The Quick Read: A flip loan’s costs live in a short chain of papers: the term sheet, the settlement statement, the loan documents, and the rehab budget with its holdback terms. Each cost on your closing day should trace back to one of those papers and match what you read before you signed. If a line has no paper behind it, ask about it before funds move.
- The term sheet lists the lender’s own charges, and the settlement statement shows every dollar actually paid.
- Cash to close is more than the down payment, because lender fees, title charges, prepaid items, and insurance all add to it.
- The rehab money is not paid out at closing. It sits in a holdback and is released in draws against completed work.
- Your settlement statement and draw records become the cost file for your exit, whether you sell or refinance.
What Does Closing Cost Documentation Mean on a Flip Loan?
It is the set of papers that shows what you were quoted, what you paid, who received it, and why. A closing cost is a charge tied to making the loan or transferring the property. Cash to close is the total money you bring to the table, and it is always larger than the costs alone.
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.
Cash to close usually combines the down payment, lender charges, title and escrow fees, prepaid interest, insurance, and appraisal charges. Earnest money you already paid comes off that total. Some lenders also deduct certain charges from loan proceeds instead of collecting them in cash, so the same fee can show up in different places on different files.
Lendmire is a broker, and it places hard money files with lenders in its wholesale network. Fee structures vary by lender, property, and experience. That is why the paper trail matters more than any single number.
Which Documents Show the Costs?
Four document groups carry nearly every cost on a flip.
- The term sheet. It states the lender’s charges, the holdback terms, and the draw process. Read it before the closing table, because the settlement statement should confirm it rather than introduce surprises.
- The settlement statement. The title or escrow company prepares it. Many business-purpose loans use an ALTA-style statement, which is a different form from a consumer mortgage disclosure. LegalClarity’s explainer covers how the older HUD-1, the ALTA statement, and the Closing Disclosure differ. Which form a given loan uses depends on the lender and the title company.
- The loan documents. These are the note, the deed of trust or mortgage, and the guaranty. They set the terms, but they rarely itemize costs.
- The rehab budget and holdback agreement. They define how renovation funds are released and what each draw requires.
The Cost-to-Document Map
This table is the quickest way to audit a closing. For each cost, find the paper that proves it.
| Cost line | Paid to | Proof | Where it appears |
|---|---|---|---|
| Lender origination and fees | Lender | Term sheet | Settlement statement |
| Broker fee | Broker | Term sheet or fee agreement | Settlement statement |
| Appraisal or valuation | Appraiser | Invoice or report | Settlement statement |
| Title and escrow | Title company | Title commitment, fee schedule | Settlement statement |
| Recording and transfer | Local government | Recording receipts | Settlement statement |
| Prepaid interest | Lender | Term sheet terms | Settlement statement |
| Insurance | Carrier | Policy or binder | Settlement statement |
| Draw inspection | Inspector or lender | Draw agreement | Draw invoices later |
One item on that table comes after closing. Draw inspection charges appear only when you request a draw. Ask for them in writing up front.
What Documents Does the Borrower Supply?
Completeness of your own file drives the closing more than anything the lender does. Gather these early:
- Entity papers if you buy through an LLC: the filing, the EIN letter, and the operating agreement. Entity-held loans are reviewed subject to lender program eligibility.
- Full bank statements and proof of funds covering cash to close plus a cushion.
- A line-item rehab budget and scope of work, not a single lump figure.
- The purchase contract and a builder’s-risk or hazard insurance policy.
- Identification and the usual guarantor information.
Ownership of conditions splits four ways. You own the budget, entity papers, and funds. The lender owns the term sheet and loan documents. Title owns the commitment and statement. Your insurer owns the binder. When a closing stalls, the stalled item usually belongs to one of those four, and knowing which one tells you whom to call.
How the Rehab Holdback Shows Up on Paper
At closing, the lender typically funds the acquisition portion. The renovation money stays in a holdback and is released in draws after work is done and verified. Across the network Lendmire places files with, up to 100% of the rehab budget funds in draws against completed work. That figure is a rehab-budget measure and has nothing to do with the purchase.
Most flip programs size the loan against project cost. Typical tiers run by completed projects:
- 93% of project cost at five or more completed projects.
- 90% of project cost at two or more.
- 85% of project cost with fewer than two.
Every tier is capped at 75% of after-repair value, and these figures vary by lender, property, and experience. Bridge purchases without rehab reach up to 80% of purchase price, and refinances reach up to 65% of value. There is no true 100% purchase program. The top tier is reserved for experienced investors.
Expect to pay your contractor first and request reimbursement. A typical draw package includes the request, invoices, proof of payment, permits, lien waivers, photos, and an inspection report. Keep every one of them.
A Worked Example: Quote Versus Statement
Take a hypothetical investor with two completed projects buying a 1-4 unit non-owner-occupied property. The inputs below are modeled assumptions, not market data.
| Item | Quote | Final statement | Reconcile to |
|---|---|---|---|
| Purchase financing | 90% of project cost | Same share | Term sheet |
| After-repair value cap | 75% | Same | Appraisal |
| Down payment | Remaining project-cost share | Same | Term sheet |
| Lender and broker fees | Listed | Match or explain | Term sheet |
| Title and escrow | Estimated | Actual | Title invoice |
| Prepaid interest | Estimated | Actual | Closing date |
| Rehab money | Held back | Held back | Holdback agreement |
The reconciliation has three steps. First, confirm the financed share matches the tier on the term sheet. Second, match every fee line to its proof. Third, confirm the holdback amount equals the rehab budget the loan was sized on. Prepaid interest is the line most likely to move, since it depends on the actual closing date.
