The Quick Read: A first flip on hard money typically means putting up about 15% of total project cost, because the lowest-leverage tier funds roughly 85% of cost and caps the loan at 75% of after-repair value, and you also need cash for closing costs, reserves, and early contractor payments, all of which vary by lender, property, and experience.
- The basis matters more than the percentage. The down payment is the gap between total project cost and what the lender will fund, not a flat slice of the purchase price.
- Experience sets your tier. With fewer than two completed projects, expect roughly 85% of project cost. Two or more projects reach 90%, and five or more reach 93%.
- The after-repair cap can override everything. Every tier is capped at 75% of after-repair value, so a thin deal can force a bigger check.
- The down payment is not your whole cash need. Closing costs, interest carry, reserves, and contractor float all draw on the same pile.
Hard money is not a zero-down product. Up to 100% of the rehab budget can fund in draws, but that is a rehab figure. It says nothing about the purchase side.
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.
Key Terms Defined
You will see these terms in every quote, so here they are once.
- Hard money loan: a short-term, business-purpose loan secured by the property, underwritten mostly on the deal itself: the property, the plan, and the exit.
- Loan-to-cost (LTC): the loan amount as a percentage of total project cost, meaning purchase price plus rehab budget.
- After-repair value (ARV): what the property should be worth once the work is done. Lenders cap the loan against it.
- Draw: a release of rehab money after the work is done and checked. You pay first and get reimbursed.
- Interest-only: you pay interest each month and no principal until the loan ends.
- Reserves: cash left in your account after closing, which proves you can carry the loan and start the work.
- Seasoning: the waiting period a lender wants after a purchase before it will refinance the property.
What Does “Down Payment” Mean on a Flip Loan?
On a flip loan, your down payment is the shortfall. Take purchase price plus rehab budget, subtract what the lender funds, and the remainder is yours to cover. That is why two lenders can both say “up to 90%” and ask for very different amounts of cash.
A conventional mortgage works differently. There, the down payment is a percentage of the purchase price, and that is the end of it. A flip loan can size on purchase price, on total project cost, or on a cap against after-repair value. The lender funds the lowest result. Your cash fills the difference.
Across the lenders we place hard money files with, the cost-based tiers are the most common structure. They are tied to your documented track record. Every figure in this piece varies by lender, property, and experience, and none of it is a commitment to lend.
How Underwriting Sets Your Number, Step by Step
Underwriting is a short sequence of tests, and the lowest result wins. Here is the order.
1. Lender sizes on project cost. Fewer than two completed projects puts you in the 85% loan-to-cost tier. Two or more reaches 90%. Five or more reaches 93%. These are percentages of project cost, never of purchase price.
2. Lender checks the ARV cap. Every tier is capped at 75% of after-repair value. If your numbers are tight, this test binds first.
3. Lowest result wins. Whichever test gives the smaller loan sets the loan. The rest is your cash.
4. Rehab money is held back. Up to 100% of the rehab budget funds in draws against completed work. You start the job with your own money and get reimbursed as inspections and invoices clear.
5. Credit and plan adjust the file. A 620 score is the minimum, with additional conditions below 660. Underwriting stays asset-based, so the scope of work, the ARV support, and your exit weigh heavily.
6. Experience shapes what you are offered. First-time investors qualify at the lower leverage tiers. The top tier is reserved for experienced investors.
The ARV cap is where most first-timers get surprised. They budget for the percentage on the quote, then the cap quietly shrinks the loan.
One Deal, Measured Three Ways
Multiples beat dollar examples here, so every figure below is expressed against the purchase price. This is a modeled deal, not market data. Say the rehab budget is 25% of the purchase price. Say the after-repair value is 1.6 times the purchase price. Total project cost is then 1.25 times the purchase price.
