The Quick Read: A hard money flip loan is sized to the deal rather than to the borrower, so owning a business does not raise the ceiling: the lender runs a cost test and an after-repair-value test, funds the lower of the two results, and then reviews your liquidity, track record and guaranty. Program figures here reflect select lenders in Lendmire’s wholesale network and vary by lender, property, and experience. Nothing here is a commitment to lend.
- Leverage is measured against project cost and tiered by completed projects: typically 85% of project cost with fewer than 2, 90% at 2+, and 93% at 5+.
- Every tier is also capped at 75% of after-repair value, and the lower of the two results sets the loan.
- Up to 100% of the rehab budget can fund in draws against completed work. That is a rehab figure, not a purchase loan-to-value.
- Loan amounts typically run up to $5,000,000, with larger requests handled by exception.
- Your business shows up in the file as documented cash and relevant experience, not as extra borrowing power.
Key Terms Defined
Six terms carry this whole topic. Learn them once and the rest reads easily.
As-is value is what the property is worth today, before any work.
After-repair value (ARV) is the estimated worth of the finished property, based on comparable sales and a realistic scope of work.
Loan-to-cost is the loan divided by purchase price plus the approved rehab budget.
Loan-to-ARV is the loan divided by the after-repair value. In flip lending it works as a ceiling, not as the amount you automatically receive.
Draw is a release of rehab money after work is completed and verified.
Guarantor is the person who personally promises to repay if the borrowing entity does not.
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.
How Is the Maximum Actually Set?
The maximum is the lower of two numbers. One comes from what the deal costs. The other comes from what the finished property should be worth. Whichever limit binds first becomes the loan.
Here is the part that trips up newer flippers. A headline such as “93% of project cost” sounds like the loan. It is only the cost test. The 75% of ARV cap sits behind it, and on a thin deal the second test wins.
Your income does not enter either formula. Hard money underwriting is asset-based. The lender studies the property, the plan and the exit, then checks that the borrower can carry the project. A business owner and an employee with the same deal, the same credit and the same cash get the same sizing.
Business ownership still matters, just not as a multiplier. It matters through liquidity you can document, experience you can prove, and the strength of the person standing behind the guaranty.
The Six-Step Method
Run this sequence before you ever talk to a lender. It tells you the real ceiling and your real cash need.
1. Total the project cost. Add the purchase price and the approved rehab budget.
2. Find your leverage tier. The tier depends on documented completed projects: 85% of project cost with fewer than 2, 90% at 2+, 93% at 5+.
3. Apply the cost test. Multiply total cost by your tier percentage.
4. Apply the ARV test. Take 75% of the after-repair value.
5. Take the lower number. That is the ceiling on the loan.
6. Subtract it from total cost. The gap is the cash you bring, before closing costs, carry and reserves.
Now run it on four modeled deals. These are illustrative assumptions, not market data. Each is expressed as a share of ARV so no dollar math distracts from the logic.
| Modeled deal | Tier | Cost test | Binding limit |
|---|---|---|---|
| Purchase 50% of ARV, rehab 20% | 2+ projects (90%) | 63% of ARV | Cost test |
| Purchase 55% of ARV, rehab 35% | 2+ projects (90%) | 90% of project cost, above the cap | ARV cap: 75% |
| Purchase 50% of ARV, rehab 25% | 5+ projects (93%) | roughly 70% of ARV | Cost test |
| Purchase 60% of ARV, rehab 25% | Under 2 projects (85%) | roughly 72% of ARV | Cost test |
Read the second row closely. Total cost is 90% of ARV, so the cost test alone would fund 90% of project cost. The ARV cap stops the loan at 75% of ARV, and you fund the remaining 15% of ARV yourself. Same experienced borrower as the first row, very different cash requirement.
Work backward and a pattern appears. At the 90% tier, the ARV cap only starts to bind once total cost passes roughly 83% of ARV. At the 93% tier the crossover is near 81%, and at 85% it is near 88%. In other words, the ARV cap bites on thin-margin deals. Those are the deals where you least want maximum debt.
