The Quick Read: A new investor lowers the cash needed at closing by strengthening the deal and the borrower profile, because hard money lenders size each loan against project cost and after-repair value, and experience mainly sets the leverage tier rather than deciding eligibility, so the biggest lever is buying far enough under finished value.
- On most files across the wholesale network, fix-and-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, and the lower of the two limits sets your down payment.
- Up to 100% of the rehab budget can fund in draws against completed work, but you still front early costs.
- A 620 credit score is the minimum, with extra conditions below 660. These figures vary by lender, property, and experience, and nothing here is a commitment to lend.
What Is a Lower Down Payment Really?
A hard money down payment is whatever the lender does not fund. It is the mirror image of leverage. No rulebook sets it, because hard money is private-market underwriting and each capital source decides its own limits.
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.
Hard money is a short-term loan that private capital funds against the asset. The lender cares about the property, the plan, and the exit. Your résumé matters less than the numbers on the deal.
That is good news if you have never flipped a house. Experience changes your terms more than it changes your eligibility. Baseline Software’s fix-and-flip guide says lenders usually count completed projects of similar scope inside a lookback window of about 24 to 36 months. It also says most lenders tier leverage and pricing by that count. A first-timer lands in the lowest tier, which means more cash in.
So “lower” has two meanings. You can move up a tier, or you can make sure the lowest tier actually delivers its full leverage. Most new investors can only do the second one on the first deal, and it is worth more than it sounds.
How Does Underwriting Treat a First-Timer, Step by Step?
Underwriting runs in a fixed order. The lender slots you into a tier, applies its ceilings, and then checks cash and credit.
1. Tier by track record. The lender counts your completed projects. With fewer than 2, you sit in the lowest tier. Some lenders count rentals as well as flips, and definitions vary.
2. Apply the loan-to-cost limit. This caps the loan against purchase price plus rehab budget.
3. Apply the after-repair-value cap. This limits total exposure against the finished value. Baseline Software calls it the ultimate guardrail: a lender can advertise a high loan-to-cost, but the value cap governs if the loan would exceed it.
4. Take the lower number. Whichever ceiling is lower sets the loan. Your down payment is the gap.
5. Verify cash and credit. The lender wants an entity (usually an LLC with an EIN, subject to program terms), bank statements showing seasoned funds, and a credit score at or above program minimums.
6. Review the deal package. That means the purchase contract, a scope of work, a budget, and after-repair comps. Conservative comps help your case.
The rehab portion usually works differently from the purchase. The purchase funds at closing. The renovation money is held back and released in draws after an inspector confirms the work and you submit receipts or invoices. You typically pay contractor start-up costs before the first draw arrives.
What Do the Leverage Tiers Look Like?
Across the network, the tiers run on completed projects, and the top tier is reserved for experienced investors. Every figure below is a typical range that varies by lender, property, and experience.
| Completed projects | Loan-to-cost (of project cost) | Value cap |
|---|---|---|
| Fewer than 2 | 85% | 75% of ARV |
| 2 or more | 90% | 75% of ARV |
| 5 or more | 93% | 75% of ARV |
For a first-timer, the cash in at the lowest tier works out to about 15% of project cost, if the value cap does not cut the loan further. Bridge purchases with no rehab run up to 80% of purchase price. Cash-out and rate-and-term refinances run up to 65% of value. There is no true 100% purchase program. When someone advertises 100% financing, they usually mean the rehab budget, which funds in draws.
Loans run up to $5,000,000, with smaller balances varying by lender. Terms run 6 to 18 months, interest-only, with no prepayment penalty.
Ways a First-Timer Can Lower the Cash Needed
These levers are mechanisms, not guarantees. Each one strengthens the file, and lenders decide how much weight to give it.
Buy deeper under after-repair value. This is the lever that works on day one. When project cost is low relative to finished value, the value cap never bites, and you get the full 85% of cost. When the margin is thin, the cap cuts the loan and your down payment grows. The common screen is the 70% rule, which keeps purchase plus rehab well below finished value.
Pick a simpler first project. A cosmetic rehab with a clear scope is easier to underwrite than a structural one. A credible, modest budget reads as lower risk. Lenders sometimes treat that more kindly at the entry level.
Bring a licensed contractor or an experienced partner. A general contractor with a real portfolio, or a partner who has finished similar projects, addresses the lender’s main worry. Whether that person’s record counts toward your tier depends on the lender and on how the partner is structured on the loan. A partner on the loan, a guarantor, and a hired contractor are three different things.
Show strong credit and seasoned liquidity. The minimum is 620, with extra conditions below 660. Higher scores and more verified cash can offset thin experience when a lender weighs the whole file. They do not move you past a tier cap.
Ask about cross-collateral. A few lenders will take a second property as added security in place of some cash. It adds risk to an asset you already own, so weigh it carefully.
Make the paperwork clean. Set up the entity, gather the statements, and write the scope before you need the loan. Missing documents do not usually change the tier, but they stall files.
