The Quick Read: Yes. Many hard money lenders size a fix-and-flip loan against the property’s projected after-repair value (ARV), but ARV works as a ceiling, not a payout. The loan is usually the lesser of two tests: a share of project cost and a share of ARV.
- Across the network Lendmire places files with, fix-and-flip leverage runs 85%, 90%, or 93% of project cost depending on completed projects. Every tier is capped at 75% of after-repair value.
- Up to 100% of the rehab budget is released in draws against completed work. It is not paid up front.
- Terms run 6-18 months, interest-only, with no prepayment penalty. All of it varies by lender, property, and experience.
- A low appraisal shrinks the loan and raises the cash you bring.
- ARV does not carry into a rental refinance. The long-term lender uses its own appraisal.
What “Lending Against ARV” Actually Means
ARV is the estimated value of a property after all planned repairs are finished. FortuneBuilders defines it that way and notes it is built from comparable sales. As-is value is what the property is worth today, with the broken kitchen and the failed roof.
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 bank lends on today’s condition plus your income. A hard money lender looks forward. It asks what the finished house will sell or appraise for, and whether the loan stays safely below that number.
Lenders do not all use the word the same way. Some size only off purchase price. Some use both purchase price and ARV. A few size only off ARV. So when a lender quotes you a leverage figure, ask which base it uses. A big percentage of cost and a big percentage of value are very different promises.
Why Hard Money Lenders Underwrite to Future Value
A house that needs a gut renovation is worth little today and much more later. The lender is lending on a project, not on a finished asset.
The gap between loan and ARV is the lender’s cushion. If the flip goes badly, the lender still needs to sell the property and get repaid. The cushion has to cover selling costs, carrying costs, and a price drop.
That is also why the underwriting stays asset-based. The lender studies the property, the plan, and the exit. Credit still matters (a 620 minimum score is the floor on the program sheet, with added conditions below 660), but it is not the star of the file.
The Two Limits on Your Loan: Cost and ARV
Most fix-and-flip loans are the lesser of two numbers. One is a percentage of what the project costs, meaning purchase plus rehab. The other is a percentage of ARV.
The leverage structure the network uses is tiered by documented completed projects:
| Experience | Loan-to-cost | ARV cap |
|---|---|---|
| 5+ completed projects | 93% of project cost | 75% of ARV |
| 2+ completed projects | 90% of project cost | 75% of ARV |
| Fewer than 2 | 85% of project cost | 75% of ARV |
Bridge purchases with no rehab go up to 80% of purchase price. Loan sizes run up to $5,000,000, with larger by exception. There is no true 100% purchase program. When you see 100% financing mentioned, it refers to the rehab budget funded through draws, not the purchase.
Here is how the two tests play out. These are modeled assumptions using the 90% of project cost tier, with project cost described relative to ARV so no dollar figures are needed.
| Scenario | Project cost vs. ARV | Cost test | Result |
|---|---|---|---|
| Healthy margin | 65% of ARV | 58.5% of ARV | Cost test binds |
| Thin margin | Close to ARV | Lands above the 75% cap | ARV cap binds |
| Appraisal at 80% of your estimate | 70% of estimated ARV | 63% of estimated ARV | ARV cap of 60% of estimated ARV binds, loan shrinks |
Read the middle row carefully. At a thin margin, the lender’s cost-based number runs past the ARV cap, so the cap wins and you cover the difference. The deal that looked fully funded is not.
The last row shows a different problem. You estimated the ARV, but the appraiser came in lower. The cost test would have given you 63% of your original estimate. The ARV cap now gives 60%. The loan drops, and your cash requirement rises.
Experienced investors use the 70% rule to screen deals before they ever ask for a loan. The Motley Fool states it as maximum purchase price equal to 70% of ARV minus repair costs, and notes some rehabbers stretch to 75-80%. Landlord Studio calls it a quick filter, not a precise valuation. That is the right way to hold it. It is a screening tool, not a lending rule.
