The Quick Read: Yes, you should ask before you sign anything, because a flip loan costs more than its quoted price, and fees, draw rules, extension terms and the lender’s ability to fund all sit outside the headline number, so every answer worth relying on belongs in writing. The questions also protect you from fake lenders and last-minute changes to the terms.
- Ask in three stages: a short screening call, a written term sheet, then a closing-statement check.
- Get the total cost in writing, not just the quoted price.
- Learn how value is set, because that decides your loan size.
- Confirm how draws work, since early rehab work is usually paid from your pocket.
- Pin down maturity, extension terms and your payoff if you refinance instead of selling.
When Should You Ask?
Ask in three stages. A screening call comes first, a written term sheet second, and a comparison of the closing statement to that term sheet third.
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.
On the screening call, keep it to four or five questions that can disqualify a lender fast: Do you fund fix and flips as a core product? Is the money yours? What does experience do to my leverage? What are all the fees? Do you allow repayment by sale or refinance?
Do this before you pay for an appraisal or an application. A wrong lender costs you the deposit, the contractor schedule and sometimes the deal.
At the term-sheet stage, ask for every answer in writing. At the closing stage, compare the final statement line by line to the term sheet. Terms that change right before closing are a known pattern, and the written sheet is your proof.
Key Terms Defined
ARV (after-repair value): the estimated value of the property once the renovation is finished.
Loan-to-cost: the loan as a share of what you pay for the property plus the rehab budget.
Draw: a release of rehab money after work is completed and inspected.
Holdback: a portion of each draw the lender keeps until the project is finished.
Dutch interest: interest charged on the full approved loan from day one, including rehab money you have not drawn yet.
Seasoning: the time you must own a property before a lender will count a new value on a cash-out refinance.
The Questions, Grouped by What They Protect
| Question | Why it matters | Strong vs. warning answer |
|---|---|---|
| Whose money funds the loan? | Decides who controls draws | Own funds vs. waiting on an investor |
| What is my total cost? | Quoted price hides fees | Itemized sheet vs. verbal only |
| How is value set? | Sets your loan size | ARV method explained vs. vague |
| How do draws work? | Sets your cash needs | Clear schedule vs. no timeline |
| What are extension terms? | Delays are common | Fee and terms stated up front |
| What is my payoff at exit? | Drives your refinance | Written payoff formula |
What Does the Whole Loan Actually Cost?
The cost is spread across four places: fees at closing, interest on the drawn balance, per-draw inspection and administration charges, and an extension fee if the project runs past maturity. One lender’s lower headline price can cost more than another’s after those items are added.
So ask for the total in writing. Ask how origination fees are calculated, because some lenders base them on the purchase price alone and others on the whole loan, including rehab money. Ask whether interest is Dutch or charged only on money disbursed. On a project that draws slowly, that single answer can change your carrying cost a great deal.
Ask about prepayment as well. Many flip loans carry no penalty for early payoff, but “many” is not “all.” Across Lendmire’s wholesale network, hard money terms typically run 6 to 18 months, interest-only, with no prepayment penalty. Even so, terms vary by lender, property, and experience, so confirm the answer on the paper you sign.
How Do Lenders Set Value and Leverage?
Hard money is underwritten mostly on the asset. The lender weighs the property, the renovation plan and your exit. That makes the valuation method the most important question after cost.
Ask whether sizing uses ARV, as-is value or loan-to-cost. Ask whether an appraisal or a broker price opinion supports it. A thin valuation up front can turn into a low appraisal at the end, and that gap lands on you.
Leverage in the wholesale network is tiered by documented completed projects. These figures are typical, not promised, and vary by lender, property, and experience:
- Fix and flip: about 93% of project cost at five or more completed projects, 90% of project cost at two or more, and 85% of project cost with fewer than two. Every tier is capped at 75% of ARV.
- Bridge purchase without rehab: up to 80% of the purchase price.
- Cash-out or rate-and-term refinance: up to 65% of value.
- Rehab budget: up to 100% of the budget can fund in draws against completed work. That is a budget figure, not a purchase loan-to-value.
The top tier is reserved for experienced investors, and the network has no purchase program that funds the full price. A quote that promises more than the highest tier above, with no prepayment penalty, and asks for your bank login early is something to verify, not a bargain. Loan amounts run up to $5,000,000 in the network, with larger deals by exception. Credit generally starts around 620, with extra conditions below 660, and underwriting stays asset-based.
How Do Draws Work, and Who Fronts the Cash?
Your rehab budget is approved at closing but released in stages. Draws are reimbursements for finished, inspected work, not advances, according to Baseline Software’s fix and flip guide. In practice you often cover the first round of work yourself.
Ask these questions:
- Is any money advanced at closing, or is every draw a reimbursement?
- Who inspects, and how long does an inspection take to turn around?
- What lien waivers does the lender require with each request?
- Does the lender hold back part of each draw?
- What happens when actual costs exceed the budget?
Slow inspections hurt most when contractors want payment on a fixed schedule. A lender that cannot describe its draw timeline is telling you something. Keep every lien waiver and inspection report. That paperwork becomes part of the file for your next lender if you refinance.
