The Quick Read: A flip loan is sized by two tests at once, and the lower result sets your loan. One test is a percentage of total project cost. The other is a cap on the after-repair value, or ARV, which is what the finished home should be worth. The tests below are for a typical purchase with a rehab, subject to lender guidelines.
- Across the wholesale network, leverage is tiered by completed projects: 85% of project cost with fewer than 2, 90% at 2 or more, and 93% at 5 or more. Each tier is capped at 75% of ARV.
- A bridge purchase with no rehab runs up to 80% of the purchase price.
- Up to 100% of the rehab budget can fund in draws against completed work.
- There is no true 100% purchase program. You bring cash on every tier.
- All of this varies by lender, property, and experience, and none of it is a commitment to lend.
Why “LTV” Means Something Different on a Flip
On a flip, the loan is usually measured against cost and against the finished value, not only against what the house is worth today. That is why a plain LTV figure can mislead you.
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.
Loan-to-value is the loan amount divided by the property’s value. The federal consumer-finance regulator explains that lenders use it to size loans and that a larger down payment lowers it. Corporate Finance Institute adds that lenders cap leverage because collateral can lose value.
A flip has a wrinkle. The house you buy is often worn, and its as-is value may be low. The value you are building toward is the ARV. So lenders measure the loan against more than one number.
No regulator sets these caps. They are private lender overlays on a business-purpose loan. Hard money itself is asset-based lending from private or non-bank lenders, and the trade terms “private lending” and “bridge lending” are often used for the same thing, as this overview of commercial hard money notes.
The Three Ratios, Defined
Each ratio answers a different question. Mixing them up is the most common way new investors misread a quote.
| Ratio | Measured against | What it controls |
|---|---|---|
| LTV (as-is) | Current value or price | Bridge and refinance sizing |
| LTC (loan-to-cost) | Purchase plus rehab | The main flip advance |
| ARV cap | Finished value | The ceiling on total loan |
LTV on a flip file is a current-value test. LTC is the loan divided by your total project cost. The ARV cap is the loan divided by the projected finished value.
On the network’s flip tiers, the headline number is a loan-to-cost figure. That is why every tier is stated as a percent of project cost. The 75% ARV cap then sits on top as a ceiling.
Why Lenders Stop Short of 100%
The gap between loan and value is the lender’s cushion. If the flip fails and the lender must sell, that cushion absorbs a falling market, a bad rehab, and selling costs.
Hard money underwrites the asset, the plan, and the exit more than the borrower’s paycheck. That makes the cushion the main protection. It also explains why experience matters. A borrower with documented completed projects has shown the plan works, so the top tiers go to experienced investors.
What the Network Allows on a Typical Purchase
These are the structures we see across the programs we place files with. Each varies by lender, property, and experience.
- Fix-and-flip purchase: 85% of project cost with fewer than 2 completed projects, 90% at 2 or more, and 93% at 5 or more. Every tier is capped at 75% of ARV.
- Bridge purchase, no rehab: up to 80% of the purchase price.
- Cash-out or rate-and-term refinance: up to 65% of value.
- Rehab budget: up to 100% funded in draws as work is completed. That is a rehab-budget figure, never a purchase LTV.
- Terms: 6 to 18 months, interest-only, with no prepayment penalty.
- Credit: a 620 minimum score, with added conditions below 660. First-time investors can qualify at the lower leverage tiers.
- Property: non-owner-occupied residential, 1 to 4 units.
- Loan size: up to $5,000,000, larger by exception.
One more point on credit. Underwriting stays asset-based, so the score is a gate, not the whole story. A 620 does not mean approval, and the property and plan still have to hold up.
A Typical Purchase, Walked Through
Say you buy a worn single-family home to flip. To keep the math clean, state everything as a percent of projected ARV, with ARV set at 100. These are modeled assumptions, not market data.
Assume the purchase price is 55% of ARV. Assume the rehab budget is 20% of ARV. Your all-in project cost is 75% of ARV.
