The Quick Read: Yes, a hard money fix-and-flip loan has leverage limits, and two usually apply at once: a cap on the loan as a share of project cost, and a separate cap on the loan as a share of after-repair value, with the lower of the two setting the actual loan amount. Those caps are program terms, so they vary by lender, property, and experience. Across the wholesale network Lendmire places these files with, the pattern looks like this (subject to lender guidelines, not a commitment to lend):
- Flip leverage is tiered by completed projects: 85% of project cost with fewer than 2, 90% with 2 or more, and 93% with 5 or more.
- Every tier is capped at 75% of after-repair value (ARV). That cap is the one that surprises first-timers.
- Up to 100% of the rehab budget funds in draws. That is a rehab figure, not a purchase LTV.
- Bridge purchases with no rehab run up to 80% of purchase price. Cash-out and refinance files run up to 65% of value.
- Loan amounts go up to $5,000,000, with larger loans by exception. Terms run 6 to 18 months, interest-only, with no prepayment penalty.
Why Two Caps Apply at Once
Hard money lends against the asset, so every cap ties back to a property value. A flip has two values: what the property costs you all-in, and what it should be worth when the work is done. Lenders cap against both.
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.
Loan-to-cost (LTC) compares the loan to total project cost. Cost means the purchase price plus the rehab spend, and a higher LTC means more risk for the lender. Loan-to-value (LTV) is different.
ARV, or after-repair value, is the third number: the projected value of the property once the rehab is finished. LTV can be measured against it.
Here is the catch. When a lender advertises an LTV, it may mean as-is value, cost, or ARV. The word gets used loosely. Ask which value sits under the percentage before you compare two offers.
How the Network Sizes a Flip
The network sizes a flip on cost first, then checks the result against ARV. Leverage steps up with documented completed projects. Experience mostly moves the percentage, not eligibility. Credit and the exit plan still matter on every tier.
Here is how the tiers read on most files:
- Fewer than 2 completed projects: 85% of project cost.
- 2 or more: 90% of project cost.
- 5 or more: 93% of project cost.
- All tiers: capped at 75% of after-repair value.
The top tier goes to experienced investors, and the experience has to be documented. A first-time flipper is not shut out. A first-time investor qualifies at the lower tiers, with a minimum score around 620 and additional conditions below 660. All of this varies by lender, property, and experience.
Collateral is non-owner-occupied residential, 1-4 units. This is business-purpose lending. Underwriting is asset-based: the property, the plan, and the exit.
For a first-timer, the 85% tier is not the problem. The ARV cap is.
One Deal, Run Through Both Tests
The lower result wins. Run it this way, using index numbers instead of dollars. These are modeled assumptions, not market data. Say total project cost is 100 units on the 85% tier.
1. Set the two values. Total cost is purchase price plus rehab budget. ARV comes from an appraisal or a comps analysis. Assume cost of 100 and an ARV of 110.
2. Apply the cost cap. 85% of 100 is 85.
3. Apply the ARV cap. 75% of 110 is 82.5.
4. Take the lower number. The ARV cap governs at 82.5. The loan is smaller than the cost test alone suggested.
5. Fund the difference. The borrower covers the gap between cost and the loan. That includes the down payment, closing costs, and reserves.
Now flip the picture. Same investor, but with 5 completed projects, so the 93% tier applies, and an ARV of 125. The cost cap gives 93. The ARV cap gives 93.75. Now the cost cap governs.
The rule is simple. The better the spread between cost and ARV, the more likely the cost cap binds. A thin spread makes the ARV cap bind. Check which one governs before you budget cash.
What Happens When the ARV Comes In Low?
The loan shrinks, and your cash requirement grows. The ARV cap is a percentage of whatever value the lender accepts, not the value you hoped for.
Say you budget on one ARV and the appraisal or comps analysis supports a lower one. The cost test hasn’t changed. The ARV test has. If the ARV test now binds, the loan drops and you bring the difference.
This is the quiet failure mode on flip files. The investor sized the deal on an optimistic ARV, the number came back lighter, and the cash to close moved. Build a cushion into the ARV on your own model. Don’t plan around the top of the comp range.
When the numbers don’t fit, you have four moves:
- Bring more cash. The simplest fix, and often the most expensive for your return.
- Trim the scope. A smaller rehab lowers total cost, though it may also lower ARV.
- Renegotiate the price. If the contract isn’t final, the purchase price is the lever you still control.
- Bring better comps. A clean packet of recent, close sales gives the reviewer something to work with. It does not replace the lender’s own review.
Documents matter here. A lender wants the purchase contract, a line-itemed scope and budget, and an ARV opinion. Experience documentation supports the higher tiers. An ARV packet with weak comps, or a budget with round numbers, invites questions.
How Limits Change by Loan Type
The percentages above apply to flips with a rehab budget. Without a rehab, the sizing runs off current value, not ARV. Don’t carry the flip numbers over to a refinance.
| Loan type | Typical network cap | Measured against |
|---|---|---|
| Fix-and-flip | 85%-93% of cost, 75% of ARV max | Project cost and ARV |
| Bridge, no rehab | Up to 80% | Purchase price |
| Cash-out or refinance | Up to 65% | Value |
All three are typical ranges and vary by lender, property, and experience.
The refinance number is the one that catches people. An investor who bought a flip, finished the work, and wants to pull cash out before selling should expect a lower cap than the flip loan carried. Plan the exit with the lower figure in mind.