What Business Ownership Changes (and What It Doesn’t)
Owning a company does not move the ceiling. It changes the quality of the file in three ways.
Liquidity. Lenders want to see cash that is yours and reachable. Rehab money arrives in draws after work is done, so you front early costs and get reimbursed. A business owner with documented personal liquidity handles that well. Claiming business revenue does not substitute for it.
Experience. The tiers reward completed projects, and a business owner with a construction, contracting or property-management background often has a story worth documenting. Experience that is documented helps. Experience that is described does not.
The guarantor’s balance sheet. Most flip loans are made to an LLC, subject to lender program eligibility, and the principal usually signs a personal guaranty. A law-firm explainer from Fortra Law notes that a lender may pull a principal’s credit on an entity loan only when that principal is personally liable, such as by signing that guaranty. So the entity does not shield your credit from review. Lenders still read your score and your financial statement.
Here is the business-owner wrinkle brokers see often. A personal financial statement made up mostly of company equity and business debt can look thinner than the owner expects. Illiquid ownership stakes do not pay a contractor. Pulling together statements that show cash and marketable assets, separate from the business, strengthens the file.
Flip loans are business-purpose credit, which means they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Regulation Z exempts credit extended primarily for a business or commercial purpose from its consumer rules, and the eCFR text of 12 CFR 1026.3 is the official wording. That affects paperwork, not loan size. A business-purpose label never raises your maximum.
Dollar Ceilings vs. Percentage Ceilings
Percentages set the loan on each deal. Dollar ceilings only matter at the top end.
Across the network, loan amounts typically run up to $5,000,000, with larger requests considered by exception. Smaller balances vary by lender. Most flips never get near the top. The percentage tests bind long before the dollar ceiling does.
Where the dollar ceiling matters is repeat flippers and larger projects. If you run several flips at once, each loan is sized on its own deal. A strong record may support better tiers, but every new file still faces both tests. Exceptions above the standard ceiling usually mean a deeper look at experience, liquidity and the exit.
Other transaction types carry different caps, so do not mix them:
- Bridge purchase without rehab: typically up to 80% of purchase price.
- Cash-out or rate-and-term refinance: typically up to 65% of value.
- Ground-up construction: up to 90% of cost and 75% of completed value at 3+ completed projects, on structures up to 10 units.
- Flip collateral overall: non-owner-occupied residential, 1-4 units.
What “100% Financing” Does and Doesn’t Mean
No true 100% purchase program exists. When someone advertises 100% financing on a flip, the real structure is narrower, and it is the one worth understanding.
The top leverage tier covers 93% of project cost, never the whole purchase. Separately, up to 100% of the rehab budget can fund through draws. Both sit under the 75% of ARV cap. So “100% of rehab” is a rehab-budget statement. It is not a purchase loan-to-value, and it is not a guarantee you bring no cash.
Here is how the draw process works in practice:
1. You submit the scope of work and budget with the deal.
2. The lender reviews both against the value assumptions.
3. At closing, the purchase side funds and the rehab money is held back.
4. You complete a phase of work and request a draw.
5. The lender verifies the work and releases that portion.
The holdback is why working capital matters more than the headline percentage. A contractor wants a deposit. You front it. The draw reimburses you afterward. Investors who plan only for cash to close often run short in month two.
Where the General Rule Breaks
The tidy two-test method has real exceptions. These are the ones that move files.
First-timers and thin track records. With fewer than 2 completed projects the cost tier drops to 85%. First-time investors qualify at the lower tiers, and the top tier is reserved for experienced investors. Lenders count documented projects, so keep closing statements and purchase-and-sale records organized.
The appraisal comes in lower than your ARV. Your ARV is an estimate. A lender gives more weight to the appraiser’s view, backed by comparable sales. A lower ARV shrinks the 75% cap and raises your cash to close. An inflated ARV does not survive review.
The budget lacks credibility. A scope that is vague or unrealistically cheap invites a haircut or a request for contractor detail. Approval for less than the maximum is often a paperwork problem, not a leverage problem.
