The Quick Read: It depends on whether the deal needs rehab money, because a flip loan is simply a hard money loan built with a renovation budget, while a plain hard money loan may fund only the purchase, so choose the structure that matches your project and your exit. Both are short-term, interest-only bridge loans secured by the property. The label matters less than the term sheet.
- If you are buying a property that needs work, pick the loan with a rehab holdback and a draw schedule. The market usually calls that a flip loan.
- If the property is already in shape, or you are refinancing short-term debt, a plain hard money or bridge loan can be enough.
- Across Lendmire’s wholesale network, fix-and-flip leverage runs up to 93% of project cost for experienced investors, always capped at 75% of after-repair value. Figures vary by lender, property, and experience.
- Neither loan is a long-term hold. If you plan to keep the property as a rental, the DSCR loan is the exit.
- Approval of the bridge does not guarantee the exit. Plan the exit before you sign.
Are a Hard Money Loan and a Flip Loan Really Different?
Mostly, no. Hard money is the category, and a flip loan is one product inside it. Hard money means short-term lending secured by real estate, where the lender looks at the property, the plan, and the exit more than at your paycheck.
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 flip loan adds structure for renovation. It sets aside a rehab budget, releases that money in stages, and checks the work along the way. A generic hard money loan may skip all of that. It might fund the purchase and nothing else.
Here is where it gets confusing. Lenders use the labels inconsistently. One lender’s hard money loan includes a rehab holdback. Another lender’s flip loan is stricter than its hard money product. You will hear that flip loans are for beginners and hard money is for veterans, and you will hear the reverse. Neither rule holds across the board.
So do not shop by label. Shop by what the loan actually does: does it include rehab funds, how are they released, what leverage does it allow, and what is the term? Those answers decide the deal.
Key Terms Defined
After-repair value (ARV): The estimated value of the property once the renovation is finished. Most flip leverage caps are tied to it.
Loan-to-cost: The loan amount as a share of your total project cost, meaning the purchase price plus the rehab budget. Lenders often size flip loans this way.
Rehab holdback: The part of the loan set aside for renovation. The lender holds it and releases it as work is completed.
Draw: A release of holdback money against finished work. You submit a request with invoices, and the lender inspects before paying.
Bridge loan: Short-term financing that carries you from purchase to a sale or a refinance.
Interest-only: You pay interest each month and repay the principal at the end of the term, by sale or refinance.
DSCR (debt service coverage ratio): A measure of whether a rental’s income covers its monthly obligation. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.
How the Two Loans Compare
The table below separates the structural differences. Treat it as the typical pattern, since individual lenders blend the two.
| Factor | Plain hard money / bridge | Flip loan |
|---|---|---|
| Rehab money | May not be included | Built in as a holdback |
| What gets sized | Purchase price or current value | Project cost, capped by ARV |
| How funds release | Usually at closing | Purchase at closing, rehab in draws |
| Inspections | Rarely ongoing | Typically before each draw |
| Best fit | Clean property, quick purchase, short-term payoff | Purchase plus renovation, then sale or refinance |
| Exit | Sale or refinance | Sale or refinance |
One thing does not change between columns. Both are priced and sized as short-term risk, so both cost more to carry than long-term rental financing. Compare the total cost across your full hold period, including interest carry, inspection charges, and any extension fees, not just the headline terms.
What Do Network Programs Look Like?
Lendmire is a broker. It arranges these loans through select lenders in its wholesale network, 41 markets including Washington, D.C. The figures below come from that network. They are typical ranges and vary by lender, property, and experience, and nothing here is a commitment to lend.
Fix-and-flip leverage is tiered by completed projects. On most files, the tiers look like this:
- 93% of project cost at 5 or more completed projects.
- 90% of project cost at 2 or more completed projects.
- 85% of project cost with fewer than 2 completed projects.
- Every tier is capped at 75% of after-repair value.
Other structures sit lower. A bridge purchase without rehab can reach up to 80% of the purchase price. Cash-out and rate-and-term refinances reach up to 65% of value. Ground-up construction can reach up to 90% of cost, and 75% of completed value, at 3 or more completed projects.
Rehab money funds in draws. Up to 100% of the rehab budget can be funded against completed work. That is a rehab-budget figure, not a purchase loan-to-value. There is no true 100% purchase program. You still bring cash at closing, and you usually carry the early renovation costs until a draw reimburses you.
Other basics. Loan amounts run up to $5,000,000, larger by exception. Terms run 6 to 18 months, interest-only, with no prepayment penalty. Credit starts at a 620 minimum, with added conditions below 660. First-time investors qualify at the lower leverage tiers. Collateral is non-owner-occupied residential property of 1 to 4 units, with ground-up construction up to 10 units. Underwriting stays asset-based: the property, the plan, and the exit.
How the cap actually bites
Two caps work together, and the lower one wins. Say you have two completed projects, which puts you in the 90%-of-cost tier.
Run the first deal with total project cost at 80% of the ARV. Ninety percent of that cost is 72% of ARV, which sits under the cap. The loan-to-cost tier governs.
Run a second deal where total cost is 85% of ARV. Ninety percent of that cost would be 76.5% of ARV, which breaks the cap. The lender trims the loan back to 75% of ARV, and you cover the rest.
The lesson is simple. Thin-margin flips get less leverage than the headline tier suggests. That is the lender protecting itself against a sale price that comes in light, and it is also a signal about your deal.
How Do Draws Work?
Draws are where a flip loan earns its name, so it pays to understand them before you buy.
1. You close on the purchase. The lender takes a mortgage or deed of trust on the property and holds the rehab money in reserve.