Does 100% Financing Exist?
No true 100% purchase program exists in this network. What gets called 100% financing is usually 100% of the rehab budget, paid out in draws, with the whole loan still inside the ARV cap.
Here is the myth, the verdict, and the real structure:
- Myth: 100% financing means 100% LTV.
- Verdict: It does not. It means up to 100% of the rehab cost, inside the ARV-based maximum.
- Why people believe it: Marketing copy says the headline number and leaves out what it applies to.
- What is true: The purchase portion is capped by the tier percentage of cost. The rehab portion can fund in full through draws. The total stays inside 75% of ARV. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Draws release after inspection of completed work. The borrower typically pays for the first phase of work and is reimbursed afterward. That means cash flow matters even when the rehab is fully funded. A contractor who wants a deposit and a first progress payment needs your cash, not the lender’s, until the first draw lands.
Edge Cases: Gap Funding, Cross-Collateral, and Experience
Some deals sit above the standard caps. Each path comes with strings.
Gap or second-lien funding. A junior loan can cover part of the cash a first lien leaves. The catch is that the first-lien lender must allow a second lien, and many do not. Confirm that before you count on it.
Cross-collateral. Some lenders will go higher when the borrower pledges a second property. Treat it as an exception, not a plan. It puts a property you already own at risk on the flip.
Experience exceptions. Experienced borrowers with documented liquidity sometimes get more room. For a first-timer, the better move is to plan the cash, not hunt for the exception.
Loan size. Standard loan amounts run up to $5,000,000, with larger loans by exception. Smaller balances vary by lender.
Key Terms Defined
Loan-to-cost (LTC): the loan divided by total project cost, which is purchase price plus rehab.
Loan-to-value (LTV): the loan divided by an appraised value. It is not the same as LTC.
After-repair value (ARV): the projected value once the work is complete, supported by comparable sales or an appraisal.
Draw: a release of rehab funds after the lender confirms work is done.
Cross-collateral: pledging a second property as added security for the loan.
Gap funding: a junior loan that covers part of the cash a first lien leaves.
Is Any Law Setting These Caps?
No federal rule sets an LTV or LTC limit on these loans. They are business-purpose loans, and federal consumer-credit rules generally do not reach them. The CFPB’s Truth in Lending summary describes that business-purpose exemption. The Federal Reserve’s supervisory manual covers what counts as business-purpose credit, including loans to acquire or improve non-owner-occupied property.
So the caps come from each lender’s program. That is why two offers on the same property can look so different.
Questions to Ask Any Lender Before You Commit
Ask these on the first call. They save a lot of re-working.
- Does your percentage apply to as-is value, cost, or ARV?
- Which cap usually binds on a deal like mine?
- How is ARV set: your appraiser, a comps analysis, or mine?
- Is the rehab budget funded in draws, and who pays the first phase?
- What experience tier applies to me, and what documents prove it?
- Is a second lien allowed if I need gap funding?
- What reserves and closing costs sit outside the loan?
- Is there a prepayment penalty?
In a wholesale network, this is the operator view. Most delays on a flip file trace back to one of these questions asked late. An investor assumes the cost percentage is the loan, learns at the ARV review that the other cap governs, and has to find cash in the middle of the file. Asking up front means the budget is built on the real number.
Planning the Exit
A hard money flip loan is short-term by design. The term runs 6 to 18 months, interest-only. There are no multi-year options, so the exit has to be a sale or a refinance.
For investors who plan to keep the property, many refinance out of hard money into long-term rental financing once the property is stabilized. Lendmire brokers that path. A DSCR loan is sized on the property’s rental income against its payment, plus LTV rules, subject to lender guidelines. It does not use cost and ARV. The complete DSCR loans guide explains how that side works.
Tax treatment varies; consult a qualified professional.
Next Step
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. Reach the team at 828-256-2183.
Frequently Asked Questions
Can I borrow 100% of a flip?
Not as a purchase loan. Up to 100% of the rehab budget can fund in draws, but the purchase portion is capped at a share of cost, and the whole loan stays inside 75% of ARV. The investor funds the rest.
Is the limit based on purchase price or ARV?
Both. The lender runs a cost-based cap and an ARV-based cap, and the lower result becomes the loan. On a thin spread, the ARV cap usually governs.
Does my credit score change the cap?
Credit sets eligibility more than the percentage. The network’s floor sits around 620, with added conditions below 660. Experience, meaning documented completed projects, moves the leverage tier. Underwriting stays asset-based, and every file is reviewed individually.
Do the limits differ for a refinance?
Yes. Without a rehab, sizing runs off current value. Bridge purchases without rehab go up to 80% of purchase price, and cash-out or refinance files go up to 65% of value. These vary by lender, property, and experience.
Are hard money flip loans the same as DSCR loans?
No. Flip loans are sized on cost and ARV. DSCR loans are long-term rental loans sized on rent against the payment. Many investors refinance from one to the other after the rehab is finished.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. CFPB: Truth in Lending Act summary
2. Federal Reserve: Supervisory manual, Truth in Lending
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a DSCR Refinance Close Before Hard Money Maturity on a Long Rehab? · Hard Money Loan Requirements to Exit Seller Financing or Subject-to · How a Lender Reads a Seller-Carried Note on a Hard Money Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.