Here is how each tier treats that deal.
| Tier | Cost-based loan | ARV cap | Your cash |
|---|---|---|---|
| 85% (under 2 projects) | 63.75% of ARV | 75% | 11.25% of ARV |
| 90% (2+ projects) | 67.5% of ARV | 75% | 7.5% of ARV |
| 93% (5+ projects) | 69.75% of ARV | 75% | 5.25% of ARV |
In every row, the cost test is lower than the ARV cap. So the cost test binds, and the loan follows the tier.
Two cautions. First, the cash column is only the gap between cost and loan. It leaves out closing costs, interest carry, and holding costs, which you also fund. Second, the rehab portion arrives through draws. You often front rehab spending and get reimbursed after inspection, so your cash need can peak mid-project.
When the ARV Cap Takes Over
Now change the deal. Assume the all-in cost is 82% of ARV, because the purchase was pricey or the rehab was heavy.
At the 93% tier, the cost test gives 76.26% of ARV. That is above the 75% ceiling. So the cap binds, the loan is cut to 75%, and you fund the rest.
At the 90% tier, the same deal gives 73.8% of ARV, which is under the cap. The cost test still binds. The takeaway is simple. High tiers hit the ARV ceiling first on tight deals.
What If Your ARV Is Wrong?
Run the first deal again, but assume the finished value lands at 90% of your projection. The ARV cap is now 75% of that lower value, or 67.5% of your original ARV figure.
| Tier | Cost-based loan | Lowered cap | Binding test |
|---|---|---|---|
| 85% | 63.75% | 67.5% | Cost |
| 90% | 67.5% | 67.5% | Even |
| 93% | 69.75% | 67.5% | ARV cap |
The 85% borrower sees no change. The 93% borrower ends up with a smaller loan and has to bring more cash to closing. That is a reason to run conservative comparable sales before you sign a contract.
An ARV shortfall also hits the exit. If you plan to sell, a lower value squeezes profit. If you plan to refinance into long-term financing, it can leave you short on the payoff. Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path. Our complete DSCR loans guide covers how that later loan is judged.
Initial Advance Versus Rehab Holdback
Your loan is not one check at closing. The purchase portion funds at closing. The rehab portion is held back and released in draws as work is completed and inspected.
The schedule is set before you start. Some lenders release by line item and some by percent complete. This matters for cash planning. At closing you owe your share of the purchase plus fees. During the project you may carry contractor costs until each draw is reimbursed.
The network allows up to 100% of the rehab budget to fund this way. That does not make the whole deal 100% financed. Your equity sits in the purchase side, and the full loan must still fit inside your tier and the 75% ARV cap.
Where the General Rule Breaks
The tiers explain most files. These edge cases move the answer.
Lopsided deals. A big rehab on a cheap house pushes all-in cost toward the ARV ceiling. The cap binds early, and you fund the gap. Lenders also look harder at the scope and budget.
Purchase price above as-is value. If the lender’s valuation lands under your contract price, the loan can shrink. The price you agreed to still has to work.
First-time flippers. The 85% tier applies with fewer than 2 completed projects. A lender can also ask for more cash or reserves if experience is thin.
No-rehab buys. A bridge purchase runs up to 80% of the purchase price. That is a purchase-price test, not a project-cost test.
Refinancing a property you hold. Cash-out and rate-and-term refinances run up to 65% of value. That is much lower than flip leverage, because you are not buying in at a discount.
Property types. The sheet covers non-owner-occupied residential of 1 to 4 units. Owner-occupied homes, commercial buildings, and raw land are not offered.
Footprint. The program covers 41 markets, including Washington, D.C. A few places are excluded, so confirm your property location first.
What Moves Your Limit
| Factor | Direction | Why |
|---|---|---|
| Completed projects | Up | Proven execution cuts risk |
| Heavy rehab scope | Down | Budget risk rises |
| Strong, close comps | Up | ARV is easier to defend |
| Thin reserves | Down | Overruns are less covered |
| Credit near the floor | Down | Extra conditions apply |
Experience is the biggest lever. It is the difference between the 85% and 93% tiers. The ARV cap is the one lever that does not move with experience, since it holds at 75% on every tier.