2. You finish a phase of work, using your own cash or your contractor’s credit.
3. You submit a draw request with invoices and photos.
4. The lender inspects the work, usually through a third-party inspector.
5. The lender releases money for the completed work, and you repay your contractor.
6. You repeat until the scope is done, then sell or refinance.
Notice step 2. Draws reimburse finished work. They do not prefund it. If you start with thin cash, a stalled draw can stall your contractor, and a stalled contractor stalls the whole timeline. Budget cash for the first phase and a cushion for inspection charges.
Which One Fits Your Deal?
Choose a flip loan if:
- The property needs real renovation and you want the rehab budget inside the loan.
- Your scope of work and budget are written down and realistic.
- You are confident in your after-repair value, since the lender will test it.
- You can float the first phase of work while waiting for a draw.
Choose a plain hard money or bridge loan if:
- The property is rent-ready or needs only light cosmetic work you will pay for yourself.
- You are making a purchase that needs a short-term bridge until a refinance.
- You are refinancing existing short-term debt and need more runway.
- You prefer fewer inspections and draw requests.
There is a third question that matters more than either list: what happens after the work is done? If the answer is sale, you need a term that fits your realistic sale timeline, with room for delays. If the answer is hold as a rental, you are buying a bridge, and the DSCR refinance is the real loan. That changes how you choose, because lease-up, appraised value, and rent coverage now belong to the plan from day one.
Experience also matters here. In the network, the strongest leverage tiers require documented completed projects, and the top tier is reserved for experienced investors. A first-time flipper should expect the lower tier and plan more cash into the deal. That is not a penalty for choosing a flip loan. It is how the lender prices an unproven track record.
One practitioner habit worth copying: price your rehab budget, then stress it. If a 15% overrun breaks the deal, the deal was too thin before you started.
What Can Go Wrong With Either Choice?
Most trouble comes from four places.
Rehab overruns. Costs run over, and the loan does not grow with them. The extra comes out of your pocket.
A slow sale. A flip that sits past maturity forces a payoff, an extension, or a refinance. Each one adds carry cost.
A light rehab with a weak exit. On a cosmetic rehab, the appraised value may land close to your cost. That limits how much cash an exit refinance can return.
An exit that was never tested. The bridge lender approves the bridge. A different lender approves the refinance, using its own test of seasoning, appraised value, and rent coverage. A modification or extension buys time. It does not change the exit test.
A related risk is less obvious. Holding a rental on a short-term note past its term exposes you to forced payoff, extension costs, and market risk all at once. Short-term debt is a tool for a short job.
Where Does a DSCR Loan Fit?
A DSCR loan is the permanent exit for investors who keep the property. Many investors refinance out of hard money into long-term DSCR financing once the property is finished and leased, and Lendmire brokers that path.
DSCR cannot fund a rehab. It is built for a property that is habitable and lease-ready, so a gutted house is not a DSCR candidate. That is why the two products work as a sequence rather than as rivals. For the full picture of how the permanent loan works, see Lendmire’s complete DSCR loans guide.
Also remember that clearing a coverage test is not the same as positive cash flow. DSCR compares rent to the monthly obligation only. Repairs, vacancy, management, and capital expenses sit outside it.
Is This Business-Purpose Lending?
Yes. Hard money and flip loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Regulation Z provision on exempt credit carves out credit extended primarily for a business purpose. Credit to acquire or improve non-owner-occupied rental property is generally treated that way, but not every investment property qualifies, according to Compliance Alliance’s explanation of Regulation Z and investment properties. This is background, not legal advice. Tax treatment varies; consult a qualified professional.
What Should You Ask Any Lender Before You Pick?
These questions cut through the labeling problem.
- Is the rehab budget included in the loan, and how much of it?
- Is leverage sized on cost, on current value, or on after-repair value? What is the cap?
- How are draws requested, inspected, and paid, and what do inspections cost?
- What does the term allow, and what happens if I need more time?
- Is there a prepayment penalty?
- What credit and experience do I need for each leverage tier?
- If I plan to hold the property, can the lender or a partner help with the exit refinance?
Write the answers next to each other for two or three lenders. The structural differences show up fast, and the label stops mattering.
Frequently Asked Questions
Are a hard money loan and a flip loan the same thing?
Not exactly. Hard money is the broad category of short-term, asset-based lending. A flip loan is a version of it with a rehab holdback and a draw schedule. Some lenders use the two terms interchangeably, so read the term sheet rather than the product name.
Which one is easier to qualify for?
Neither is automatically easier. Both are underwritten on the property, the plan, and the exit, with credit and experience mattering to different degrees. In the network, a 620 credit minimum applies, with added conditions below 660, and leverage rises with completed projects.
Which one includes rehab money?
A flip loan does, by design. A plain hard money loan may fund only the purchase. Up to 100% of the rehab budget can be funded in draws against completed work on network programs, but you still bring cash at closing and usually float the early phases.
Can a first-time investor use either one?
Yes, at the lower leverage tiers. Fewer than two completed projects typically means 85% of project cost, capped at 75% of after-repair value. First-timers should expect to bring more cash and should plan the exit carefully.
Can I use these loans for a rental I plan to keep?
Only as a bridge. Terms run 6 to 18 months, so a hold plan needs a refinance. Many investors move into long-term DSCR investor loans once the property is finished and leased, subject to lender guidelines, credit approval, and property review.
Make the Choice Deal by Deal
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. Call 828-256-2183 or request a quote through Lendmire’s site.
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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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, Regulation Z §1026.3, Exempt Transactions
2. Compliance Alliance, Regulation Z and Investment Properties
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 You Buy a Flip in an LLC With a Hard Money Loan? · Should You Choose a Bank Statement Loan Over Hard Money? · Should You Choose a Hard Money Lender for a Flip on Cost Alone?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.