the value. Your own after-repair estimate is a planning number, not the loan basis.
- The contract, the title commitment, and the borrowing entity should all show the same name.
- Order title early and read the exceptions, because liens are cheaper to clear before closing than during it.
- Plan for cash at the table: appraisal costs, lien payoffs, and rehab funds released in draws all pull on your liquidity.
Lendmire is a mortgage broker that arranges hard money and DSCR investor loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. This guide covers how to prepare each packet and what each one tells the lender. It also covers where the usual rules bend.
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.
What the Lender Is Actually Underwriting
A hard money lender looks at the asset first. It asks what the property is worth today, what it will be worth after work, and how you plan to pay the loan back. Your credit and finances still matter, but they support the property story instead of replacing it.
That is why the documents are lighter than a conventional file, often just recent bank statements showing liquid funds. It is also why the valuation and title work get so much attention.
Here is how leverage typically works across the programs Lendmire places files with. Everything below varies by lender, property, and experience, and none of it is a commitment to lend.
- Fix-and-flip: up to 93% of project cost at 5 or more completed projects, 90% of project cost at 2 or more, and 85% with fewer than 2. Every tier is capped at 75% of after-repair value.
- Bridge purchase without rehab: up to 80% of the purchase price.
- Refinance, cash-out or rate-and-term: up to 65% of value.
- Rehab funds: up to 100% of the rehab budget, released in draws against completed work. That is a budget figure, not a purchase LTV.
- Terms and size: 6 to 18 months, interest-only, with no prepayment penalty. Loan amounts run up to $5,000,000, and larger loans are handled by exception.
- Credit and collateral: a 620 minimum score, with additional conditions below 660. Collateral is non-owner-occupied residential property of 1 to 4 units, and ground-up construction can go to 10 units.
Notice the phrase “loan-to-cost.” The lender usually sizes the loan to the lower of the cost-based test and the value-based test. If your purchase price and rehab budget look strong but the appraised value is low, the value test wins.
The Document Package, and Why Each Piece Is There
Every item in the package answers a lender question. If you know the question, you can predict the request. The items below are commonly requested, and the exact list varies by lender and by deal type.
| Document | What it proves | Applies to |
|---|---|---|
| Executed purchase contract, all addenda | Price, parties, terms | Purchase |
| Government ID | Who you are | All |
| Recent bank statements | Liquidity for costs and reserves | All |
| Entity formation papers | The borrower legally exists | Entity borrowers |
| Operating agreement | Ownership and who can sign | Entity borrowers |
| EIN letter | The entity’s tax identity | Entity borrowers |
| Scope of work and budget | The plan is realistic | Rehab deals |
| Experience summary | Completed projects, which sets your leverage tier | Flips and construction |
| Lease or hosting history | Income the property already produces | Rental refinance |
| Insurance contact and coverage evidence | The collateral is protected | All |
Three of these deserve extra attention.
The contract. Send it fully executed, with every addendum and counteroffer. A missing addendum changes the price or terms the lender thinks it is financing.
The experience summary. Your leverage tier depends on documented completed projects. The difference between 85% and 93% of project cost is the difference between fewer than 2 projects and 5 or more. Keep addresses, purchase and sale details, and scope of work for each project ready.
The scope of work and budget. Lenders test whether the budget is realistic and sometimes stop a file when it is not. A budget with line items and contractor bids reads as a plan. A single lump figure reads as a guess.
Entity borrowers. If an LLC will borrow, the contract, the title commitment, and the loan application should all name that same entity. Mismatches create last-minute re-papering. Lending to LLC-titled entities is subject to lender program eligibility, so confirm that early.
Also line up your title and insurance contacts before you need them. Delays often come from third parties who were contacted late, not from the borrower.
Title: Order It Early and Read the Exceptions
Order title as soon as the contract is signed. The title company searches the public records and issues a preliminary report, also called a commitment. Fidelity National Title’s educational flyer describes it as a dated, formal report of the conditions under which a policy would be issued.
Read it in this order:
1. The basics. Check the legal description, parcel number, and vesting, meaning how ownership is currently held. Beresford Law recommends confirming these first, since errors here ripple through everything else.
2. The exceptions. These are the recorded matters the policy will not cover unless something changes: liens, easements, restrictions. Many are routine. The real question is whether one affects ownership, access, financing, or resale.
3. The requirements to close. This is your cure list. Exceptions are not set in stone, and the lender can ask for items to be removed before closing.
One caution applies throughout. Underwood Law points out that a preliminary report is not a guarantee of title and may not list every defect. A clean report is good news, not a guarantee.