Cash You Need Beyond the Down Payment
Equity is not the only cost. Budget for closing costs, lender fees, interest while the property is held, and carrying costs such as utilities and insurance. Pricing varies by lender and file, so ask for the full list before you commit.
A practical test: if your cash only covers the gap between cost and loan, you are underfunded. The project needs a cushion for slow draws and overruns.
How to Calculate Your Own Limit
Use this procedure with your own numbers.
1. Write down your purchase price and your rehab budget. Add them for project cost.
2. Estimate ARV from recent sales of renovated homes nearby. Use the conservative end.
3. Pick your tier by completed projects: 85%, 90%, or 93% of project cost.
4. Multiply project cost by your tier percentage. That is the cost-based loan.
5. Multiply ARV by 75%. That is the cap.
6. The lower of steps 4 and 5 is your maximum loan.
7. Subtract it from project cost. That gap is your minimum equity before fees and carry.
Then rerun step 2 with an ARV 10% lower. If the deal still works, your margin is real. The site’s illustrative calculator can help you test scenarios, though it is an estimate, not a quote.
Common Misreadings
- “100% rehab funding means 100% financing.” It does not. The rehab draws sit inside a loan that still has your equity in the purchase.
- “The ARV cap is flexible.” The 75% ceiling holds on every flip tier.
- “Hard money ignores the borrower.” Experience, reserves, and credit shape the tier and conditions.
- “The 70% rule sets my loan.” It is a purchase screen for profit, not a lender cap. A deal that fits the screen is often one a lender funds near cost, but the two are separate tests.
Tax treatment varies; consult a qualified professional.
Before You Apply
Have these ready so your numbers match underwriting:
- The signed purchase contract.
- A line-item rehab budget and scope of work.
- Comparable sales that support your ARV.
- Proof of your completed projects, if you claim a higher tier.
- Statements showing the cash you will bring and your reserves.
- Your exit plan, either a sale or a refinance.
Key Terms Defined
ARV (after-repair value): the estimated value of the property once the rehab is finished.
LTC (loan-to-cost): the loan divided by purchase price plus rehab budget.
LTV (loan-to-value): the loan divided by the property’s current value.
Draw: a release of held-back rehab money after work is completed and inspected.
Holdback: the rehab portion of the loan that is not paid out at closing.
Business-purpose loan: a loan for an investment property rather than a home you live in.
Frequently Asked Questions
What is the maximum LTV on a hard money fix-and-flip purchase?
There is no single ceiling. Across the network, a flip is sized at 85%, 90%, or 93% of project cost by experience tier, with every tier capped at 75% of ARV. A bridge purchase with no rehab runs up to 80% of the purchase price. Terms vary by lender, property, and experience.
What is the difference between LTV and LTC on a flip?
LTV compares the loan to current value. LTC compares it to purchase price plus rehab. On a flip the main advance is a loan-to-cost figure, with an ARV cap on top. Always ask which value a quoted percentage is measured against.
Can a hard money loan cover my whole purchase and rehab?
No. There is no true 100% purchase program, and the top tier is reserved for experienced investors. Up to 100% of the rehab budget can fund in draws, but you still bring equity on the purchase side. Your closing costs and carry are also yours to fund.
What happens if the ARV comes in lower than I projected?
The 75% cap shrinks with it. Lower-leverage tiers may be unaffected, while higher tiers can see the loan cut and your cash need rise. Using conservative comps before you sign protects you from that shift.
Can a first-time flipper qualify?
First-time investors can qualify at the lower leverage tiers, with fewer than 2 completed projects. A 620 minimum credit score applies, with extra conditions below 660. Underwriting stays asset-based, and approval is never guaranteed.
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.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
Many investors treat hard money as the acquisition tool and plan the exit up front – see the hard money loan overview.
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References
1. CFPB: What Is a Loan to Value Ratio and How Does It Relate to My Costs
2. Corporate Finance Institute: Loan to Value Ratio
3. Wikipedia: Commercial Hard Money
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Use a Hard Money Loan to Buy and Flip a House? · Can You Get an Interest-Only Hard Money Loan for a Fix and Flip? · Can You Use Hard Money to Flip a Triplex or Fourplex?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.