The Quick Read: Hard money flip loans qualify mainly on the deal rather than your income, so lenders weigh the after-repair value, your rehab budget, your cash, your credit score, your track record, and your exit plan, and first-timers can qualify, though experience mostly changes how much leverage and what terms you get. Every figure below varies by lender, property, and experience, and nothing here is a commitment to lend.
- Leverage is measured against project cost and tiered by completed projects: 85%, 90%, or 93%.
- Every tier is capped at 75% of the home’s finished value.
- A 620 credit score is the minimum on this program, with extra conditions below 660.
- Rehab money arrives in draws after work is done, so you fund early phases yourself.
- The loan is short, interest-only, and repaid by a sale or a refinance. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Key Terms Defined
Hard money loan: A short-term, interest-only loan secured by the property and underwritten mainly on the deal, not your paycheck.
ARV (after-repair value): What the property should be worth when the renovation is finished, based on recent comparable sales.
Loan-to-cost (LTC): The loan amount as a share of your total project cost, meaning purchase price plus rehab budget.
Draw: A release of rehab funds after a portion of the work is finished and inspected.
Holdback: The rehab money the lender sets aside at closing and pays out in draws.
DSCR loan: A long-term rental loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
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.
What Do Hard Money Fix-and-Flip Qualification Requirements Actually Check?
Lenders check five things, in roughly this order: the deal, the plan, your cash, your credit, and your experience. A bank starts with your income. A hard money lender starts with the property.
That order explains most approvals and most declines. A strong borrower with a weak deal gets turned down. A newer borrower with a tight deal and real cash often gets a term sheet at a lower leverage tier.
Here is what each gate looks like from the broker’s chair.
1. The deal. Does the finished value support the loan? The lender compares your total cost to the ARV and applies a cap.
2. The plan. Is the scope of work realistic, and does the budget match it?
3. Your cash. Can you verify the down payment, closing costs, and a cushion?
4. Your credit. Is your score above the program floor?
5. Your experience. How many projects have you completed? That count sets your leverage tier.
How Underwriting Treats Your Credit
Credit is a floor, not the main event. On the program Lendmire arranges through its lender network, the minimum score is 620, with additional conditions below 660. Those conditions vary by lender and by the rest of the file.
Hard money underwriting stays asset-based, meaning the property, the plan, and the exit carry the file. That does not mean credit is ignored. A score near the floor can limit your leverage tier or add conditions. A score well above it gives the lender less to worry about.
Recent credit events, such as a late-paying account or a collection, get a closer look than an old blemish. Explain anything unusual in writing before the lender asks. Surprises cost you more than the blemish itself.
Experience Sets Your Leverage, Not Just Your Eligibility
Experience decides which leverage tier you get. It rarely decides whether you can apply at all.
The program measures leverage against project cost and tiers it by documented completed projects:
| Completed projects | Max loan-to-cost | Also capped at |
|---|---|---|
| Fewer than 2 | 85% of project cost | 75% of ARV |
| 2 or more | 90% of project cost | 75% of ARV |
| 5 or more | 93% of project cost | 75% of ARV |
The top tier is reserved for experienced investors. These figures vary by lender, property, and experience.
First-time investors qualify at the lowest tier. You will bring more of your own cash to that first deal. Many lenders in the network also pay closer attention to scope and budget realism when there is no track record.
What counts as proof? Lenders generally want completed projects you can document, such as past purchase and sale records. A partner’s or contractor’s history may be credited by some lenders and ignored by others, so ask before you count on it.
Cash: The Part Borrowers Underestimate
The loan covers less than the whole project, so you bring cash. Plan for four buckets: your equity in the deal, closing costs, a reserve cushion, and working capital to pay contractors before draws reimburse you.
The leverage tiers tell you the first bucket. At the 85% tier you fund roughly 15% of project cost yourself. At 90% it is about 10%. At 93% it is about 7%. That assumes the cost test is the one that binds, which the worked example below shows is not always true.
The other three buckets are where first-timers get squeezed. Reserve requirements vary by lender, loan size, and experience. Closing costs sit on top of your equity. Working capital matters because draws reimburse spending that has already happened.
Lenders verify funds with account statements. Money that appeared in your account recently usually needs an explanation. Move cash early, not the week you apply.