At the 85% tier, the cost test funds 1.0625 times the purchase price. The ARV cap allows 75% of 1.6 times, which is 1.2 times. The cost test is lower, so it binds. Your gap is 0.1875 times the purchase price, or 18.75% of it. That is the 15% of project cost you fund yourself.
| Completed projects | Loan-to-cost | ARV cap | Your cash gap (share of purchase price) |
|---|---|---|---|
| Fewer than 2 | 85% of cost | 75% of ARV | 18.75% |
| 2 or more | 90% of cost | 75% of ARV | 12.5% |
| 5 or more | 93% of cost | 75% of ARV | 8.75% |
Now weaken the deal. Keep the same cost but drop the after-repair value to 1.3 times the purchase price. The cap now allows 0.975 times the purchase price, below the 1.0625 times from the cost test. The cap binds, and your gap grows to 27.5% of the purchase price. Same property, same lender, same tier. The only change is a softer ARV.
That is why a quote’s headline percentage tells you little. Ask what the percentage applies to, then run the cap.
Why First-Timers Land in the Lowest Tier
Lenders price experience because a finished project is the best evidence you can finish another. With fewer than two completed projects, you sit at the 85% loan-to-cost tier. That is not a rejection. It is a smaller loan and a bigger check.
Experience changes terms, not just eligibility. First-timers usually see lower leverage and tighter conditions. Borrowing less than the maximum offered can be a smart move on a first deal, since it leaves you more breathing room if the rehab runs long.
You can strengthen a first-time file in ways that cost nothing extra:
- A specific, line-by-line scope of work instead of a round number.
- Conservative as-is and after-repair values backed by real sales.
- A contractor with a visible track record.
- A credit score at or above 660, which clears the extra conditions.
Documented projects count, so keep closing statements and before-and-after records. They are your ticket to the next tier.
Your Real Cash to Close
The down payment is only the largest piece of your cash need. Plan for four buckets.
- Down payment. The gap from the tests above.
- Closing costs and lender fees. Title, insurance, and lender charges are due at closing.
- Reserves and interest carry. The loan is interest-only, so you carry monthly interest through the whole project. Lenders want cash left over after closing to prove you can do it.
- Contractor float. Draws reimburse completed work. Your contractor may want a deposit before the first draw, and you cover it.
The pressure on cash is real. CNBC, citing ATTOM data, reports a typical flip gross profit of $65,981 and a 25.5% return, the lowest return since the Great Recession. ATTOM puts the share of flips using financing at 38.9% in its latest quarterly data.
Thin margins make every extra month of carry matter. A first flipper who plans cash for the down payment alone is planning for the easy part.
Where the Down Payment Can Come From
Savings are the cleanest source. Lenders generally want statements showing the funds are yours, and large recent deposits tend to draw questions. What a lender accepts varies, so ask before you rely on any source.
Other common sources:
- Equity partner. A partner funds most of the cash in exchange for a share of profit. Many first deals are built this way. Put the split in writing before you apply.
- Retirement accounts. Some investors tap them, but access rules and penalties differ by account type. Tax treatment varies; consult a qualified professional.
- Borrowed funds. Some lenders limit or ask extra questions about a down payment that is itself borrowed. Confirm the policy first, since a surprise here can stall a file.
Reserves do not count as down payment. They are a separate test. Funds moved to the closing table do not also sit in your account as reserves.
Where the General Rule Breaks
The 15% rule of thumb has edges. Here are the ones that matter on a first flip.
The ARV cap binds. You saw this above. Deals with a smaller spread between cost and after-repair value need more cash, because the cap, not the tier, sets the loan.
Light rehab versus heavy rehab. The tier percentage applies to total cost, so a bigger rehab budget raises the dollars you fund yourself, even at the same percentage. The draw structure also stretches your float, since more work is paid before reimbursement.
Purchase-only bridge loans. A bridge purchase without rehab sizes differently, with leverage up to 80% of the purchase price. No rehab budget means no draws and no ARV question, though it also means no 100% rehab funding. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Ground-up construction. The better construction tier, up to 90% of cost and 75% of completed value, requires three or more completed projects. A first-timer will not reach it.
