The Quick Read: Reading a hard money closing statement means starting at the bottom with your cash-to-close total, then working upward to sort every charge by who gets paid, whether that is the lender, a third party, or a holdback account, and finally matching each line against your term sheet before wire day.
- Cash to close is bigger than your down payment. Fees, insurance, and prepaid items sit on top of it.
- Lender-controlled charges (points and flat fees) are where you have room to ask questions. Third-party charges mostly are not.
- Rehab money usually does not arrive at closing. It sits in a holdback and is released in draws as work is finished.
- Some costs never appear on the closing statement at all: draw fees, extension fees, and exit fees.
- Program details vary by lender, property, and experience, and nothing here is a commitment to lend.
What “Closing Costs” Actually Means on a Flip Loan
Closing costs are everything you pay to get the loan funded, other than the loan’s interest. On a flip loan, that is the lender’s own charges plus the outside vendors who touch the deal.
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.
Think of two buckets. The first is the price of the money: points and lender fees. The second is the cost of the paperwork and protection: title, escrow, recording, appraisal, and insurance.
A point is 1% of the loan amount. It is paid once, up front, and a flip is a short hold. That makes points weigh heavily on your margin compared with a long-term loan. Across the wholesale network Lendmire works with, the structure is typically interest-only over a 6-18 month term with no prepayment penalty. All of it varies by lender, property, and experience.
Step One: Split the Statement Into Who Gets Paid
Sort every line into one of three groups before you judge any number.
- Lender charges: points, underwriting, processing, and document prep.
- Third-party charges: title, escrow, recording, appraisal or broker price opinion, and insurance.
- Money that is yours: holdback funds and credits.
This sort matters because you can push on some lines and not others. A lender sets its own fees. It does not control what a title company charges. Ask about the lender-controlled lines first.
| Line item | Plain meaning | Who is paid | Negotiable? |
|---|---|---|---|
| Points | Percent of loan amount | Lender | Sometimes |
| Processing / doc prep | Flat file-handling fees | Lender | Sometimes |
| Underwriting | Flat review fee | Lender | Sometimes |
| Appraisal or BPO | Value opinion for the lender | Vendor | Rarely |
| Title and escrow | Ownership search, closing agent | Title company | Rarely |
| Recording | Public-record filing | Government office | No |
| Builder’s-risk insurance | Coverage during rehab | Insurer | Shop it |
| Inspection / draw setup | Work-verification fees | Lender or vendor | Ask |
Layouts differ from lender to lender. One lender folds processing into points. Another itemizes everything. The names change. The question stays the same: who gets this money, and for what?
Step Two: Find the Points Line and Check Its Base
The points line is the biggest lender charge on most flips. The key question is what the percentage is applied to.
Points are charged on the loan amount, not the purchase price. On a flip loan, the loan amount may include the rehab portion. Some lenders charge points on the full commitment. Others charge only on what is funded at closing.
Those two setups can produce very different totals on the same deal. Ask which one your lender uses, and get the answer in writing on the term sheet.
Step Three: Find the Flat Fees
Flat fees are the small lines that add up. Look for processing, document prep, inspection, appraisal, and a rehab escrow or draw-setup fee.
Individually they look minor. Together they can rival a point or more on a smaller loan. Count them. If two lines sound like they cover the same work, such as a legal fee and a document fee, ask what each one buys. Duplicate charges are worth challenging.
Step Four: Understand the Holdback
The holdback is the rehab budget the lender has committed but not yet handed over.
Here is how it works. At closing, the lender funds the purchase advance. The rehab money is held back. As work gets done, you request a draw, the lender verifies progress, and funds are released as reimbursement.
Up to 100% of the rehab budget can be funded in draws against completed work, depending on lender, property, and experience. That is a rehab-budget figure. It is not a purchase figure.
The catch is cash flow. You often front the contractor’s first payment and get repaid after the work is verified. A first-timer who budgets only for the down payment can be caught short in week one. Hold some of your own cash for that gap.
