The Quick Read: Yes, a first-time investor should plan to bring cash to a hard money deal, because the loan funds a share of project cost and never all of it. On a fix-and-flip, the network’s top tier funds 93% of project cost only for investors with 5+ completed projects, and first-timers sit at the 85% tier. Every tier is capped at 75% of after-repair value.
- Fix-and-flip leverage is 85% of project cost with fewer than 2 completed projects, and every tier is capped at 75% of after-repair value.
- Bridge purchases without rehab go up to 80% of purchase price.
- Rehab money funds in draws against completed work, so you front contractor costs.
- Your true cash need includes closing costs, carrying costs, and a cushion for overruns.
- Figures vary by lender, property, and experience, and nothing here is a commitment to lend.
A sharp first-timer usually asks one thing: can I do this with nothing down? Almost never. The rest of this piece shows why, how the cash is sized, and what to do if you are short.
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.
Why Does Hard Money Ask for Cash in the Deal?
Hard money is short-term, asset-based lending. The lender is betting on the property, your plan, and your exit, not on years of income history. Your cash is the cushion that protects that bet.
Think of it as alignment. A borrower with money in the deal finishes the project and fixes problems. A borrower with none can walk away. Lenders know this, so they size the loan to leave you exposed.
No federal rule sets the number. Hard money is business-purpose credit, and the federal consumer-finance regulator’s Truth in Lending exam procedures describe exemptions for credit extended primarily for business or commercial purposes. The cash you bring is therefore a lender risk decision, not a regulatory minimum.
How Is the Down Payment Actually Calculated?
The down payment is whatever the loan does not cover. Lenders apply two tests and the smaller loan wins.
Here are the terms, defined once:
- Loan-to-cost (LTC): the loan as a share of purchase price plus rehab budget.
- After-repair value (ARV): what the property should be worth once the work is done.
- Loan-to-ARV: the total loan as a share of that finished value.
Across Lendmire’s wholesale network, fix-and-flip leverage is tiered by completed projects. It runs 93% of project cost at 5+ completed projects, 90% at 2+, and 85% with fewer than 2. Every tier is capped at 75% of ARV. That last figure is a cap on the finished value, never a purchase LTV.
Run the numbers on a modeled flip. Say the purchase price plus rehab equals 100 units of project cost, and the finished property is worth 130 units. The first-timer cost test allows 85 units. The ARV test allows 75% of 130, which is 97.5 units. The cost test is smaller, so it governs, and you cover the other 15% of cost.
Flip the deal. Say the finished value is only 110 units. Now 75% of ARV is 82.5 units, which is below the 85 from the cost test. The ARV cap governs, and your cash share rises to 17.5%. A thin spread between cost and value costs you more cash.
Ask any lender which base they mean when they say “80% leverage.” Value and cost are different measures, and the gap between them changes your check. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Down Payment Versus Total Cash to Close
The down payment is the smallest part of the surprise. Total cash is a stack, and most of it sits outside the loan.
| Cash bucket | What it is | Financed by the loan? |
|---|---|---|
| Down payment | Cost not covered by the loan | No |
| Closing costs | Title, legal, appraisal, lender fees | Usually no |
| Rehab float | Contractor costs before draws reimburse you | Reimbursed later |
| Carry costs | Insurance, utilities, interest during the hold | No |
| Overrun cushion | Costs beyond the agreed scope | No |
| Reserves | Proof of liquid funds after closing | No |
The rehab float is the one that catches new investors. Draws pay out as work is completed and inspected. You front the money, then get reimbursed.
Scope matters too. The loan covers the rehab scope agreed at closing. Surprises beyond that scope are yours.
Why Are First-Timers Treated Differently?
First-timers qualify, but at lower leverage tiers. Experience changes how much the lender will fund. It does not usually decide whether you are eligible at all.
The network’s top leverage tier is reserved for experienced investors with a documented project history. With fewer than 2 completed projects, you land at 85% of project cost. The credit floor is 620, with additional conditions below 660, and underwriting stays asset-based: property, plan, and exit.
What substitutes for a track record? Lenders want to see a deal that proves itself on paper:
- Clear sales comps supporting your ARV
- A detailed rehab scope and timeline
- Binding contractor quotes, ideally from an experienced general contractor
- A realistic exit plan
- Equity that does not rest only on a discounted purchase price
That last point matters. Some lenders do not count a below-market purchase as your contribution. A bargain price helps your margin. It does not always replace cash.
Many investors who start with a partner or an experienced contractor on the team find lenders more comfortable with the file. Terms depend on the lender, the property, and your experience.
Can You Really Do Hard Money With Nothing Down?
Rarely, and never as a true 100% purchase program. There is no 100% purchase loan on the network’s sheet. The top tier is 93% of project cost, and it is reserved for investors with 5+ completed projects.
“Zero down” claims usually mean something narrower. Each version below is different:
| Claim | What it usually means |
|---|---|
| 100% financing | Rare; lender funds price and rehab, often needs strong credit or cross-collateral |
| No cash at closing | Cash arrives elsewhere, such as a seller credit, partner, or second loan |
| No cash needed overall | Almost never true once draws, fees, and carry are counted |
The realistic paths are cross-collateral (another property pledged in place of cash), an equity partner, or a seller who carries part of the price. If a second loan sits behind the first, the hard money lender has to allow it. Check that before you sign.
Be skeptical of any pitch that says you need nothing. The lender’s money is at risk in a short window, and a deal that works only with zero investor cash is a deal the lender should worry about.
What Do the Market Numbers Say About a First-Timer’s Cash?
Market surveys of individual lenders and investor communities put the first-timer cash requirement anywhere from about 10% of project cost to 30% or more of the purchase, and they disagree with each other. That spread tells you the range is lender-specific.