Credit sits near the floor. The minimum score is 620, with additional conditions below 660. Underwriting stays asset-based, but a thin credit profile can bring added conditions on top of the leverage tier.
The property doesn’t fit. Collateral is non-owner-occupied residential, 1-4 units. Commercial, industrial, land, hospitality and owner-occupied properties are not on the sheet.
The guarantor is stretched. If your personal statement is dominated by business debt or illiquid holdings, expect more questions even if the deal math is clean.
The loan is not a flip at all. A bridge purchase or refinance uses different caps, as listed above. State your actual plan up front. A sale exit and a refinance exit are different plans, and the lender sizes accordingly.
Misclassifying purpose is a risk too. The creditor must decide in each case whether the primary purpose is business. A hobby flipper with no operating plan is a weaker fit for business-purpose credit than an investor running an actual business.
Should You Borrow the Maximum?
Not always. Often the maximum is the signal that the deal is too thin.
Compare the first and second rows of the table above. Both borrowers have the same experience. The second hits the ARV cap, brings far more cash, and has far less margin if the rehab runs over or the sale price softens. Borrowing the full amount is only smart if the profit survives your own stress test.
Run three checks before you take the maximum:
- Margin: If the ARV drops, does the deal still pay you after costs?
- Carry: Terms run 6-18 months, interest-only, with no prepayment penalty. Count every month of carry in your projection, plus the holding costs that sit outside the loan.
- Exit: Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. If that is your plan, confirm the finished rent supports it. Lendmire’s complete DSCR loans guide explains how that coverage test works.
One more habit worth stealing. The classic 70% rule is an investor screening formula for your maximum offer, with a cushion for surprises. It is not the lender’s sizing rule. The two share a number and nothing else.
What to Bring to the File
Strong files arrive complete. Prepare these before you submit a deal:
- The purchase contract and property details.
- A line-item scope of work and rehab budget.
- Comparable sales supporting your ARV.
- Proof of completed projects, if you are claiming a tier.
- Your entity documents and a personal financial statement.
- Statements showing the cash you plan to use for closing and early draws.
- Your exit plan: sale or refinance.
Tax treatment varies by how the property is held and sold; consult a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Can a business owner get a bigger hard money flip loan than other investors?
No. The loan is sized to the deal’s cost and ARV, not to company income. A business owner can strengthen the file with documented liquidity, relevant experience and a clean guarantor profile. Those factors help approval and tier placement, but they do not lift the 75% of ARV cap.
What is the maximum loan on a flip in dollars?
Loan amounts typically run up to $5,000,000, with larger requests handled by exception. Smaller balances vary by lender. In practice, the percentage tests on cost and ARV set the loan long before the dollar ceiling does. Everything varies by lender, property, and experience.
Does a hard money lender fund the full rehab budget at closing?
No. The rehab money is held back and released in draws as completed work is verified. Up to 100% of the rehab budget can fund this way, still inside the overall caps. Plan for the cash needed to cover early costs before the first draw reimburses you.
Do I need an LLC, and will I still sign personally?
Most flip loans are made to an entity, subject to program terms, and the principal typically signs a personal guaranty. The entity structure does not remove your credit and financial statement from review. Talk through the structure before you buy the property.
What credit score do I need?
The minimum is 620, with additional conditions below 660. Underwriting stays asset-based, so the property, plan and exit carry most of the weight. Higher experience tiers and stronger files open more leverage.
Run Your Own Deal
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. As a broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C., Lendmire places each file with the lender that fits it. Call 828-256-2183, and use the site calculator for an illustrative estimate before you commit to a number.
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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References
1. Fortra Law, Business Purpose Lending 101
2. CFPB, Regulation Z §1026.3 — Exemptions
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 Get Rehab Draws Released on a Hard Money Loan · Hard Money Loan Preapproval Documents Before You Make Offers · How to Replace Seller Financing With a Hard Money Loan on a First Flip
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.