On the purchase side, leverage is based on project cost, not on purchase price alone. Typical network tiers run 85% of project cost with fewer than two completed projects, 90% with two or more, and 93% with five or more. Every tier is capped at 75% of after-repair value, and the top tier is reserved for experienced investors. These ranges move by lender and file.
Step Five: Check How Interest Starts
Interest generally accrues on the money actually disbursed, not on the full commitment. That is good for you, because undrawn rehab funds are not costing you interest while they sit in the holdback.
Look for a minimum-interest clause. Some lenders set a floor, so you owe interest for a minimum period even if you pay off early. A flip you sell in half that period still pays the floor.
On this program, loans are interest-only with no prepayment penalty. Still, read your own term sheet. A minimum-interest period and a prepayment penalty are different things, and the paperwork should say which one applies.
Step Six: Do the Cash-to-Close Math
Your wire is rarely the same as your down payment. Here is the formula.
Cash to close = down payment + lender fees + third-party fees + insurance and prepaid items − credits.
The down payment is the purchase price minus the advance the lender funds. Then add the lender charges, the title and escrow charges, and the builder’s-risk policy. Subtract any credits, such as earnest money you already paid.
If you want to see how rolling costs into the loan changes this math, Lendmire’s piece Can You Roll Closing Costs Into Hard Money on a Flip? goes through it.
A Worked Walk-Through (No Dollar Figures Needed)
Picture a first-time flipper buying a distressed single-family house. The loan is sized on project cost at the lowest leverage tier, with the 75% after-repair-value cap applying on top. Every item below is a modeled assumption, not a quote.
- Purchase advance: funded at closing, and it pays the seller.
- Rehab holdback: held by the lender, released in draws after verified work.
- Points: a percentage of the loan amount, so confirm whether the base includes the holdback.
- Flat lender fees: processing, document prep, and draw setup, each listed once.
- Third-party fees: title, escrow, recording, and appraisal.
- Insurance: a builder’s-risk policy paid at or before closing.
- Credits: earnest money already paid.
- Bottom line: your cash to close, which is above your planned down payment.
Now reconcile. Take the term sheet and put each statement line next to its term-sheet match. A small movement in third-party charges is normal. A new lender fee that was not on the term sheet is not. Ask about it before you wire anything.
Why Your Paperwork May Look Different
A loan made for business purposes, such as a flip you plan to sell or rent, is reviewed differently from a standard owner-occupied mortgage. The Federal Reserve’s Regulation X manual lists a business-purpose exemption from the federal settlement-cost rules, so many flip lenders issue a term sheet and a lender-specific closing statement instead of the standard consumer forms. That is why layouts vary.
Exempt does not mean unregulated. The OCC’s Truth in Lending handbook says a lender weighs several factors, including your stated purpose, before deciding consumer disclosures are unnecessary. A law-firm analysis on Lexology makes the same point: business purpose does not mean compliance exempt. Some lenders issue consumer-style forms anyway. So the format you get depends on the lender and the facts of your deal.
Where the Rules of Thumb Break
The steps above fit a typical single-deal flip loan. These cases change the picture.
A revolving line of credit. Some lenders offer a line instead of deal-by-deal loans. Points can be charged once on the whole line, with only document fees per deal. That tends to suit experienced flippers.
Experience tiers. Leverage moves with your track record. The network’s tiers step up at two and five completed projects. A first-timer gets the lowest tier, so more of your cash goes in.
Small loans. Smaller balances vary by lender. Some charge a minimum fee, which makes the cost look heavy as a share of the loan. Loan sizes in the network run up to $5,000,000, with larger loans by exception.
Mixed-purpose facts. If part of the deal looks personal, such as living in the property, the loan can fall back toward consumer rules. Hard money here is for non-owner-occupied 1-4 unit properties, business purpose only.
Bridge purchases without rehab. These run up to 80% of purchase price, a different structure from the cost-based flip tiers.
Refinances. Cash-out and rate/term refinances run up to 65% of value on this program.
Costs That Never Appear on the Closing Statement
Some of the costs that hit your margin are not on the statement. They show up later.