Common title problems and how they get cleared
| Problem | Typical cure | Who acts |
|---|---|---|
| Unpaid property taxes | Paid from sale proceeds at closing | Title agent |
| Old mortgage paid but never released | Obtain a recorded release | Title agent, prior lender |
| Judgment lien | Payoff letter and recorded release | Seller or borrower |
| Mechanics’ lien from prior work | Payoff or release from the contractor | Seller or borrower |
| HOA lien | Payoff statement from the association | Seller or borrower |
| Ownership or name mismatch | Corrected deed or updated vesting | Attorney, title agent |
A few edge cases cause outsized trouble. A quit-claim deed does not clear a tax lien. Mechanics’ liens from earlier renovation work are a standard exception, so ask what work the seller did and who was paid. Auction and foreclosure purchases need extra title care, so involve your title agent before bidding if you can.
Who the title policy protects
Lender’s title insurance protects the lender, usually for the balance of the loan. The Consumer Financial Protection Bureau says it is usually required and does not protect your equity. Only an owner’s policy does that. The National Association of Realtors adds that the lender’s policy lasts only for the life of the loan, and that the owner’s policy is optional.
Those pages are written for consumer home loans, but the logic carries over to business-purpose loans. If you are putting real equity and rehab money into a property, an owner’s policy is the coverage that protects it. Ask your title agent about pricing both policies together, and whether the total comes out lower when one provider issues both.
For a refinance, a related question is how long you have held title and how to document it. Lendmire’s piece How to Prove Title Seasoning When Refinancing Out of Hard Money Into DSCR covers that exit step.
Getting the Appraisal Ready
The lender orders the valuation, and you usually pay for it up front. Your job is to make the property accessible and give the appraiser what they need to see the same story you see.
Understand which value matters. An as-is value drives bridge purchases and many refinances. After-repair value, or ARV, drives rehab and flip loans. The appraiser builds ARV from the as-is value, the proposed renovations, and closed comparable sales. They do not start from your number.
Prepare these items before the site visit:
- Access. Arrange entry, make sure utilities are on, and clear the site so the appraiser can see every room and system.
- Scope and budget. On renovation deals, hand over the same scope of work and budget you gave the lender, so the appraiser prices the finished product you are actually building.
- Comparable sales. Offer a short list of recent closed sales that support your ARV. Give them as reference. The appraiser decides what to use.
- Lease or income history. For rental deals, provide the signed lease. For short-term rentals, provide the hosting records.
- Permit history. Documentation for completed and in-progress work removes questions.
- Photos. Before photos and any progress photos help on a rehab in progress.
Some lenders use a broker price opinion instead of a full appraisal. It is a lighter, cheaper valuation. Lenders that skip valuations entirely deserve scrutiny, because the valuation protects you from overpaying and overborrowing as much as it protects them.
One useful habit comes from the rental side. The appraiser’s market rent estimate feeds your coverage later, when you refinance into long-term financing. For a single-family rental, that estimate typically comes from Fannie Mae’s Form 1007 comparable rent schedule. On 2-4 units, the rent analysis sits inside the Form 1025 small residential income property report. Only the form names matter here. Agency rules about when those forms are required do not govern hard money loans, and each lender sets its own requirements.
If the Value Comes In Short
A low appraisal shrinks the loan. It can also shrink the refinance that is supposed to repay it. A plan that only works at your best-case ARV is fragile, and the appraisal is where that fragility shows.
Work through these options in order:
1. Check the report for factual errors. Look at square footage, bedroom and bath counts, and unit count. Corrections are the easiest wins.
2. Request reconsideration with comparable support. Send closed comparable sales the appraiser may have missed, with a short explanation of why they fit. Treat this as one shot. Reconsideration sometimes raises a value slightly, and it does not always work.
3. Renegotiate the price. If the contract allows, use the appraisal as leverage with the seller.
4. Restructure. Bring more cash, trim the scope, or phase the work.
5. Walk away. If the deal only worked at the higher value, the appraisal told you something true.
Lendmire’s article How to Refinance Out of Hard Money After a Low Appraisal covers the exit side of this problem.
Where the General Rules Bend
Rehab draws. Rehab money is not handed over at closing. The lender holds it aside and releases it in increments as work is verified, and it pays only what is in the approved budget. Plan to carry costs between draws from your own liquidity.
Refinances and cash-out. The document list shifts. You need evidence of ownership, a payoff statement for the existing loan, and, on occupied property, the leases. Leverage is lower too, at up to 65% of value on a refinance, so the appraisal matters even more.
Title held in a trust or entity. Vesting and signing authority need to be documented. Bring the trust certificate or the operating agreement showing who can sign.