How ARV Gets Determined and Verified
Your ARV is a claim until someone else confirms it. Lenders build their own view from recent comparable sales, then adjust each comp for differences. Prop Pipeline explains the logic: subtract value from a comp that is better than your property, and add value to a comp that is worse.
Appraisals come in two flavors. An as-is appraisal values the property in its current condition. An as-repaired appraisal assumes the planned repairs are done, and appraisers often word it as subject to completion. Authority Appraisals lays out the difference. Which one the lender relies on depends on the lender, because the client chooses how the property is appraised.
If you want to see how a lender’s value can differ from yours, Lendmire’s piece Hard Money ARV Appraisal vs Lender Value for an Experienced Flipper goes deeper.
What helps the number hold up: recent sales close to the property, comps of similar size and finish level, and a repair scope that matches what those comps actually have. Comps with granite and new mechanicals will not support a cosmetic rehab.
What Happens If the Appraisal Comes In Low?
The loan gets smaller. That is the plain answer. The ARV cap is a percentage of the lender’s number, not yours, so a lower value cuts the cap directly.
You then have a few choices, none painless:
- Bring more cash to close.
- Take the smaller loan and trim the budget.
- Challenge the value with better comps.
- Renegotiate the purchase price if you are still under contract.
- Walk away.
The best protection is to run the deal at a lower ARV before you submit. If the flip only works at your optimistic number, it does not work.
How the Rehab Money Actually Gets Released
Lending against ARV does not mean you receive rehab money at closing. The rehab portion is held back. You start the work with your own funds, then request a draw as work is completed. The lender inspects, then reimburses.
Some lenders release money line by line. Others go by overall percent complete. Either way, you need working cash. Plenty of newer investors miss this, and it is the reason hard money fix-and-flip is still cash-intensive even at high leverage.
Scope changes cause trouble too. If you find new repairs after the budget was submitted, an inspector may not credit them, and the next draw comes in short. A contingency line in the original budget solves most of this. Baselane recommends a contingency of typically 10-20% of estimated repair costs.
No government rule sets draw schedules or loan-to-ARV limits on private hard money. The loan agreement and the lender’s policy control. Read both before you sign.
When Lenders Do Not Lend on ARV
ARV sizing fits value-add projects. It does not fit everything.
- A stabilized rental with no work planned. The lender has nothing to value in the future. Long-term rental financing fits better.
- Owner-occupied property. The hard money program is business-purpose only, for non-owner-occupied residential property of 1-4 units. Ground-up construction runs to 10 units.
- Commercial, industrial, land, or hospitality. These are not on the program sheet.
- Government renovation loans. Those products exist for owner-occupants, which is why investors cannot use them for a flip.
Light cosmetic work also gets treated differently. When the repairs barely change the value, lenders lean on the as-is number, not a big ARV story.
One more footnote. The hard money program is available in 41 markets, including Washington, D.C. It is not available in Louisiana, Minnesota, North Dakota, or South Dakota, or in Baltimore, Chicago, or Detroit.
What Else the Lender Checks
ARV is the headline, but several other items decide the file:
1. The budget and scope. A line-item budget with realistic numbers beats a round figure.
2. Your track record. Completed projects set the leverage tier. First-time investors qualify at the lower tiers.
3. Liquidity. You need cash for the gap, the draws, and surprises.
4. The exit. Sell or refinance, and a believable plan for either.
5. Credit. A 620 minimum score, with additional conditions below 660.
A great ARV does not rescue a thin borrower. Experience and liquidity are what let a lender go higher on cost.
What Happens After the Rehab
For a flip, the exit is a sale. Tax treatment varies; consult a qualified professional about how your profit is reported.