Where the General Rule Breaks
The rule of thumb is that experience sets the tier and the deal sets approval. Several edge cases bend it.
The value cap overrides the headline. A lender can advertise a high loan-to-cost, but if the loan would exceed the cap on finished value, the cap controls. Many first-timers get surprised here.
Some capital sources will not lend to a true first-timer. Experience definitions vary, and some private lenders simply set a minimum. That is why a broker compares many programs instead of relying on one.
Zero-down claims. Hard money is not a zero-money product. A deal with a thin margin generally will not clear the value cap with nothing in. Be wary of any lender asking for large upfront fees before an appraisal. Legitimate charges are usually a third-party appraisal and a modest credit check.
Loan-to-value means two things. It can be measured on as-is value or on after-repair value. Ask which one a lender means before you compare quotes.
Total cash to close is more than the down payment. It also includes lender fees, closing costs, carry reserves, and the contractor float before your first draw. A lower down payment can come with higher cash needs elsewhere, so compare the whole cash picture.
Hard money is not a bank construction loan. Banks usually size off finished value with an appraiser reviewing the repair list. That is a different product with different documents.
A Worked Example: How the Cap Changes the Down Payment
Here is a modeled illustration, not market data. It assumes the lowest tier at 85% of project cost with the 75% value cap. Each deal is described by project cost (purchase plus rehab) as a share of after-repair value (ARV).
| Deal | Project cost as % of ARV | Loan as % of ARV | Cash in (% of cost) |
|---|---|---|---|
| Strong margin | 70% | 59.5% | 15% |
| Moderate margin | 85% | 72.3% | 15% |
| Thin margin | 92% | 75% (capped) | About 18.5% |
The loan never exceeds 75% of ARV. The 85% loan-to-cost tier is the binding limit only while project cost stays below the point where 85% of project cost and 75% of ARV are the same dollar amount. Below that point, the loan-to-cost tier governs. Above it, the 75% ARV cap governs and the cash required from the borrower climbs. Same borrower, same tier, different cash needed. The deal did the work, not the résumé.
What Does the Decision Look Like in Practice?
Margins are thinner than they used to be, so cash efficiency matters. ATTOM’s latest home flipping report puts the typical gross flip margin at 21.5%, down from 27.6% a year earlier. Gross figures do not subtract rehab, financing, insurance, or transaction costs, and WRE News’ coverage of the ATTOM data notes that experienced flippers estimate those at 20% to 33% of ARV.
So a first-timer’s best move is usually a smaller, clearly profitable deal, not a bigger one that needs every lever. A lower down payment on a thin deal is not a bargain. It leaves less equity if the budget slips or the sale takes longer than planned.
One more practical point: experience matters at the hard money stage and much less at the exit. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized. That lender prices the rental on appraised value, market rent, credit, and reserves. DSCR compares rent to the full monthly obligation, and clearing 1.00 is where select programs start, not proof of positive cash flow. Lendmire’s complete DSCR loans guide explains how that exit works.
Key Terms Defined
After-repair value (ARV): the estimated market value of the property once the renovation is finished.
Loan-to-cost: the share of purchase price plus rehab budget that the lender funds.
Draw: a release of renovation money after an inspector confirms completed work.
Cross-collateral: pledging a second property as added security for the loan.
Seasoned funds: cash that has sat in your account long enough for a lender to treat it as yours.
Frequently Asked Questions
Do I need a completed flip to get hard money?
Usually not. Most programs lend to newer investors when the deal makes sense. Experience tends to change leverage and scrutiny, not eligibility. Across the network, fewer than 2 completed projects places you in the lowest leverage tier.
Is a zero-down hard money loan possible?
No true 100% purchase program exists. Some programs fund up to 100% of the rehab budget in draws, but that applies to renovation money, not the purchase. Expect to bring cash for the purchase gap, fees, and early contractor costs.
Can a partner fund my down payment?
Often yes, if the money is documented and structured as equity in your entity rather than borrowed. Lenders treat borrowed or gap money differently, and rules vary by lender. Get the structure reviewed before you commit to a contract.
Does my credit score matter?
Yes. A 620 score is the typical minimum, with extra conditions below 660. Higher scores can help the overall file. Underwriting stays asset-based, so credit supports the deal but does not replace a strong margin.
What counts as experience?
It depends on the lender. Some count only completed flips in a recent window, often 24 to 36 months. Others also count rentals or construction projects. Ask each lender how it defines a completed project before you apply.
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 arranging financing through select lenders across 41 markets, including Washington, D.C.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
The exit plan matters as much as the purchase price on short-term financing – see the hard money loan overview.
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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
2. attomdata.com: Home Flipping Profits Continue Gradual Two Year Decline
3. WRE News – Home Flipping Returns
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 an Investor Choose a Hard Money Loan or a Flip Loan? · Can You Buy a House Like a Cash Buyer With Hard Money? · Can You Get Preapproval for a Hard Money Loan Before Offers?
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.