Ineligible property. Hard money collateral is non-owner-occupied residential property of 1 to 4 units, with ground-up construction to 10 units. Commercial, industrial, land and lot loans, hospitality, and owner-occupied property are not offered on this program.
Experience tiers. The top leverage tier is reserved for experienced investors. First-time investors qualify at the lower leverage tiers.
A Sequence That Keeps the Three Packets Moving
Run these tracks in parallel. The order below shows what comes before what, not how long each step takes.
| Phase | Tasks | Owner |
|---|---|---|
| Before you apply | Gather ID, statements, entity papers, experience summary | You |
| Contract signed | Order title, send the contract to the lender | You, title agent |
| Terms and conditions | Submit scope and budget, send insurance contact | You |
| Valuation | Give the appraiser access, scope, comps, lease | You, appraiser |
| Title review | Read exceptions, start cures, request payoffs | You, title agent |
| Before closing | Confirm vesting matches, review the lender’s policy amount | All parties |
| After closing | Track draws, keep receipts and inspection records | You, lender |
The lender’s title policy is issued at the loan amount, not the purchase price, so confirm that figure with your title agent.
Common mistakes and the fix
| Mistake | What happens | Fix |
|---|---|---|
| Ordering title late | Liens surface near closing | Order at contract |
| Borrowing entity differs from the contract | Re-papering | Match names early |
| Unrealistic budget | Lender pauses the file | Itemize with bids |
| Relying on your own ARV | Loan sized below plan | Plan on the low case |
| Skipping owner’s coverage | Equity unprotected | Price both policies |
A Worked Example
Picture an investor buying a duplex through an LLC with a heavy cosmetic rehab and two completed projects behind them. That puts them in the 90%-of-project-cost tier, capped at 75% of after-repair value.
The title commitment comes back showing an old mortgage that was paid off years ago but never released, plus a contractor’s lien from prior work. Because the investor ordered title at contract, the title agent has time to request the release and ask the seller for a payoff on the contractor’s lien.
The appraisal then lands a bit under the investor’s ARV estimate. The 75% cap binds, so the loan is smaller than planned. Because the investor already budgeted for that possibility, they cover the gap from liquidity and close without renegotiating.
The investor did not get lucky. They prepared for the failure points before they happened.
The Exit Matters Too
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized. DSCR stands for debt service coverage ratio, which compares a property’s rent to its monthly obligation. Lendmire brokers that path, and the complete DSCR loans guide explains how it works. The same discipline carries over: clean title, a clear valuation, and rent that is documented.
Key Terms Defined
As-is value: What the property is worth today in its current condition.
After-repair value (ARV): The appraiser’s estimate of the property’s value once planned renovations are complete.
Loan-to-cost: The loan amount as a percentage of total project cost, meaning purchase price plus rehab budget.
Preliminary title report (commitment): The title company’s dated report on ownership, liens, and the conditions required before it will issue a policy.
Exception: A recorded matter the title policy will not cover unless it is removed or resolved.
Vesting: How ownership of the property is legally held, such as an individual or an LLC.
Draw: A release of held-back rehab funds after the lender verifies completed work.
Broker price opinion (BPO): A lighter valuation than a full appraisal, based on comparable sales and a property review.
Frequently Asked Questions
Is a full appraisal always required?
No. Some lenders accept a broker price opinion or a comparative market analysis on certain deals. The valuation type depends on the lender, the loan size, and the deal. A full appraisal tends to give the strongest support for an ARV-based loan.
Who orders and pays for the appraisal?
The lender typically orders it, and you usually pay for it up front. Treat it as a cost you carry even if the loan does not close.
Can I use my own appraisal?
Generally no. The lender picks the appraiser so the valuation is independent. You can hand over comparable sales and your scope of work to inform it.
What if title shows a lien?
Ask the title agent for the payoff or release steps. Many liens are paid from sale proceeds at closing, and some need a payoff letter or recorded release from the lienholder. Start early, because some take outside parties to clear.
Do I need owner’s title insurance?
It is optional, but it is the only policy that protects your equity. The lender’s policy protects the lender’s loan balance. Ask whether pricing the two together lowers the total.
If You’re Ready to Run the Numbers
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. You can reach the team at 828-256-2183.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
1. Fidelity National Title’s educational flyer
2. Beresford Law – Reading a preliminary title commitment
4. CFPB – What is lender’s title insurance?
5. NAR – What is title insurance?
6. Fannie Mae – Selling & Servicing Guide Forms
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: DSCR Loan vs Local Bank Commercial Loan on a Fourplex · No-Reserves DSCR Loan vs Standard DSCR Loan on Pricing and LTV · Should a BRRRR Investor Exit Hard Money on a Low Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.