How Do You Read the Settlement Statement?
Read it line by line against the term sheet, working in this order:
1. Check the loan amount and the holdback amount first.
2. Confirm every lender charge equals what the term sheet listed.
3. Match each third-party charge to an invoice or fee schedule.
4. Look for charges that appear twice, once from the lender and once from an attorney or title company.
5. Confirm the cash-to-close total equals your down payment plus costs, less earnest money.
6. Ask for corrections in writing before signing, not after.
Where the General Rule Breaks
The general rule is that a business-purpose flip loan closes on a term sheet and a settlement statement. Several situations bend it.
Consumer purpose. Federal rules exempt credit extended primarily for a business purpose from the consumer disclosure regime, and the regulation text says so directly. That is why a business-purpose flip loan generally does not come with a Loan Estimate or Closing Disclosure. The test is purpose, not label. A title-industry write-up, Crescent Title’s overview of loan disclosures not covered by TRID, makes the same point: property type alone does not decide it. If you plan to live in the property, you are outside this article’s scope.
Purchase-only deals. With no rehab, there is no scope of work, draw schedule, or draw inspection. The file carries fewer conditions and fewer documents.
Seller credits. A seller may contribute toward costs, but how a credit interacts with the loan depends on the lender’s terms. Do not assume one lender’s treatment applies to another.
Rolling costs into the loan. Practice varies. Some lenders allow certain costs to be financed, and others require cash. Ask which category you are in before you budget.
Interest on drawn versus full balance. This is a negotiated term. It changes your carry, so get it in writing.
Property type. Some property types need extra underwriting attention.
Credit and experience. Most programs want a 620 minimum score, with added conditions below 660. First-time investors qualify at the lower leverage tiers. Underwriting stays asset-based, meaning property, plan, and exit, and nothing here is a commitment to lend.
What Red Flags Should You Ask About?
- A fee on the statement that was not on the term sheet.
- A lump sum with no itemization.
- The same service billed by two parties.
- A holdback amount that does not match your budget.
- A lender who will not put draw and extension terms in writing.
- Any term offering multi-year runway. Current hard money terms run 6 to 18 months, interest-only, with no prepayment penalty, so an investor who needs longer plans a refinance instead.
A 12-month plan that stretches by a few months adds carry, draw activity, and possibly extension charges. Model the longer case, not the ideal one.
Key Terms Defined
Term sheet: The lender’s written summary of loan amount, charges, holdback, and draw terms.
Settlement statement: The closing record, prepared by title or escrow, showing every dollar received and paid.
Cash to close: The total money the borrower brings, including down payment, costs, and prepaids, less earnest money.
Holdback: Renovation money the lender keeps in reserve and releases in draws.
Draw: A release of holdback funds after the lender verifies completed work.
Loan-to-cost: The loan amount as a share of total project cost, which is how most flip programs size leverage.
What Should You Keep After Closing?
Keep the term sheet, the settlement statement, every draw package, the rehab budget with change orders, and payoff paperwork. They document your cost basis and the property’s story for the next lender.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Many investors refinance out of hard money into long-term rental financing once the property is stabilized. Lendmire brokers that path, and a file with clean closing and draw records is easier for the next lender to review. The complete DSCR loans guide explains how that long-term step works.
Next Steps
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. Reach the team at 828-256-2183 or request a quote through the site. Program availability covers 41 markets, including Washington, D.C.
Frequently Asked Questions
Do I get a Closing Disclosure on a hard money flip loan?
Generally not on a true business-purpose loan, which falls outside the consumer disclosure rules. You will usually see a term sheet and a title-prepared settlement statement instead. If the purpose looks personal, the analysis changes.
Is cash to close just my down payment?
No. It also covers lender charges, title and escrow fees, prepaid interest, insurance, and appraisal charges, less any earnest money already paid. Ask for an itemized estimate early so your proof of funds covers all of it.
Is the rehab budget paid at closing?
No. The lender holds renovation money back and releases it in draws after work is completed and verified. Up to 100% of the rehab budget can fund in draws, depending on the lender, the property, and your experience.
Can closing costs be rolled into the loan?
It depends on the lender. Some allow certain costs to be financed, while others require cash at closing. Confirm this on the term sheet before you commit to a contract.
What should I keep after funding?
Keep the term sheet, settlement statement, draw packages, and budget changes. They support your cost records and make a later refinance easier to review.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Short-term financing tends to work best when the long-term plan is decided early – 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. LegalClarity, HUD-1 vs ALTA settlement statement and Closing Disclosure
4. Crescent Title, loan disclosures not covered by TRID
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 a Hard Money Fix and Flip Loan Worth It for a Business Owner? · Can You Use a Hard Money Loan to Buy and Flip a House? · Should You Ask a Hard Money Lender Questions Before a Fix and 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
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.