The network figure for a first-timer is the one above: 85% of project cost with fewer than 2 completed projects, capped at 75% of ARV. Treat any single number you find online as one lender’s view.
Ways to Close a Cash Shortfall
If the math leaves you short, you have options. None is free.
| Option | Upside | Tradeoff |
|---|---|---|
| Smaller or cheaper first deal | Less cash at risk while you learn | Smaller profit |
| Equity partner | Brings cash and sometimes experience | Shares profit |
| Cross-collateral | Replaces cash with another asset | Puts that asset at risk |
| Seller carry or gap structure | Reduces cash at closing | Needs first-lien lender consent |
| Wait and save | Stronger file later | Costs time |
For most first-timers, the smaller deal is the stronger play, though ambitious investors will argue a partner buys speed of learning. It is a genuine toss-up that depends on whether you value keeping the whole profit or shortening the learning curve.
Where the Cash Can Come From and What to Document
Lenders want to see where your money came from. Expect to provide:
- Bank or asset statements
- An explanation for any large recent deposit
- Proof of reserves after closing
- The purchase contract, rehab scope, and budget
- Entity documents if you buy through an LLC, subject to lender program eligibility
- A written exit plan
Cash from savings, a partner, or the sale of another asset is generally easier to document than cash that appears suddenly. Clean paper trails make files move smoothly through review.
Hard money is business-purpose financing for non-owner-occupied residential property, 1-4 units, with ground-up construction up to 10 units. Because these are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage. Documentation of how the funds will be used still matters, and the OCC’s Truth in Lending handbook repeats the same business-purpose framing.
A Modeled First Flip, Start to Finish
Picture a first-time investor buying a light-rehab single-family house. The inputs below are modeled assumptions, not market data.
1. Before closing. You assemble comps, a scope, contractor quotes, and proof of funds.
2. At closing. You pay your share of project cost at the 85% tier, plus closing costs. The loan stays under the 75% of ARV cap.
3. During the rehab. You pay the contractor, request a draw, pass an inspection, and get reimbursed against completed work.
4. If costs overrun. The extra comes from your cash, since the loan covered only the agreed scope.
5. At the exit. You sell, or refinance into long-term financing.
Many investors who keep the property refinance out of hard money into long-term DSCR financing once it is stabilized. DSCR means debt service coverage ratio: the property’s rent compared with its monthly mortgage obligation. Lendmire brokers that path. The terms there are different, and the complete DSCR loans guide explains how that long-term side works.
Hard money terms run 6-18 months, interest-only, with no prepayment penalty. There are no multi-year options, so plan the exit before you close.
What Goes Wrong When You Stretch Too Thin?
Running out of cash mid-project is the classic failure. The lender holds back draws until work is complete, and a stalled contractor can stall your deal.
Three patterns show up on thin files:
- An ARV that comes in below the number you underwrote, shrinking the loan cap
- A budget with no overrun cushion
- A term that expires before the work and exit are done
The refinance is sensitive to appraisal too. If the property appraises low, the cash you expected to pull out shrinks. Hard money cash-out and rate/term refinances go up to 65% of value, which leaves less room than many first-timers assume.
Am I Cash-Ready? A Short Checklist
- I can cover my share of project cost.
- I can cover closing costs and several months of carry.
- I can float contractor costs between draws.
- I have a cushion for overruns.
- My credit clears the 620 minimum, with additional conditions below 660.
- I have comps, a scope, quotes, and an exit.
If you can check all six, you are likely ready to talk to a broker. If two or more are open, a smaller deal or a partner may be the better first step.
Key Terms Defined
Hard money loan: short-term, interest-only financing secured by the property, sized on project cost and finished value.
Loan-to-cost (LTC): the loan as a share of purchase price plus rehab budget.
After-repair value (ARV): the estimated worth of the property once renovations are done.
Draw: a release of rehab funds after completed work is inspected.
Cross-collateral: pledging a second property in place of cash.
Reserves: liquid funds you show remain after closing.
Frequently Asked Questions
Can a first-time investor get hard money with no money down?
Rarely. The network’s top tier funds 93% of project cost, and only for investors with 5+ completed projects. First-timers sit at 85% of project cost, so cash is expected. Some structures, such as cross-collateral or a partner, reduce cash at closing, but they do not remove the need for money in the deal.
Does hard money lend against purchase price or against ARV?
Both. The loan is sized by loan-to-cost and capped at 75% of ARV, and the smaller result governs. Bridge purchases without rehab go up to 80% of purchase price. Cash-out and rate/term refinances go up to 65% of value. Figures vary by lender, property, and experience.
Does the lender cover the rehab automatically?
Up to 100% of the rehab budget funds in draws against completed work. You pay contractors first and are reimbursed after inspection. Costs beyond the agreed scope are yours.
What credit score do I need?
The network minimum is 620, with additional conditions below 660. First-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, looking at the property, the plan, and the exit, and every file is reviewed individually.
Is a hard money loan the same as a DSCR loan?
No. Hard money is short-term rehab or bridge financing. DSCR loans are long-term financing that qualify primarily on property-level rental income covering the payment, subject to lender guidelines. Many investors refinance from one into the other.
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. Lendmire is a broker arranging financing through select lenders across 41 markets, including Washington, D.C.
Tax treatment varies; consult a qualified professional.
Cash is the entry fee for a first flip, and the investors who budget for the whole stack, not just the down payment, are the ones who reach a second deal.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB Truth in Lending exam procedures
2. OCC Comptroller’s Handbook, Truth in Lending Act
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Hard Money Flip Loan vs Private Money for a First-Time Investor · How a Hard Money Lender Counts Equity as a Flip Down Payment · Hard Money Bridge Down Payment Requirements for Out-of-State Investors
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.