ARV: Why the Finished Value Caps Everything
ARV is the number that most often decides the loan amount. Every tier on this program is capped at 75% of ARV, no matter how much experience you have.
Lenders want a conservative ARV built on recent comparable sales near the property. Your optimistic number does not drive the approval. A thin set of comps, or comps that are larger or newer than your finished house, will pull the number down.
The word “LTV” causes confusion in hard money. It can mean the loan against the as-is value, against ARV, or against total cost. When you compare lenders, ask for the cost percentage and the ARV cap separately. They are two different tests.
Worked Example: Which Test Binds?
The clean way to see this is to run one deal through all three tiers. Use index numbers instead of dollars. These are modeled assumptions for illustration, not market data.
Assume a purchase price of 100, a rehab budget of 30, and an ARV of 160. Project cost is 130. The ARV cap is 75% of 160, which is 120.
| Tier | Cost test | ARV cap | Binding limit | Your equity |
|---|---|---|---|---|
| 85% of cost | 110.5 | 120 | Cost test | 19.5 |
| 90% of cost | 117 | 120 | Cost test | 13 |
| 93% of cost | 120.9 | 120 | ARV cap | 10 |
At the top tier, the cost test would allow 120.9, but the ARV cap stops it at 120. A larger rehab with the same ARV would make the ARV cap bind at every tier.
That is the main lesson. When margins are thin, the ARV cap, not your experience tier, sets your cash in the deal. Add closing costs, reserves, and working capital on top of the equity column. Actual structures vary by lender.
Which Properties Qualify
Eligible collateral on this program is non-owner-occupied residential property with one to four units. Ground-up construction can run up to 10 units. Owner-occupied homes, commercial buildings, industrial property, land, and hospitality properties are not offered.
Condition matters too. Lenders expect a property that can be renovated and resold or refinanced.
Loan amounts go up to $5,000,000, with larger loans considered by exception. Smaller balances vary by lender. The program is available in 41 markets, including Washington, D.C.
Entity, Guarantee, and the Business-Purpose Test
Many investors close in an LLC. Entity documents then join the checklist, and lenders commonly ask for a personal guarantee from the principal. Both vary by lender and file.
Hard money flip loans are business-purpose investor loans, so they are reviewed differently from a standard owner-occupied mortgage. The business-purpose test looks at what the loan proceeds are for, and the lender decides that in each case, per Regulation Z’s business-purpose provision. Expect to sign a business-purpose declaration. Treat it as a fact about your project, not a formality.
The Exit Plan Is Part of the Application
Lenders ask how the loan gets repaid, and a vague answer weakens the file. The loan runs 6 to 18 months, interest-only, with no prepayment penalty. Your plan must fit inside that window.
There are two exits. You sell the finished property, or you refinance it. Many investors who decide to keep a finished flip refinance into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Lendmire’s complete DSCR loans guide explains how that second loan is underwritten.
Clearing a DSCR test does not mean the property cash flows after repairs, vacancy, and management. The test only compares rent to the payment. Run your own numbers before you commit to the hold.
Draws and Working Capital
Up to 100% of the documented rehab budget can fund through draws against completed work. The key word is completed. The lender inspects, then releases.
This creates a cash gap. You pay the contractor, then wait for inspection and reimbursement. A slow inspection or a disputed scope item stretches that wait. Experienced flippers hold working capital for exactly this reason.
Draw practices differ across lenders in the network. Some reimburse stored materials only with receipts and photos. Others pay only after installation. Some advance a portion at closing.
Treat draw readiness as a qualification issue. A lender that doubts your budget or your contractor will size the file more cautiously.
The Documents You Will Need
- Borrower: government ID, a credit authorization, and a completed loan application.
- Entity: formation documents, operating agreement, and good standing, if you close in an LLC.
- Property: the purchase contract and any appraisal or valuation the lender orders or accepts.
- Project: scope of work, itemized budget, and contractor information.
- Funds: recent account statements showing your equity and cushion, plus any track-record records.
Build the project folder before you apply. A clear budget schedule does more for your file than a long cover letter.