Direct Lender or Broker: Who Controls the Loan?
Many advertisers are intermediaries, and an intermediary is not automatically a problem. What matters is who funds the wire, who inspects draws and who decides what to do if the project runs over.
Ask these plainly. Do you lend your own money or place my file with a funder? Do you have the cash today, or must another deal close first? If the answer depends on an investor funding or another closing, treat that as a reason to pass. Ask for independent references from past borrowers, and ask what the payoff figure looked like at their closings.
Lendmire is a broker. It arranges hard money and DSCR investor loans through select lenders in its wholesale network across 41 markets, including Washington, D.C. Apply the same questions to any broker, Lendmire included. A good broker can name the funding channel and explain how draws are handled.
Red Flags in the Conversation
Fee-before-funding is the classic scam pattern. A genuine lender may charge for an appraisal paid directly to the appraiser or for a credit check. A “fee to clear” wired to a third party or an unregistered company is different. Demanding upfront payment for a promised loan that has not been confirmed in writing is a hallmark of fraud. Warnings about this practice have addressed consumer lending, so use them as a direction, not as a rule for investor loans.
Watch for these too:
- Vague answers, or terms offered only by phone
- A lender that changes terms right before closing
- A mailbox address with no real office
- A request for bank account details early in the process
- Pricing that looks too good compared with every other quote
Not every upfront fee is a scam. The test is whether the payment is tied to a promise of funding, or sent to a party you cannot verify.
A Worked Comparison, Without Dollar Figures
Picture two quotes for the same flip. Lender A shows a lower headline price but charges for every draw inspection, bases fees on the full loan and accrues Dutch interest. Lender B shows a higher headline price but charges interest only on money disbursed and keeps extension terms simple.
If your rehab runs slow, Lender B may cost less overall. If the project finishes early and draws out fast, Lender A could win. The answer depends on your schedule, so model your own timeline against each term sheet.
Build a scorecard with the same rows for each lender: total fees, interest method, valuation method, draw timing, holdback, extension terms and payoff formula. Fill it in from written answers only. Comparing two or three quotes this way takes an hour and can save a deal.
Ask About the Exit Before You Close
The hard money terms decide whether your next loan works. The bridge payoff equals principal drawn, plus accrued interest, plus any exit or extension fee. That total is the amount you must refinance.
If you plan to keep the property, the rental refinance has its own clock. DSCR cash-out files commonly expect about 6 months of seasoning, measured from title recording. A short bridge term can mature before you are eligible. So ask now about extension options and what they cost.
The rental loan then compares rent to the full monthly obligation of principal, interest, taxes and insurance. A coverage ratio of 1.00 is where select programs start, and stronger ratios can open better leverage. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. A cash-out refinance on a standard rental typically tops out around 75% LTV. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy and management sit outside the calculation.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. For the mechanics, see Lendmire’s piece Can You Refinance a Flip Into DSCR Before the Hard Money Matures?. The complete DSCR loans guide covers qualification in full.
If You Are a First-Time Flipper
Experience changes your leverage. Some lenders require completed flips, and others accept first-timers with compensating factors. In the network, first-time investors qualify at the lower leverage tiers, which means more cash in the deal.
Ask which tier you fall into and what could move you up. Strong reserves, a detailed scope of work, a vetted contractor and a clear exit plan help your case. Ask what documents the lender wants before you start, so you can gather them in advance.
Do not read a low leverage tier as a rejection. Plan the extra cash into your budget and check the full cost again at that tier.
Frequently Asked Questions
Is it normal to ask a hard money lender for references?
Yes, and a legitimate lender expects it. Ask for past borrowers you can contact independently, and ask them whether closing matched the promise, how draws were handled and whether the payoff figure matched the paperwork. A lender that refuses references is giving you information.
How many lenders should I compare?
Two or three is enough. Use the same scorecard for each and compare written terms, not phone quotes. More than that adds time without adding much insight, and a rushed comparison is how fee differences get missed.
What if the appraisal comes in low?
It depends on how the loan is sized. If leverage is tied to ARV, a low value can shrink the loan and raise the cash you need. Ask before you commit what the lender does in that case, and whether it will restructure or walk away.
Should I ask about fees before I apply?
Yes. Ask for an itemized fee list during the screening call, before you pay for an appraisal or an application. Most legitimate lenders collect their fees at closing. If someone demands money first, ask what it covers and who receives it.
What should I ask about the refinance exit?
Ask for the maturity date, the extension fee, any change in terms on extension and the written payoff formula. Then compare the maturity to the seasoning your rental lender expects. If the loan matures before you are eligible, you need an extension plan or a different bridge.
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 or request a quote at Lendmire’s quote page. All terms are subject to lender guidelines, and nothing here is a commitment to lend.
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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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. Baseline Software – Fix & Flip Loans Complete Guide
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does a Hard Money Lender Require an Appraisal on an Investment Property? · Should You Take a DSCR Loan to Pay Off a Hard Money Flip? · Does a Hard Money Fix and Flip Loan Allow Interest Only Payments?
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
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.