The Quick Read: Your limit is the lower of two caps. One is loan-to-cost, which measures the loan against purchase price plus rehab budget. The other is a cap on after-repair value (ARV), the projected worth of the finished house. Exact figures vary by lender, property, and experience. A first-time investor typically starts in the lowest cost tier, 85% of project cost across select lenders in Lendmire’s wholesale network, and every tier stops at 75% of ARV. Whatever the loan doesn’t cover, you pay in cash.
- The lender runs the cost test and the ARV test, then lends the lower number.
- Fewer than 2 completed projects means 85% of project cost. Two or more means 90%. Five or more means 93%.
- Up to 100% of the rehab budget can be funded in draws, but only as work is completed.
- There is no true 100% purchase program. Fees, closing costs, reserves, and the first draw come out of your pocket.
- First-timers usually qualify at the lower tiers, with a 620 credit score minimum and added conditions below 660.
Key Terms Defined
You’ll see these words in every term sheet. Here is what they mean in plain English.
- Draw: a payment the lender releases from the rehab budget after a stage of work is done.
- Holdback: the part of the loan reserved for renovation and paid out only through draws.
- Interest-only: you pay the interest each month and none of the principal until the loan ends.
- Balloon payoff: the full balance due when the term ends, repaid by selling or refinancing.
- Asset-based loan: a loan underwritten mainly on the property, the plan, and the exit rather than on your paycheck.
- DSCR loan: a long-term rental loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
- Reserves: cash you keep on hand, verified by the lender, after the deal funds.
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.
The Two Caps That Set Your Limit
Hard money lenders size a flip loan with two separate tests. Loan-to-cost asks how much of your total project cost the lender will fund. The ARV test asks how much the lender will lend against the finished value. You get the smaller answer.
Here is the math on each test.
- Cost test: project cost is purchase price plus approved rehab budget. Multiply it by your tier percentage.
- ARV test: take the supported after-repair value and multiply it by 75%.
Notice the word “supported.” The ARV isn’t the number in your spreadsheet. It is the value the lender can back up with comparable sales or an appraisal. An optimistic ARV doesn’t raise your loan. It just makes your plan look worse once the lender checks it.
This is why the limit isn’t a single advertised number. Two investors can buy the same house and walk away with different loans because their experience tiers differ. Two deals can have the same tier and different loans because the ARV came in differently.
Which Cap Wins?
It depends on the spread between what you’re paying and what the house will be worth. A wide spread means the cost cap binds. A thin spread means the ARV cap binds. Here is a modeled example using index points, not dollars: total project cost is 100, at the first-time tier of 85% of project cost.
| Scenario | Cost cap | ARV cap | Your loan (lower) |
|---|---|---|---|
| ARV of 130 | 85.0 | 97.5 | 85.0, cost binds |
| ARV of 110 | 85.0 | 82.5 | 82.5, ARV binds |
| ARV of 100 | 85.0 | 75.0 | 75.0, ARV binds |
Your own cash is whatever the loan leaves uncovered: 15.0 in the first row, 17.5 in the second, and 25.0 in the third. The table shows loan sizing only, so fees, closing costs, and reserves sit on top.
Look at what happened. The house, the plan, and the purchase price never changed. Only the ARV moved, from 130 to 100. The loan fell by ten index points, and your cash requirement rose by the same amount. That’s the “why did my loan come in lower than I expected?” explanation in one table.
How Experience Changes the Number
Experience changes the cost tier. It doesn’t change the ARV ceiling. Across the wholesale network, leverage steps up as you document completed projects.
| Completed projects | Cap on project cost | Cap on ARV |
|---|---|---|
| Fewer than 2 | 85% of project cost | 75% |
| 2 or more | 90% of project cost | 75% |
| 5 or more | 93% of project cost | 75% |
These figures vary by lender, property, and experience, and nothing here is a commitment to lend. The top tier is reserved for experienced investors. As a first-timer you sit in the first row, and that’s normal. First-time investors qualify at the lower tiers, so you aren’t shut out. You’re just asked to put in more of your own money.
Run the same 130-ARV deal at the 2+ tier and the cost cap rises to 90 against an ARV cap of 97.5. The loan is 90, and your cash drops to 10. Two finished flips are worth about five index points of equity on a deal this size.
A lender can’t fix a weak experience profile with a pitch. A simple scope, a capable general contractor, and extra cash on the table all help. They won’t rescue an ARV the comps don’t support or a title problem.
What You Still Pay in Cash
Think of the loan as covering most of the project, not all of it. Four cash items sit outside the loan limit.
1. Your equity share. That’s the gap between the loan and total project cost, shown in the tables above.
2. Lender fees and closing costs. These are due at closing in cash and aren’t rolled into the loan.
3. Reserves. The lender typically wants to see verified cash left over after funding. Amounts vary by lender and deal.
4. The first draw float. You pay the contractor, the lender inspects, and the lender reimburses. So you carry the first stretch of work yourself.
Add interest-only carry while the house sits unsold. A first-time investor who sizes cash needs to the loan limit alone is the one who runs short in month four.
How Rehab Draws Work
A draw is a reimbursement, not an advance. The rehab portion is held back at closing and released in stages after the lender confirms the work. Up to 100% of the rehab budget can be funded this way, as a rehab-budget figure and never a purchase leverage figure. The combined loan still has to sit under the ARV cap.
A typical draw package contains invoices, progress photos, an updated budget, and lien waivers. Many lenders verify through a third-party inspector or a photo review. Rules differ lender to lender, and partial completion is often paid in proportion to the work finished.
Two practical consequences follow. First, a draw request for half-done work may fund only about half that line item. Second, a contractor who wants a big deposit up front is a problem for you, not the lender. Pick contractors who will work against reimbursement.