Requirement-by-Requirement Summary
| Requirement | What the lender checks | How to strengthen it |
|---|---|---|
| Credit | Score against the 620 floor | Pay down balances, explain events |
| Experience | Completed projects, documented | Organize past settlement records |
| Cash | Verified equity and cushion | Season funds in your account |
| Property | 1-4 units, non-owner-occupied | Confirm eligibility before you offer |
| Plan | Scope, budget, ARV comps | Use realistic comps and bids |
| Exit | Sale or refinance fits the term | Write the plan down with a backup |
Other Structures Beyond the Standard Flip
Not every deal is a classic flip. A bridge purchase without rehab can go up to 80% of the purchase price. A cash-out or rate-and-term refinance can go up to 65% of value. Ground-up construction can reach 90% of cost and 75% of completed value at three or more completed projects.
These limits vary by lender, property, and experience.
Why Applications Get Declined (and the Fix)
Most declines trace back to the deal or the paperwork, not to the borrower’s character.
| Cause | Typical fix |
|---|---|
| ARV does not support the loan | Renegotiate price or trim scope |
| Thin or weak comparables | Add closer, more recent sales |
| Cash cannot be verified | Season funds and document sources |
| Credit below the floor | Rebuild first, or restructure the deal |
| Scope and budget do not match | Rebuild the budget with itemized bids |
| Ineligible property or occupancy | Choose a 1-4 unit non-owner-occupied property |
An approval can still change before funding if the appraisal comes in low, title shows a problem, or your cash goes missing. Keep your statements clean until the loan funds.
Is the Margin Still There?
Flipping is still common. ATTOM’s most recent quarterly report counted 77,991 single-family and condo flips, or 6.2% of all home sales. A trade summary of that report put the typical profit margin at 21.5%, down from 27.6% a year earlier.
Narrower margins make the ARV cap and carrying costs matter more.
Which Path Fits You?
| Investor | Likely tier | Focus |
|---|---|---|
| First flip | Fewer than 2 projects, 85% of cost | Cash, realistic scope, conservative ARV |
| Building a record | 2 or more projects, 90% of cost | Document the track record, protect margin |
| Repeat investor | 5 or more projects, 93% of cost | Watch the ARV cap, plan the exit early |
Tiers are the program’s typical structure and vary by lender, property, and experience.
A Five-Step Prep Sequence
1. Pull your credit and fix anything fixable.
2. Organize your funds and let large deposits season.
3. Collect your project records and build the track-record file.
4. Write the scope, itemized budget, and comps-based ARV.
5. Decide your exit and your backup exit before you ask for a term sheet.
Run that sequence once and the application becomes a handoff, not a scramble.
Frequently Asked Questions
Can I qualify for a hard money flip loan with no flipping experience?
Yes, at the lowest leverage tier. On this program, fewer than two completed projects means up to 85% of project cost, still capped at 75% of ARV. Expect to bring more cash and show a tight scope. Terms vary by lender, property, and experience.
Does a hard money lender check my credit?
Yes. The program minimum is a 620 score, with additional conditions below 660. The loan is still underwritten on the property, the plan, and the exit, so credit works alongside the deal rather than replacing it.
Do I have to use an LLC?
Not always, but many investors do, subject to lender program eligibility. When you borrow through an entity, expect to provide formation documents and often a personal guarantee. The requirements differ across lenders in the network.
How much cash will I actually need?
More than the down payment alone. Plan for your equity in the deal, closing costs, reserves, and working capital to cover contractors until draws reimburse you. The worked example above shows how the ARV cap can raise your equity above what the leverage tier suggests.
What happens after I am approved?
The purchase advance funds at closing, and the rehab budget sits in a holdback. You then request draws as work is completed and inspected. Plan your exit, whether a sale or a refinance, before the 6-to-18-month term runs out.
Next Step
If you are buying, rehabbing, or refinancing an investment property 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 mortgage broker that arranges these loans through select lenders in its network, subject to lender guidelines and credit approval. Investors who plan to keep the property can ask about the DSCR refinance path at the same time. Flip margins are tightening, which makes a conservative ARV the most valuable number in your file.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
Hard money often opens the deal, and a refinance typically closes the chapter – 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. Regulation Z, business-purpose provision (CFPB)
2. ATTOM Home Flipping Profits Continue Gradual Two-Year Decline
3. thetitlereport.com: Attom Report Showing Continuous Drop in Home Flipping
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Hard Money Lender Licensing and Documentation for a Fix and Flip · Hard Money Lender Questions and Documents for a Fix and Flip Loan · Hard Money Lender Requirements for the Seller of 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
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.