Low-cost deals. A deep discount to after-repair value can make the ARV cap irrelevant. Under the tiers described here, the cost test still leaves you a share to fund. Do not build a plan around a lender who promises otherwise.
Extra collateral instead of cash. Some lenders elsewhere in the market will take additional collateral in place of cash down. It is not part of the structure described in this piece, and it puts a second property at risk. Treat it with caution.
Eligible properties. These loans cover non-owner-occupied residential property of one to four units. Owner-occupied homes, commercial buildings, and land are not offered.
What If You Are Short on Cash?
Run through these in order.
1. Shrink the deal. A lighter rehab means a smaller total cost and a smaller gap.
2. Borrow less than the maximum. A bigger down payment can improve your terms and cushion your carry, though it means more cash out the door.
3. Bring in a partner. Capital partners can fill the gap. Agree on roles and profit split first.
4. Wait and build. A few more months of savings can matter more than a rushed first deal.
5. Do not stretch reserves to fund the check. Skip it. A flip with no cash left for carry is a flip waiting to stall.
Red flag: anyone promising full financing on the purchase side. That is not how hard money works, and the cost shows up somewhere else in the deal.
Questions to Ask Any Lender
Quotes are only comparable when the basis is the same. Ask these before you compare anything.
- Is the loan sized on purchase price, or on purchase plus rehab?
- What is the ARV cap, and who determines the value?
- How much cash do you want left after closing, and how do you count it?
- How do draws work, and what do I pay out of pocket before the first one?
- What documents do you need to show my funds, and how recent can the deposits be?
- Does my experience tier change if my first project closes before this one?
- If my rehab budget changes, does the loan amount change?
The answers will often be more useful than the headline percentage.
When the Flip Becomes a Rental
These loans run six to eighteen months, interest-only, with no prepayment penalty, and there are no multi-year options on the current program. Investors who need longer runway refinance into long-term rental financing.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized. The numbers there are different. The refinance on a standard rental tops out around 75% LTV on a cash-out refinance of an investment property, and about six months of seasoning is the common expectation. A credit score of 620 is the floor in parts of the network, most programs want around 660, and 700 or above opens the strongest leverage tiers. For the full picture, see Lendmire’s complete DSCR loans guide.
Coverage works the same way. DSCR compares monthly rent to the full monthly housing payment, meaning principal, interest, taxes, insurance, and any HOA dues. A ratio of 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
One caution. Clearing 1.00 is not positive cash flow. Repairs, vacancy, management, utilities, and capex all sit outside the calculation.
Leverage on the flip does not carry into the rental exit.
Frequently Asked Questions
Can I flip a house with no money down?
Not with these programs. The most leverage a first-timer typically sees is about 85% of project cost, and the cap against after-repair value can push your share higher. Closing costs and reserves come on top. Up to 100% of the rehab budget funds in draws, but that is reimbursement of work already done.
Do my reserves count toward the down payment?
No. Reserves are a separate test: cash left in your account after closing to cover interest and early rehab costs. Money you spend on the down payment cannot also be counted as reserves, so plan for both.
Can I use retirement funds or borrowed money?
It depends on the lender and on how the funds are documented. Savings are the simplest source to prove. Retirement distributions and borrowed money draw more questions, so confirm the policy before you rely on either.
What happens if the appraisal comes in low?
A lower after-repair value shrinks the loan, because every tier is capped at 75% of ARV. Your cash gap grows by the difference. Build some cushion into your budget so a soft valuation does not end the deal.
Does my credit score matter if the loan is asset-based?
Yes, though less than the deal itself. Underwriting leans on the property, the plan, and the exit, and the score is one input among them.
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 these loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. Call 828-256-2183 or request a quote.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s traditional personal-income documentation, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
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
2. 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: How to Meet Hard Money Requirements on Your First Fix-and-Flip · Hard Money Maximum Loan Amount Requirements for a Flip · National vs Local Hard Money Lender for a Fix-and-Flip Investor
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
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.