Can You Get 100% Financing?
No. There is no true 100% purchase program. The phrase usually means 100% of the rehab budget, funded through draws as work is completed. It doesn’t mean 100% of the purchase.
The purchase side still carries your cash share, and the ARV cap still applies to the whole loan. That’s why a lender can fund the full rehab budget and still hand you a loan that is tight against ARV. If you hear “no money down” on a flip, ask exactly which line item the promise covers.
Other Structures, Property Rules, and Edge Cases
The flip loan is one structure among several, and the other limits differ.
- Bridge purchase without rehab: up to 80% of purchase price.
- Cash-out or rate-and-term refinance: up to 65% of value.
- Ground-up construction: up to 90% of cost and 75% of completed value, at 3 or more completed projects. A first-timer won’t be here.
- Loan size: up to $5,000,000, larger by exception, with smaller balances varying by lender.
- Term: 6 to 18 months, interest-only, with no prepayment penalty. There are no multi-year options on the current program.
- Property: non-owner-occupied residential, 1 to 4 units. Ground-up construction goes to 10 units. Commercial, industrial, land or lots, hospitality, and owner-occupied properties are not offered.
- Credit: a 620 minimum, with additional conditions below 660. Underwriting stays asset-based and looks at the property, the plan, and the exit.
- Entity: lenders commonly want the loan in an LLC or corporate entity rather than your personal name, subject to lender program eligibility.
Lendmire arranges hard money through select lenders in its wholesale network across 41 markets, including Washington, D.C. A few states and cities are excluded, so confirm your property’s location before you sign a purchase contract.
One more edge case has nothing to do with lender rules. ATTOM’s flip data found that homes bought for under $50,000 posted a typical 14% loss. That is a deal-quality problem, and a bigger loan won’t fix it.
Thin Margins Make Leverage a Choice
ATTOM’s second-quarter flipping data counted 77,991 flips, or 6.2% of home sales, with a typical gross profit of $60,526. HousingWire reports that industry participants cautioned that gross margins don’t necessarily mean stronger net returns.
That’s the practical read. Gross profit is purchase versus resale, before carry, fees, and surprises. Borrowing at the top tier makes thin margins thinner, and a first-timer doesn’t have to chase it. Many hard money lenders will do lower-leverage loans, and a smaller loan with more equity leaves room if the ARV slips or the rehab runs long. (Most first flips go sideways on the budget, not the loan limit.)
ATTOM’s state-level data shows the median flip takes several months from purchase to resale. Set that against a 6 to 18 month term and decide how much cushion you want before the balloon payoff.
When the Flip Becomes a Rental
A flip that doesn’t sell is not a failed deal if you planned the exit. Many investors refinance out of hard money into long-term DSCR investor loans once the property is stabilized, and Lendmire brokers that path. A DSCR lender reads the rent against the full payment, along with the appraisal. It doesn’t read your draw schedule.
Clearing the coverage test isn’t the same as positive cash flow. Repairs, vacancy, and management all sit outside it. The structural mistake is a bridge note that matures before the lender’s ownership clock runs out. Plan the refinance timeline before you choose a term. Lendmire’s complete DSCR loans guide explains how the rental loan side works.
Tax treatment varies by how the property is held and how the profit is realized, so consult a qualified professional before relying on any deduction.
First-Timer Checklist
Before you request terms, have these ready.
- The address, purchase price, and a line-item rehab budget.
- Comparable sales that support your ARV.
- A contractor with a written scope and schedule.
- Proof of funds for your equity share, fees, and reserves.
- Your entity paperwork, if you’re borrowing through an LLC.
- A written exit: sale, or refinance, with the timing mapped to the loan term.
Size your first project below the ceiling, not at it. Margin for error is worth more than the last few points of leverage.
Frequently Asked Questions
Can I borrow against ARV alone with little cash?
No. ARV only sets the upper cap. The cost test, your experience tier, and your cash contribution all apply as well. The lender lends the lower result, and a low-cash deal with a thin spread usually fails the ARV test.
How many completed projects do I need to move up a tier?
Across the network, 2 or more documented completed projects typically move you from 85% to 90% of project cost, and 5 or more reach 93%. The ARV cap stays at 75% in every tier. Tiers vary by lender, property, and experience.
How much cash does a first-time flipper actually need?
Plan for the unfinanced share of project cost at the 85% tier, plus fees, closing costs, verified reserves, interest-only carry, and the first draw float. Add a contingency for rehab overruns. The calculator on this page can give an illustrative estimate, but it isn’t a quote.
What happens if the rehab runs over budget or the house doesn’t sell?
Draws fund the approved budget, so overruns come out of your cash. If the house is still unsold as the term nears its end, the usual exits are a sale or a refinance. Talk to your lender well before maturity, because the term is 6 to 18 months.
Is there a minimum credit score?
The minimum is 620, with additional conditions below 660. Underwriting stays asset-based, so the property, the plan, and the exit matter alongside credit. Nothing here is a commitment to lend.
Run Your Numbers Before You Borrow
If you’re 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.
Your first flip is a test of discipline more than financing, and the investor who knows which cap will bind before the lender does is already ahead.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (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. attomdata.com: Q1 Home Flipping Report
2. attomdata.com: Top Metros with the Largest Increases in Home Flipping Roi
3. HousingWire coverage of ATTOM flipping data
4. ATTOM home flipping trends by state
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is There a Limit on a Hard Money Fix-and-Flip Loan? · Can a Business Owner Qualify for a Hard Money Fix and Flip Loan? · Is a Hard Money Fix-and-Flip Loan Worth It on a Single-Family Home?
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.