- Draw fees: a charge each time you request a release of rehab funds.
- Extension fees: a charge if the project runs past its term.
- Payoff or exit fees: a charge when the loan is repaid.
Look for these on the term sheet and loan agreement before you sign. If the rehab drags, extension costs and extra interest can erase profit. Build a cushion into your timeline.
Red Flags and What to Ask
| Red flag | What to ask |
|---|---|
| Two lines for similar work | What does each line cover? |
| Vague administrative charge | Which service is this, and who gets it? |
| Points higher than term sheet | What changed? |
| Points on full commitment | Can they apply to funded amount only? |
| Total does not tie out | Can you walk me through the math? |
| Unfamiliar third-party vendor | Is this required, or can I choose? |
Get the draft statement before wire day, not on it. That leaves time to compare it with the term sheet. Confirm wire instructions by phone using a number you already know, never one sent in a fresh email.
What the Decision Looks Like in Practice
Compare two quotes on the same basis, not on the headline number. Normalize four things: the points base, the flat fees, the draw process, and any minimum-interest clause. A lender with lower points and heavy flat fees can cost more than one with higher points and clean terms. The most useful figure is total cost over your real hold period.
Plan the exit before you close. Many investors who plan to keep the property refinance out of hard money into long-term DSCR financing once the house is stabilized, and Lendmire brokers that path. The complete DSCR loans guide explains how that loan treats rent. Delays raise your bridge costs before the long-term loan ever funds, so a realistic schedule protects the exit.
Keep your receipts and closing statement.
On credit, the network’s minimum is 620, with added conditions below 660. First-time investors qualify at the lower leverage tiers. Underwriting stays asset-based: the property, the plan, and the exit, subject to lender guidelines.
Key Terms Defined
Holdback: rehab money the lender commits at closing but keeps until work is verified.
Draw: a request to release part of the holdback after work is completed.
Cash to close: the total you must wire at closing, including your down payment, fees, and prepaid items, less credits.
Loan-to-cost: the loan as a share of the total project cost, meaning purchase plus rehab.
After-repair value (ARV): the estimated value of the property once the work is finished.
Proration: a split of ongoing costs, such as taxes, between buyer and seller as of the closing date.
Frequently Asked Questions
Are points the same as an origination fee?
Often they are the same charge under two names. Some lenders also add a separate underwriting or processing fee on top. Ask for every lender fee in a list, and have the lender confirm which ones are bundled into points.
Are closing costs paid in cash or financed?
It depends on the lender and structure. Many are paid in cash at closing, and some can be rolled into the loan. Rolling them in raises the loan balance and your carrying cost, so compare both routes before you choose.
Why is cash to close higher than my down payment?
The down payment covers only the gap between price and the funded advance. Plan too for the contractor’s first payment, which you may front before the first draw is reimbursed.
Does the rehab money come at closing?
Usually not. Rehab funds sit in a holdback and release in draws as you complete and document work, up to 100% of the rehab budget, varying by lender, property, and experience.
Can a first-time flipper qualify?
First-time investors can qualify at the lower leverage tiers, subject to lender guidelines, a 620 minimum score with added conditions below 660, and a review of the property and plan. The strongest tiers go to borrowers with completed projects.
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. The brokerage arranges these loans through select lenders in its wholesale network across 41 markets, including Washington, D.C.
To see how a first-timer can fold these costs into the loan, read Lendmire’s piece on whether a first-time flipper can roll closing costs into a hard money loan: Can a First-Time Flipper Roll Closing Costs Into a Hard Money Loan?.
About Lendmire
Lendmire, NMLS# 2371349, is a non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 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. Federal Reserve Regulation X supervision manual
2. OCC Truth in Lending Act handbook
3. Lexology: Beware of Business Purpose
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Meet Hard Money Requirements on Your First Fix-and-Flip · How to Compare National and Local Hard Money Lenders for a Flip · How a Hard Money Lender Sizes the Maximum Term for a Flip
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
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.