For a rental, the exit is a refinance. Many investors move out of hard money into long-term DSCR investor loans once the property is finished, leased, and stable, and Lendmire brokers that path through select lenders in its wholesale network. DSCR stands for debt service coverage ratio. It compares the property’s rent to its full monthly obligation, meaning principal, interest, taxes, insurance, and any HOA dues (together called PITIA).
Here is the catch. Your ARV does not follow you into that loan. The DSCR lender runs its own appraisal and sizes off that. Before seasoning clears, the lender commonly sizes off cost basis, meaning purchase plus documented rehab. Seasoning is the waiting period between buying and refinancing. About 6 months is the common expectation across most of the network.
On a cash-out refinance of a standard rental, leverage tops out around 75% LTV across most of the network. Coverage matters too. A coverage of 1.00 is where select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. A bigger payoff balance lowers the ratio, so the refinance has to be underwritten before you take the bridge. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Clearing 1.00 does not mean positive cash flow. DSCR looks at rent against PITIA only. Repairs, vacancy, management, utilities, and capex sit outside the calculation.
For the full picture of how that exit works, see Lendmire’s complete DSCR loans guide. If your plan is to pull cash out afterward, the piece How to Cash Out on the Full Value After a DSCR Exit From Hard Money covers it.
An investor who wins the bridge on ARV and then misses the refinance appraisal is stuck paying carry. Underwrite both ends on day one.
Key Terms Defined
After-repair value (ARV): the estimated market value of a property once all planned repairs are finished.
As-is value: what the property is worth today, in its current condition.
Loan-to-cost (LTC): the loan amount as a share of total project cost, meaning purchase price plus rehab.
Loan-to-value (LTV): the loan amount as a share of a property’s value.
Draw: a release of held-back rehab money after the lender confirms work is done.
Seasoning: the waiting period a lender wants between buying a property and refinancing it.
Build Your ARV Package Before You Apply
A short checklist keeps the file clean:
- Three to five recent comparable sales, close and similar, with notes on adjustments.
- A line-item scope and budget, plus a contingency.
- A repair scope that matches what the comps actually have.
- Proof of completed projects, if you have them.
- Proof of cash for the gap and the early rehab work.
- A written exit plan, including a backup if the sale takes longer than expected.
Check prepayment terms on every loan in the chain. The hard money program carries none, but the long-term loan may.
Frequently Asked Questions
Will a hard money lender fund 100% of my purchase and rehab?
No. The program tops out at 93% of project cost for investors with 5+ completed projects, and every tier is capped at 75% of ARV. Only the rehab budget can reach 100%, and it is released in draws against completed work. Leverage varies by lender, property, and experience.
Is the loan the lesser of cost and ARV?
Usually, yes. The lender calculates a share of project cost and a share of ARV, then lends the lower number. On a thin-margin deal the ARV cap binds, and you cover the difference in cash.
What if my ARV estimate is higher than the lender’s?
The lender’s number controls. A lower value shrinks the ARV cap and the loan with it. You can bring cash, take a smaller loan, or challenge the value with stronger comps.
Do I get the rehab money at closing?
No. Rehab funds are held back and released as draws after inspections. You front the work and get reimbursed, so you need working cash.
Does my ARV count toward a DSCR refinance?
No. The DSCR lender uses its own appraisal, and before seasoning clears it commonly sizes off cost basis. Plan the exit on the lender’s value, not yours.
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. Lendmire is a broker that arranges financing through select lenders in its wholesale network, and nothing here is a commitment to lend.
Run your deal at a conservative ARV first, because the investors who stay in the game are the ones whose math survives a low appraisal.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. FortuneBuilders – ARV Meaning
3. Landlord Studio – ARV in Real Estate
4. Prop Pipeline – How to Calculate ARV
5. Authority Appraisals – As-Is vs. As-Repaired
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Should a Flipper Use a Private or Direct Hard Money Lender? · Should You Use Hard Money for a Rental Then Refinance to DSCR? · Can You Get a Hard Money Loan With No Down Payment?
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.